M/S PUNJAB INFRASTRUCTURE DEVELOPMENT BOARD,CHANDIGARH vs. ACIT (TDS), CHANDIGARH

आदेश/Order

Per Bench:

These appeals have been remanded back by the Hon'ble Punjab &

Haryana High Court vide common orders passed in ITA Nos. 100, 68 & 64

of 2016 dated 20.12.2016 and separate orders dated 9.5.2017 in ITA Nos. 65, 69, 97 & 98 (O&M) of 2016 respectively to decide as to whether

the assessee herein before us namely ‘Punjab Infrastructure Development

Board’ (herein referred to as ‘ PIDB’) was required to collect tax at source

(TCS) as per the provisions of section 206(1C) of the Income-tax Act, 1961

(in short 'the Act').

inspection and assessment proceedings u/s 206C(1C) / 206C(7) of the Act,

the Assessing officer noticed that assessee ‘ PIDB’ had received certain

amounts from the contractor [herein referred to as ‘Concessionaire’] in

awarding / entering into Concession Agreement for toll plaza operation /

Toll based operation and maintenance concession for certain segments of

roads. That the assessee being Person Responsible (‘PR’) was required to

collect tax at source u/s 206C of the Act, however, the assessee failed to

so. Therefore, the Assessing officer issued noticed to the assessee / PR to

the effect as to why it may not be held responsible under the provisions of

section 206C (1C) / 206C (7) of the Act for not collecting tax at source.

However, the assessee denied its liability to collect the tax at source. It

was pleaded that the concessionaire namely M/s Rohan Rajdeep Tollways

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 3

Ltd. filed its return of income and paid the due taxes, therefore, even

though the assessee had not collected the tax at source but it could not be

treated as ‘assessee in default’ in the light of the decision of the Hon'ble

Supreme Court in the case of ‘Hindustan Coca Cola Beverage (P) Ltd Vs.

CIT’ [2007] 293 ITR 226 (SC) However, the Assessing officer observed

that the decision cited by the assessee was not applicable to the facts and

circumstances of the case. The Assessing officer observed that since the

assessee / PR had failed to collect and deposit tax u/s 206C of the Act,

therefore, the assessee was liable to be held as ‘assessee in default’ u/s

206C of the Act. He accordingly created the demand of tax and interest as

per the provisions of section 206C (1C) / 206 C(7) of the Act.

inserted to section 206C (6A)of the Act w.e.f. 1.7.2012 stipulates that if

the PR fails to collect the tax at source, but the concerned buyer / licensee

or lessee, as the case may be, has furnished his return of income u/s 139 of

the Act and has taken into account such an amount for computing the

income in such return of income and has paid the due taxes on income

declared by him and has furnished a certificate to this effect from the

Accountant, then such assessee / PR, would not be deemed to be as

‘assessee in default’. The Tribunal held that the aforesaid proviso which

was akin to the first proviso to section 201(1) of the Act read with second

proviso to section 40(a)(ia) of the Act was to be taken as declaratory and

curative in nature and the same has the retrospective effect from 1.4.2005.

The Tribunal, therefore, held that the assessee under the circumstances

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 4

could not be held as ‘assessee in default’ and accordingly deleted the

impugned demand created u/s 206C (1C) / 206C (7) of the Act vide

common order dated 30.09.2015.

preferred appeal before the Hon'ble Punjab & Haryana High Court. The

Hon'ble High Court held that though in the light of the decision of the

Hon'ble Supreme Court in ‘Hindustan Coca Cola Beverage (P) Ltd Vs.

CIT’ (supra), whereby, the payee / purchaser / licensee had filed a return

of income and paid the due taxes and then in that case as per the newly

inserted proviso to section 206 C(6A) of the Act, the demand for the

particular amount cannot be enforced upon by the assessee / PR. However,

this would not alter the liability to pay interest under the provisions of

section 206 C(7) and penalty u/s 271CA of the Act, as the case may be.

