PUNJAB INFRASTRUCTURE DEVELOPMENT BOARD, CHANDIGARH vs. COMMISSIONER OF INCOME TAX (TDS) CHANDIGARH

ITA/409/2019HC Punjab & HaryanaPHHC01104154201918 September 2019Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE HARNARESH SINGH GILL8 pages
AI SummaryDismissed

What were the facts?

The Punjab Infrastructure Development Board (PIDB), the appellant, entered into concession agreements with concessionaires for the development of highways. Under these agreements, concessionaires were entitled to collect tolls, and out of these collections, they had to deposit a fee. The Assessing Officer (AO) determined that PIDB, as the 'Person Responsible' (PR), failed to collect Tax Collected at Source (TCS) as per Section 206C(1C) of the Income Tax Act, 1961, for amounts received from contractors/concessionaires. This led to an appeal before the Income Tax Appellate Tribunal (ITAT), which upheld the AO's order. PIDB then filed appeals before the High Court against the ITAT's decision.

What did the High Court hold?

The High Court held that the appeals must fail. The Tribunal had considered Section 20 of the Punjab Infrastructure (Development and Regulation) Act, 2002, including sub-sections (2) and (4), and concluded that despite PIDB being described as a 'nodal agency', its subsequent actions and the provisions of the Act indicated it was acting on a principal-to-principal basis with the concessionaires. The Court found that a contrary stipulation in the concession agreement did not alter this essential characteristic. The Court also noted that accepting PIDB's argument would create an anomaly where the grantor (Government) and the collector of concession fee (PIDB) would be different, potentially leading to tax leakage. The Court confirmed the Tribunal's finding that the mere use of terms like 'nodal agency' or 'confirming party' did not determine the facts. The Court referenced a previous judgment in ITA No. 73 of 2016, which had acknowledged the possibility of PIDB acting on its own on a principal-to-principal basis.

What were the issues?

1. Whether the assessee, Punjab Infrastructure Development Board (PIDB), was required to collect TCS under Section 206C(1C) of the Income Tax Act, 1961. Assessee's arguments: PIDB contended that it acted merely as a nodal agency and confirming party for the Government of Punjab. It argued that the concession agreements were between the Government of Punjab and the concessionaires, and PIDB did not deal with concessionaires on a principal-to-principal basis but acted solely as an agent for the Government. PIDB relied on Section 20(2)(i) of the Punjab Infrastructure (Development and Regulation) Act, 2002, which states the Board will act as a nodal agency to coordinate efforts of the State Government regarding infrastructure development. Revenue's arguments: The revenue's position, as upheld by the ITAT and AO, was that PIDB was liable to collect TCS. The judgment does not explicitly detail the revenue's arguments but implies they countered PIDB's agency claim.

Which sections of the Income-tax Act were involved?

Section 206C(1C),Section 260A

AI-generated summary — verify with the full judgment below

ITA No.409-2019 (O&M) 1 ITA No.407-2019 (O&M) ITA No.413-2019 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 18.9.2019 ITA No.409-2019 (O&M) Punjab Infrastructure Development Board ...... Appellant Versus Commissioner of Income Tax-(TDS) ...... Respondent ITA No.407-2019 (O&M) Punjab Infrastructure Development Board ...... Appellant Versus Commissioner of Income Tax-(TDS) ...... Respondent ITA No.413-2019 (O&M) Punjab Infrastructure Development Board ...... Appellant Versus Commissioner of Income Tax-(TDS) ...... Respondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI : HON'BLE MR. JUSTICE HARNARESH SINGH GILL Present : Mr. Deepak Aggarwal, Advocate for the appellant. *** Anuradha 2019.09.26 16:53 I attest to the accuracy and integrity of this document

ITA No.409-2019 (O&M) 2 ITA No.407-2019 (O&M) ITA No.413-2019 (O&M) AJAY TEWARI, J. (Oral)

1.

CM-19272-CII-2019 in ITA-409-2019 This is an application for placing on record the copy of the judgment in ITA No. 73 of 2016 dated 20.12.2016 passed by this Court.

For the reasons recorded in the application, the same is allowed and abovesaid judgment is taken on rec

The order continues below.

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