DCIT(E),CIRCLE-2, KOLKATA, KOLKATA vs. M/S ASANSOL DURGAPUR DEVELOPMENT AUTHORITY, DURGAPUR

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : KOLKATA [Before Hon’ble Shri S.S. Godara, JM & Shri M.Balaganesh, AM ] I.T.A No. 1494/Kol/2016 Assessment Year : 2012-13 Asansol Durgapur Development Authority -vs- ITO(TDS), Durgapur [PAN: AAALA 0733 G] (Appellant) (Respondent) I.T.A Nos. 2185, 1452& 1453/Kol/2016 Assessment Years : 2011-12 & 2012-13 Asansol Durgapur Development Authority -vs- DCIT, Circle-1, Durgapur [PAN: AAALA 0733 G] (Appellant) (Respondent) I.T.A Nos. 1439 & 1440/Kol/2016 Assessment Years : 2011-12 & 2012-13 ACIT, Circle-1, Durgapur -vs- Asansol Durgapur Development Authority [PAN: AAALA 0733 G] (Appellant) (Respondent) I.T.A No. 2155/Kol/2016 Assessment Year : 2013-14 DCIT(E), Circle-2, Kolkata -vs- Asansol Durgapur Development Authority [PAN: AAALA 0733 G] (Appellant) (Respondent) For the Appellant : Shri Arnab Chakraborty, Advocate Shri Abhijit Biswas, Advocate For the Respondent : Shri S. Dasgupta, Addl. CIT DR

Date of Hearing : 18.06.2018 Date of Pronouncement : 29.06.2018

2 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 ORDER Per Bench:

The appeal of the assessee for the Asst Year 2012-13 in ITA No. 1453/Kol/2016 is directed against the order of the ld CITA in Appeal No. 18/CIT(A)/DGP/2015-16 dated 30.3.2016 against the order of the Learned Deputy Commissioner of Income Tax , Circle-1, Durgapur [ in short the ld AO] u/s 143(3) / 147 of the Act dated 27.3.2015.

The appeal of the revenue for the Asst Year 2012-13 in ITA No. 1440/Kol/2016 is directed against the order of the ld CITA in Appeal No. 18/CIT(A)/DGP/2015-16 dated 30.3.2016 against the order of the ld AO u/s 143(3) / 147 of the Act dated 27.3.2015.

The appeal of the assessee for the Asst Year 2011-12 in ITA No. 1452/Kol/2016 is directed against the order of the ld CITA in Appeal No. 22/CIT(A)/DGP/2015-16 dated 30.3.2016 against the order of the ld AO u/s 143(3) / 147 of the Act dated 16.3.2015.

The appeal of the revenue for the Asst Year 2011-12 in ITA No. 1439/Kol/2016 is directed against the order of the ld CITA in Appeal No. 22/CIT(A)/DGP/2015-16 dated 30.3.2016 against the order of the ld AO u/s 143(3) / 147 of the Act dated 16.3.2015.

3 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 The appeal of the assessee for the Asst Year 2013-14 in ITA No. 2185/Kol/2016 is directed against the order of the ld CITA in Appeal No. 48/CIT(A)/DGP/2016-17 dated 23.8.2016 against the order of the ld AO u/s 143(3) / 147 of the Act dated 31.3.2016.

The appeal of the revenue for the Asst Year 2013-14 in ITA No. 2155/Kol/2016 is directed against the order of the ld CITA in Appeal No. 48/CIT(A)/DGP/2016-17 dated 23.8.2016 against the order of the ld AO u/s 143(3) / 147 of the Act dated 31.3.2016.

As the issues involved in all these income tax cross appeals and and TDS cross appeals are identical, the same are taken up together and disposed off by this common order for the sake of convenience.