The Hon'ble High Court further held that terminal point for calculation of

the interest / penalty payable has to be taken as the date on which the

assessee was liable to collect tax i.e. the date of payment till the date on

which the Concessionaire should have filed the return

However, a plea was taken by the assessee before the Hon'ble High

Court that the liability to pay interest or the penalty, as the case may be,

under the provisions of section 206C(7) or 271 CA, as the case may be,

would arise only, if the assessee was held to be Person Responsible to

deduct / collect tax at source. It was pleaded that the Concession

Agreement was entered into between the State of Punjab and the

Concessionaire ‘M/s Rohan Rajdeep Tollways Ltd. and that the assessee

‘PIDB’ was just a confirming party. The assessee acted just as a nodal

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 5

agency on behalf of the Government of Punjab, whereas, the toll rights

were in fact granted by the Government of Punjab to the concessionaire. It

was also contended that the concessionaire was responsible for the overall

operation and maintenance of the project facility and that it was not

merely granted usage of the toll plaza, therefore, the provisions of section

206 C(IC) were not attracted in this case.

observed that the Tribunal only considered the assessee’s alternative

contention to the effect that the Concessionaire had filed the return and

paid the due taxes. However, the Tribunal did not consider the assessee’s

main contention that the provisions of section 206 C(1C) were not

applicable at all. The matter, therefore, was remanded back to the Tribunal

to decide the issue whether the provisions of section 206C(1C) of the Act

were attracted in these cases or not for the purpose of levy of interest

liability u/s 206C(7) or the penalty u/s 271CA of the Act.

Concessionaire namely ‘M/s Rohan Rajdeep Tollways Ltd.’ filed a Civil

Writ petition No.20680 of 2014 agitating his liability to pay the demand

created under the provisions of section 206 C(1C) of the Act or the interest

under the provisions of section 206C(7) or the penalty under the

provisions of section 271CA of the Act. It has been pleaded before the

Hon'ble High Court that there was no obligation of the concessionaire

namely Rohan Rajdeep Tollways Ltd. to indemnify the assessee i.e. PIDB

for any default on the part of PIDB to collect the tax at source. That the

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petitioner / concessionaire had to repeatedly renew the bank guarantee

though it was under no obligation to indemnify the respondent /assessee

PIDB as the concessionaire has already cleared the entire tax liability. The

Hon'ble High Court vide order dated 06.02.2019 directed this Tribunal to

make endeavor to promptly decide the appeals preferred by the assessee

PIDB relating to its tax / interest / penalty liability under the provisions

section 206C (1C) / 206C(7) or 271CA, as the case may be.

Ld. Counsel for the assessee sought time to give answer to the certain

queries relevant to the issue raised by the Bench. Under the circumstances,

on his request, the hearing was adjourned to 13.3.2019. The matter was

accordingly heard on 13.3.2019.

Hon'ble High Court while remanding the identical matter to this Tribunal

in some other appeals has made certain observations in orders dated

20.12.2016 in ITA Nos. 66, 71 and 99 of 2017 that 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. 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 has also been observed by the Hon'ble High

Court in the order dated 20.12.2016 in ITA No. 73-2016 relating to the

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 7

identical issue raised therein that there is a possibility of questions of

fact arising. For instance, it would be necessary to consider whether

the assessee was merely a nodal agency for the Government of

Punjab or whether it was acting on its own on a principle to principle

basis with the concessionaire. The answer to this issue may not

depend only upon the terms of the agreement.

observations made by the Hon'ble High Court.

