THE COMMISSIONER OF INCOME TAX -1 CHANDIGARH vs. M/S PUNJAB INFRASTRUCTURE DEV BOARD CHANDIGARH

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ITA/66/2016HC Punjab & HaryanaPHHC01110660201620 December 20164 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found it impossible to determine the issue in the appeals before it because the crucial Built Operate-Transfer agreement, central to ascertaining whether the assessee acted on its own behalf or as a nodal agency for the Government of Punjab, was not produced. The Court also noted that the matter might require consideration of surrounding circumstances if the contract terms were unclear. The Court mentioned that it had decided the alternate issue (concessionaire having paid taxes) against the assessee in a separate, connected appeal (ITA No.73 of 2016). However, it emphasized that both the primary and alternate issues needed to be decided by the Tribunal. Consequently, the impugned orders of the Tribunal were set aside and the matters were remanded to the Tribunal for a fresh decision in accordance with the law, considering both contentions.

What were the facts?

The appeals were filed by the Commissioner of Income Tax (TDS)-I, Chandigarh against the orders of the Income Tax Appellate Tribunal (Tribunal) which had dismissed the Revenue's appeals. These appeals pertained to the orders of the CIT(Appeals) concerning Assessment Years 2009-10 to 2011-12. The assessee is M/s Punjab Infrastructure Dev. Board, Chandigarh. The core dispute revolves around the applicability of Section 206C(1C) of the Income Tax Act, 1961, to the assessee's case, making it liable to collect tax at source. The assessee entered into a Built Operate-Transfer agreement with a concessionaire for developing roads. The Revenue contended that the agreements were entered into by the assessee on its own behalf, while the assessee argued it acted as a nodal agency for the Government of Punjab. The Assessing Officer held the assessee liable to collect tax at source without providing reasons. The CIT(A) and the Tribunal ruled in favour of the assessee on the primary contention without furnishing detailed reasons, and did not consider the assessee's alternate contention.

What were the issues?

1. Whether the provisions of Section 206C(1C) are applicable to the assessee's case, making it liable to collect tax at source (Question of law). Assessee's Contentions: - The assessee acted only as a nodal agency for and on behalf of the Government of Punjab, and not on its own behalf. - Alternatively, even if Section 206C(1C) is applicable, the assessee is not liable as the concessionaire had already paid taxes after considering amounts payable to the assessee. Revenue's Contentions: - The agreements were entered into by the assessee on its own behalf, making it liable under Section 206C(1C). The judgment notes that the Assessing Officer held the assessee liable without furnishing reasons. The CIT(A) held the assessee not liable based on Section 206C(7), stating amounts received were concession fees, not toll fees, but also without detailed reasoning. The Tribunal upheld the CIT(A)'s order without furnishing reasons.

Which sections of the Income-tax Act were involved?

Section 206C(1C),Section 206C(7)

AI-generated summary — verify with the full judgment below

ITA No.66 of 2016 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH (1) ITA No.66 of 2016 The Commissioner of Income Tax (TDS)-I, Chandigarh

....Appellant versus M/s Punjab Infrastructure Dev. Board, Chandigarh ....Respondent (2) ITA No.71 of 2016 The Commissioner of Income Tax (TDS)-I, Chandigarh

....Appellant versus M/s Punjab Infrastructure Dev. Board, Chandigarh ....Respondent (3) ITA No.99 of 2016 The Commissioner of Income Tax (TDS)-I, Chandigarh

....Appellant versus M/s Punjab Infrastructure Dev. Board, Chandigarh ....Respondent Date of decision: 20.12.2016 CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON'BLE MR. JUSTICE DEEPAK SIBAL * * * * Present:- Mr. Denesh Goyal, Senior Standing Counsel for the appellant(s). Mr. Deepak Aggarwal, Advocate for the respondent(s). * * * * Jyoti Sharma 2016.12.28 13:28 I attest to the accuracy and integrity of this document

ITA No.66 of 2016 -2- S.J. VAZIFDAR,

CHIEF JUSTICE (ORAL)

These appeals are filed against the order of the Tribunal dismissing the Revenue's appeals against the order of the CIT(Appeals) pertaining to the Assessment years 2009-10 to 2011-12. The question of law raised by the appellant is irrelevant. It is probably on account of having copied the question of law from certain other appeals which we in fact disposed of by a separate order and judgment passed today. The question of law that arises in these appeals is as follows:- “Whether the provisions of Section 206C(1C) are applicable to the assessee's case making it liable to collect tax at source as provided for thereunder?” The agreement on the basis of which the Revenue contends that the provisions of Section 206C(1C) are applicable is not furnished. It is, however, not necessary for the purpose of this judgment. Suffice it to note, that it is a common ground that a Built Operate-Transfer agreement was entered into between the assessee and a third party referred to therein as the concessionaire under which the latter was to build operate and transfer roads. The Revenue contends that the agreements were entered by the assessee on its own behalf whereas assessee contends that it is only a nodal agency for and on behalf of the Government of Punjab. The assessee also raised an alternate contention that even assuming that the provisions of Section 206C(1C) are applicable, it is not liable under the provisions thereof on account of the concessionaire having paid the taxes after having taking into account, the amounts payable by it to the assessee. In these appeals, the Jyoti Sharma 2016.12.28 13:28 I attest to the accuracy and integrity of this document

ITA No.66 of 2016 -3- CIT(Appeals) and the Tribunal held in favour of the assessee only on the basis of the main contention and did not consider the assessee's alternate contention. The Assessing Officer merely held that the assessee was liable to collect tax at source without furnishing any reason therefor. The CIT (A), on the other hand, held that the assessee was not liable as the provisions of sub-section(7) of Section 206C were not applicable, but again without furnishing any reason whatsoever. The only observation is that the amounts received under the contract were a concession fee and not as a toll fee and that, therefore, the provisions of Section 206C(7) could not be applied to the amount received. The Tribunal also upheld the order of the CIT without furnishing any reasons. The construction/interpretation of the contract referred to by the parties as concessionaire agreement would be of vital importance in ascertaining whether the assessee entered into the same on its own account and for and on behalf itself or whether it did so as a nodal agency for and on behalf of the Government of Punjab. That contract has not even been produced before us. Further the matter may not end by a mere reading of the contract. It may be necessary to consider the surrounding circumstances if the terms thereof are not clear. It is impossible, therefore, in these appeals to determine the issue. We have decided the alternate issue in certain other appeals against the assessee by a separate order and judgment passed by us today in ITA No.73 of 2016 which is also the assessee's case. It would, however, be necessary for the Tribunal to decide both the issues. Jyoti Sharma 2016.12.28 13:28 I attest to the accuracy and integrity of this document

ITA No.66 of 2016 -4- In the circumstances, the impugned orders are set aside and remanded to the Tribunal for a fresh decision in accordance with law. A photocopy of this order be placed on the files of other connected cases. (S.J. VAZIFDAR) CHIEF JUSTICE (DEEPAK SIBAL) JUDGE December 20, 2016 Jyoti 1 (i) Whether speaking/reasoned Yes/No (ii) Whether reportable Yes/No Jyoti Sharma 2016.12.28 13:28 I attest to the accuracy and integrity of this document

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