ITA No. 1439/Kol/2016 – Revenue Appeal – Asst Year 2011-12 ITA No. 1452/Kol/2016 – Assessee Appeal – Asst Year 2011-12 ITA No. 1440/Kol/2016 – Revenue Appeal – Asst Year 2012-13 ITA No. 1453/Kol/2016 – Assessee Appeal – Asst Year 2012-13 ITA No. 2155/Kol/2016 – Revenue Appeal – Asst Year 2013-14 ITA No. 2185/Kol/2016 – Assessee Appeal – Asst Year 2013-14 2. The issues involved in these appeals are squarely dependent on the examination of exemption u/s 11 of the Act in as much as the registration u/s 12AA of the Act has been granted by the Learned Commissioner (Exemptions) [in short the ld CIT(E)] with effect from 1.4.2009. Admittedly this registration u/s 12AA of the Act was not available to the ld AO while framing the assessment. In view of subsequent development by way of grant of registration u/s 12AA of the Act, the entire income of the assessee is to be computed treating the assessee as a charitable organization and compliance of conditions prescribed in sections 11 to 13 of the Act need to be made by the assessee which requires factual verification and examination by the ld AO. The other grounds raised in these appeals would squarely depend upon the core issue of examination of

4 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 exemption u/s 11 of the Act. We find that this tribunal in assessee’s own case for the Asst Years 2009-10 and 2010-11 in ITA No. 1328/Kol/2012 & 500/Kol/2016 dated 11.1.2017 had remanded the appeals on the similar facts and circumstances to the file of the ld AO for examination of applicability of exemption u/s 11 of the Act. The operative portion of the said order is reproduced hereunder for the sake of convenience :- “6. The additional ground raised by the assessee is that the Ld. CIT(A) erred in holding that the provision of section 11 of the Act are not applicable to the assessee as it is not registered u/s 12A of the Act. 7. At the outset, we find that the assessment was completed for the year under consideration on 29.12.2011 on the presumption that the assessee is not entitled for exemption u/s 11 of the Act. However, on perusal of the records we find that the Ld. CIT(E) has granted registration certificate u/s 12AA of the Act vide its order dated 16th November, 2016. It is also important to note that the registration was granted w.e.f. 01.04.2009. In view of the above we find that the assessment order has been passed by the AO without considering the fact that the assessee is entitled for exemption u/s 11 of the Act as this fact has not been considered by the AO at the time of assessment. We are inclined to restore this ground of appeal to the AO for fresh adjudication as per law with the direction to frame the assessment u/s 143(3) of the Act de novo. Hence this additional ground of appeal of the assessee is allowed for statistical purposes.”

2.1. Respectfully following the same, we deem it fit and appropriate , in the interest of justice and fair play, to set aside these appeals to the file of the ld AO for de novo adjudication of all the issues in the light of applicability of exemption u/s 11 of the Act. We make it clear that no opinion is hereby given in respect of various grounds raised by the assessee as well as the revenue on merits. The ld AO had to make de novo adjudication of all the issues while examining the applicability of exemption u/s 11 of the Act . The assessee is at liberty to adduce fresh evidences and documents in support of its contentions. Accordingly, the grounds raised by the assessee as well as the revenue in this regard are allowed for statistical purposes.

ITA No. 1494/Kol/2016 – Asst Year 2012-13 – Assessee Appeal

5 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 3. The issue involved in this appeal is as to whether the assessee could be treated as an assessee in default u/s 201 / 201(1A) of the Act in respect of various payments in the facts and circumstances of the case.