At the outset, the Ld. Counsel for the assessee invited our attention

to the ‘Concession Agreement’ dated 21.2.2007 for Toll Based Operation

and Maintenance Concession of Ropar-Phagwara Road Project and has

submitted that this agreement may be taken as a base agreement as the

other agreements relating to the other roads were almost identical to this

agreement. He invited our attention to the names and details of the parties,

to the agreement, and has stated that perusal of the aforesaid agreement

dated 21.2.2007 reveals that the same has been entered into by the

Governor of State of Punjab in his executive capacity for the State of

Punjab acting through the Secretary, Public Works Department,

Government of Punjab, as first party and has been referred to as ‘GOP’

(Government of the State of Punjab) with M/s Rohan Rajdeep Tollways

Ltd., referred to as ‘Concessionaire’ for the grant of Concession

Agreement for Ropar – Phagwara Road segment to establish tolling facility

for the professional management, operations and maintenance of the

project on a commercial public private partnership format by the levy of

user charges. That the assessee i.e. PIDB has also been named as a party to

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 8

the contract but only as a ‘Confirming Party’ and that the PIDB acted for

and on behalf of the Guarantor i.e. Government of Punjab had undertaken a

transparent competitive bidding process to select the private sector

participant for implementing the project and pursuant to the above, the

concessionaire being found the preferred bidder, was accordingly granted

the concession. The Ld. Counsel, therefore, has submitted that the

concession was granted by the Punjab Government and that the assessee

PIDB had acted only as nodal agency on behalf of the Government of

Punjab and that the toll fee / payment, if any, collected from the

concessionaire was on behalf of the Government of Punjab. Therefore, the

assessee was not liable to collect tax at source as per the provisions of

section 206C (1C) of the Act.

The Ld. counsel has further invited our attention to the Punjab

Infrastructure (Development & Regulation) Act, 2002 [herein after referred

to ‘PI (D&R) Act, 2002’] to state that as per the provisions of the Act, the

assessee Board has been established u/s 18 of the said Act that it has been

specifically provided under the provisions of section 20 of the said Act

that the Board has to act as a nodal agency to co-ordinate all efforts of the

State Government regarding development of the infrastructure sector. That

as per section 20 (2)(v) of the PI (D&R) Act, 2002 the Board can

recommend the grant of concessions to the public infrastructure agency in

accordance with the provisions of the Act and that the concession

agreement are to be entered into between the ‘concessionaire’ and the

‘public Infrastructure agency’ as per provisions of the Act. That as per

section 2(23) of the Act, the ‘Public Infrastructure Agency’ means a

Government Department, Government company, Government-owned or

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 9

controlled Corporation, Local Authority or a Public Body which own or

governs or control infrastructure sectors or infrastructure projects. The

Ld. Counsel, therefore, has submitted that a perusal of the Concession

Agreement as well as of the statutory provisions would reveal that neither

the PIDB had actually entered into an agreement with the Concessionaire

nor the PIDB was statutorily authorised to do so. Since the PIDB had not

granted the Concession Agreement, hence, it was not authorized to collect

toll fee also. That what has been collected by PIDB was only a Concession

fee being a confirming party to the agreement and that too has been

collected on behalf of the Government of Punjab. The Ld. Counsel for the

assessee, therefore, submitted that the provisions of section 206 C(1C) of

the Income Tax Act were attracted in this case.

statutory provisions to show that it is only the assessee Board which is not

only authorised to grant concession, enter into agreement with the

concessionaire but also to collect the Concession fee / toll fee from the

concessionaire. He in this respect has invited our attention to section

20(4) of the Punjab Infrastructure (Development & Regulation) Act,

2002 which, reads as under:-

“(4) In order to carry out its functions consistent with the provisions of this Act the Board shall have the powers to do all or any of the following, namely:-

(i) Acquire, hold, develop or construct such property, both movable and immovable, as the Board may deem necessary for the performance of any of its activities related to the development of infrastructure sectors ol infrastructure projects; (ii) Advise or recommend to the State Government

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 10

acquisition of land under the Land Acquisition Act., 1894 for the purposes of infrastructure projects; (iii) Lease, sell, exchange, or otherwise make allotments of the property referred to in clause (i) to concessionaire and to modify or rescind allotment, including the right and power to evict the allottees concerned on breach of any of the terms or conditions of such allotment; (iv) Borrow and raise money in such manner as the Board may think fit and to secure the repayment of any money borrowed, raised or owing by mortgage, charge, standard security, lien or other security upon the whole or any part of the Board’s property or assets @whether present or future), and also by a similar mortgage, charge, standard security, lien or security to secure and guarantee the performance by the Board of any obligation or liability, it may have undertaken or which may become binding on it; (v) Constitute a Project Management Team and one or more Advisory Committee or Committees or Sectoral Sub- Committee or Project Implementation Sub-Committee, or engage suitable service providers or advisors or consultants to advise the Board for the efficient discharge of its functions; (vi) Enter into and perform all such contracts as it may think nee expedient for performing any of its functions; and (vii) Do such other things and perform such other acts as it may think necessary or expedient for the proper conduct of its functions and for carrying into effect the purposes of this Act.