3.1. This issue is squarely covered in favour of the assessee in its own case by the order of this tribunal for the Asst Years 2010-11 and 2011-12 in ITA Nos. 279 & 280/Kol/2016 dated 8.9.2017. The facts of the case and the decision rendered thereon are as under:- 2. The first issue to be decided in these appeals is as to whether the assessee could be treated as an assessee in default u/s 201 / 201(1A) of the Act in respect of payments released to Gujarat Enviro Protection and Infrastructure Limited [ in short GEPIL] , in the facts and circumstances of the case. 2.1. The brief facts of this issue is that a TDS survey u/s 133A of the Act was conducted in the office premises of assessee simultaneously at Durgapur as well as at Asansol on 12.10.2012. During the course of survey proceedings, it was found that the books of accounts from financial year 2009-10 onwards had not been audited and accounts were yet to be finalized. Number of documents were impounded bearing identification marks ADDA -01 to ADDA – 40 (impounded from Durgapur office) and ADDA-A-01 to ADDA-A-11 (impounded from Asansol office). The assessee submitted a quarter wise written submissions with regard to eligibility of deduction of tax at source and its remittances thereon for each of the expenses debited in its accounts vide its letters dated 20.12.2012 and 3.1.2013. From the same, the ld AO observed that in the fourth quarter of financial year 2009-10, the assessee had made payment of Rs 2,60,00,000/- (out of total contribution of Rs 9,60,00,000/- as per the agreement) to GEPIL , an enviro- infrastructure company, entrusted with the job of Municipal Solid Waste Management, without deduction of tax at source. Similarly the assessee made payment in the second quarter of financial year 2010-11, a sum of Rs 3,60,92,878/- to GEPIL towards the same purpose. When confronted with the non-applicability of TDS on the same, the assessee explained that in the fourth quarter, certain payments were made to GEPIL, an enviro-infrastructure company with whom ADDA and other five Urban Local Bodies (ULB) namely, Durgapur Municipal Corporation [in short DMC] , Asansol Municipal Corporation [ in short AMC] , Raniganj Municipality [in short RM] , Jamuria Municipality [in short JM] and Kulti Municipality [in short KM] , had entered into a concession agreement with GEPIL following a bidding procedure for development of Municipal Solid Waste Processing and Engineered Sanitary Landfill facilities under their jurisdiction and provided initial contribution of Rs 2,60,00,000/- as initial contributory support during the concerned financial year. The assessee (ADDA) explained that it was merely associated as a Nodal Agency which only released the contribution of Rs 9,60,00,000/- to GEPIL out of the total cost involved for implementation of Municipal Solid Waste Management Project under the designated areas of 5 ULBs on a Build, Own, Operate & Transfer (BOOT) basis and the same was 5

6 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 in no way related to any payment for any professional service. The nodal agency (ie the assessee) would be responsible for supervision and liaison during construction period as well as during Operation & Maintenance (O&M) period which include releasing approvals, handing over sites, appointment of project engineer to ensure minimum supply of Municipal Solid Waste by ULBs to the concessionaire (i.e GEPIL) , to ensure that the ULBs supply minimum guaranteed quantity of Municipal Solid Waste to GEPIL, payments are released in time to GEPIL, due compliance of Municipal Solid Waste by GEPIL etc. 2.2. The ld AO on perusal of the concession agreement, bid proposal and written submissions of the assessee observed as under:- 1. That ADDA as a Nodal Agency had awarded a contract under the nomenclature “Concession Agreement” to M/s GEPIL for execution of a job involving specific professional-cum-technological expertise for sustainable & better environment through Solid Waste Management in the area under its jurisdiction where the Nodal Agency had retained every possible control over the development and for the purpose of reduction of cost of the project it provided and initial contribution of Rs. 9.60 crores only on submission of progressive claim for expenditure incurred. In this fourth quarter of the F.Y. 2009-10, it made a payment of Rs. 2.60 crores towards the same. Further, in the AR’s own submission, “Grants/ subsidies are always given to an organization having sufficient professional expertise otherwise proper utilization of grant is not feasible and that grant/initial contribution was provided by ADDA only to reduce the cost of waste management.” So, to make the project feasible, the so-called grant/initial contribution was provided to M/s GEPIL with the sole purpose of rate reduction towards the cost of the project to such an entity having professional-cum-technological expertise in this kind of project. Further, as per Para 14.2.4 of the Bid Document, “The mobilization of finance for the execution of the project shall be the responsibility of the Private Partner within a specified time frame. The public partner is in no way shall be responsible for funding the capital expenditure; over run in construction cost and operational expenses. All the required personnel shall have to be deployed by the private developer at their own cost.” Hence, the AR’s argument that as the company can create charges for getting finance from the Banks/FIs and that to with the necessary No Objection Certificate from the ADDA and the ULBs is attributing some short of ownership on M/s GEPIL is not at all tenable as those clauses are there in the agreement to enable M/s GEPIL to arrange for the finance, if necessary, as the project is the self financing one. Also GEPIL is not a body whose income is exempted under any provisions of Income Tax Act, 1961. So all the arguments as put forward by the AR of the ADDA regarding non-deduction of tax at source over the payment of Rs. 2.60 crores, during the fourth quarter of the F.Y. 2009-10 does not hold any ground here. 6