Act, 2002’, which reads as under:-

“(7) In the case of Infrastructure projects based on private participation schemes, the Board shall award the contract to the bidder whose proposed tolls or fees or rentals or charges or period of concession in respect of models of contract (shortly indicated as BOT, BOO, CAO, DOT, ROT, ROO in Schedule II) and other similar schemes or proposed Schedule of amortization payments in respect of BT,BLT,BTO (as shortly indicated in Schedule II) and other similar schemes are determined to have the lowest present value.”

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 11

section 35 of the said Act which reads as under:-

“35. Grant of Concession:

(1) The concession shall be granted by a Public Infrastructure agency to a bidder who:- ….

(3) Immediately after the completion of the second stage evaluation, a decision on whether or not to award the contract shall be taken by the Board.

(4) If the Board takes a decision to award the contract, the Board shall issue to the proposed awardee, the notice of award immediately after such decision.

Board who has been authorised to enter into contract, receive the

consideration / toll fee / Concession fee etc. by whatever name it is so

called. That the assessee Board is an independent corporate entity. That

the payment, if any, was received by it was on its own behalf and not on

behalf of the Government of Punjab and further that consideration received

by the Board has not been deposited to the Government fund, rather, the

same has been used by the assessee Board for its own purposes.

the relevant clauses of the ‘Concession Agreement’ as well as the relevant

provisions of the PI (D&R) Act, 2002. Though on perusal of the agreement

it appears that the assessee Board is just a nodal agency as confirming

party and that the agreement has been entered into between the

Government of Punjab and the concessionaire, however, on the deeper

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 12

scrutiny of the relevant facts and of the actual activities and functions

carried out by the assessee Board, it reveals that, in fact, the aforesaid

agreement is just a paper document shown to be executed between the

Government of Punjab and the concessionaire. However, actually the

Assessee-Board, itself, is acting as the grantor in its independent capacity

on principle to principle basis.

question was asked to the Ld. Counsel for the assessee Shri Deepak

Aggarwal, who was being further assisted in the Court by officials of the

Board as to ‘if the Board was acting just as a nodal agency / confirming

party, in what capacity it had received the toll fee / concession fee / the

amount in question from the concessionaire’? Further, that as to whether

the amount received by it was deposited in the government fund or was

used by the Board itself? The Ld. counsel, however, sought time to get

appropriate instructions from the assessee Board. On the next day of

hearing, he along with other officials of the Board could not satisfactorily

explain in this respect, rather, it was admitted that it was the assessee’s

Board which was collecting the toll fee / concession fee from the

concessionaire and further that the amount so collected was deposited in

the own funds / used by the Board and was not deposited with the

Government of Punjab.

us from the agreement as well as from the relevant statutory provisions

that it was just a nodal agency of the Government and being so, was the

confirming party in the agreement and that the agreement, if any, has been

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 13

executed between the Government of Punjab and the concessionaire and

that it is the Government of Punjab which is entitled to grant the

concession and collect concession fee / toll fee by whatever name it is

called, however, we find that practically it is the assessee Board which has

collected the toll fee / concession fee and it is performing such day to day

activities as a grantor of the concession on principle to principle basis

and even the so collected toll fee / concession fee has been used / applied

by the Board for its own purposes / deposited in its own funds and has not

been deposited with the Government of Punjab.

Now coming to the statutory provisions, from the reading of the

entire statutory provisions of the Act, it reveals that the provisions of PI

(D&R) Act 2002, are all the more ambiguous, confusing and cryptic and

lead to unclear, indeterminate, vague and absurd interpretation. In some

of the provisions it has been mentioned that it is the Government of

Punjab which has to carry out development projects and that the Board

will act as a nodal agency, wherein, in the other provisions as discussed

above, the Board has been authorised not only for the identification of the

sites / roads / development of projects but also has been given the

responsibility of the development of the projects, calling for bids for

public private partnership, power to acquire hold, develop or construct

both immovable and immovable property as the Board deem necessary for

performance of any of its objects relating to the development of the

infrastructure sector or infrastructure projects. It is authorised to lease,

sell, exchange or otherwise make allotment of the property to the

concessionaire and to modify or rescind allotments including the right and

power to evict the allottees concerned on breach of any of the terms and

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 14

conditions of such allotment, enter into and perform all such contracts as

it may think necessary for performing any of its functions. A perusal of the

different provisions of the Act reveals that there is an overlapping,

confusion and interchanging of the powers and functions of the

Government and the Board and, hence, the provisions of the PI (D&R) Act,

2002 are not capable of being given a simple and plain meaning and

interpretation.

other surrounding circumstances, it is apparent and clear that the Board

has acted as a grantor of the concession on its own account on a principle

to principle basis with the ‘concessionaire’ and has been performing all

the functions actually and practically of the granter of the concession

agreement. At this stage, , we are of the view, that the irrespective of the

wordings of the concession agreement or the confusion and ambiguity

coming out of the provisions of the PI (D&R) Act 2002, the fact relevant

for determination of the present tax dispute is that the assessee Board had

collected the toll fee or to say Concession fee in its own capacity as an

independent body corporate and had used the funds for its own purposes

and activities, and as such, the assessee Board ( PDBI) falls under the

definition of Licensor and has acted as a Grantor of the licensee /contract

in the Toll Plaza to the concessionaire and has received from the licensee /

concessionaire the consideration for the award of said contract and, as

such, it was liable to collect tax at source as per the provisions of section

206C (1C)of the Act.

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 15

was not merely grant of usage of toll plaza, rather, the concessionaire was

responsible for the overall operation and maintenance of the project

facility, is concerned, the Ld. Counsel for the assessee could not establish

from the evidence or documents on record that as to why these agreement

be not treated as agreement for grant of license / toll rights as per the

provisions of section 206 C(1C) of the Act. A perusal of the License

/concession agreements relating to these appeals, considering the nature,

scope and ambit of the agreement and also considering the actual activity

carried on by the assessee PIDB, we are of the firm view that the

provisions of section 206C(1C) are squarely applicable to the case in hand.

Being held so, the assessee ‘PIDB. as per the law laid down by the

Hon'ble Punjab & Haryana High Court, is held to be liable to pay interest

as per the provisions of section 206C(7) and penalty under the provisions

of section 271CA of the Act.

the Tribunal, is decided against the assessee and in favour of the Revenue.

though the Hon'ble High Court has directed the Tribunal to decide the

appeals on the date of hearing i.e. 7.3.2019 or within 10 days

thereafter, however, due to inability of the counsel of the assessee

and official of the Department to answer the relevant queries raised

by the Bench on the date of hearing, an adjournment was sought and,

therefore, the case was adjourned to 13.3.2019. The case was

accordingly heard on 13.3.2019, however, the appeals could not be

ITA Nos. 880, 881 & 9-c-13, 788 to 7891-C-2014- Punjab Infrastructure Development Board, Chandigarh 16

decided within the stipulated time as considerable time has been taken to go through and consider the voluminous evidences, documents including contracts etc., and other relevant documents involved. However, every endeavor was made by the Bench to decide the appeal as promptly as possible. All the appeals are, therefore, disposed off accordingly.

Order pronounced in the Open Court on 29.03.2019.

Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member

�दनांक/Date: 29. 03.2019 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :

आदेशानुसार/ By order,

सहायक पंजीकार/ Assistant