7 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 Hence, it can be safely concluded that tax was to be deducted u/s 194J of the Act on the total payment of Rs. 2.60 crore in the fourth quarter of F.Y. 2009-10.” The ld AO observed that non-deduction of tax at source on the same would make the assessee as an ‘assessee in default’ in terms of section 201(1) of the Act and would be invited with consequential interest u/s 201(1A) of the Act. 3. The next issue to be decided in these appeals is as to whether the assessee could be treated as an assessee in default u/s 201 / 201(1A) of the Act in respect of payments made towards lift installation charges , in the facts and circumstances of the case. 3.1. The ld AO observed that in the financial years 2009-10 and 2010-11, the assessee made three payments for the lift installation charges i.e Rs 18,870/- on 12.10.2009 , Rs 1,68,550/- on 8.3.2010 and Rs 1,00,000/- during financial year 2010-11 totalling to Rs 2,87,420/- . He observed that as per the Act, tax is to be deducted on the date on which the bill is raised or payment is made whichever is earlier. Accordingly he observed that the TDS was to be made on the total cost of lift installation in the first quarter of financial year 2009-10. The assessee replied that payments were made to OTIS as and when bills are raised by them and it is not a deferred payment by assessee against the bill raised by OTIS on 12.10.2009. Hence there is no error committed by the assessee in this regard. The ld AO however observed that the subject mentioned payments would fall under the ambit of provisions of section 194J of the Act on the total cost of Rs 2,87,420/- in the first quarter of financial year 2009-10 and non-deduction of the same would make the assessee as an ‘assessee in default’ in terms of section 201(1) of the Act and would be invited with consequential interest u/s 201(1A) of the Act. 4. The next issue to be decided in these appeals is as to whether the assessee could be treated as an assessee in default u/s 201 / 201(1A) of the Act in respect of payments made to Durgapur Ex Servicemen Welfare Security in Asst Year 2011-12 , in the facts and circumstances of the case. 4.1. The brief facts of this issue is that the ld AO observed that in the first quarter of financial year 2010-11, the assessee made payment amounting to Rs 9,03,541/- to Durgapur Ex Servicemen Welfare Security where no tax was deducted at source. The assessee stated that the said agency was having PAN but the same was mistakenly not quoted by the assessee in the TDS returns. The ld AO however concluded that the said payment would suffer TDS at the rate of 20% in the absence of PAN. 5. The ld CITA observed that the assessee was covered by exemption u/s 10(20A) of the Act prior to its omission with effect from 1.4.2003. He observed that the assessee is not registered u/s 12A of the Act and hence its income is not exempt u/s 11 of the Act, even if the objects found to be carried out by the assessee are charitable in nature. Hence the income of such organizations shall be computed in the same manner as income of commercial organizations. The assessee contended that the payment made to GEPIL was out of Central Government grant on behalf of GEPIL which was routed through assessee as nodal agency and assessee did not enter into any agreement and it was only 7

8 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 monitoring the utilization of grant. The ld CITA on the contrary observed that : (1) Operational expenses – All the required personnel shall have to be deployed by the private developer at their own cost ; (2) Further as per Para 14.2.4. of the Bid Document, “the mobilization of finance for the execution of the project shall be the responsibility of the private partner within a specified time frame. The public partner is no way shall be responsible for funding the capital expenditure, over run in construction cost ; (3) Moreover, as the company can create charges for getting finance from banks / FIs and that too with the necessary No Objection Certificate from assessee and the ULBs doesn’t attribute any ownership on GEPIL ; (4) That assessee as a nodal agency had awarded a contract under the nomenclature ‘Concession Agreement’ to GEPIL for sustainable and better environment through Solid Waste Managemetn in the area under its jurisdiction where the nodal agency had retained every possible control over the development ; (5) GEPIL is not a body whose income is exempted under any provisions of the Income Tax Act, 1961 ; (6) Grants / subsidies are always given to an organization having sufficient professional expertise otherwise proper utiisation of grant is not feasible . He observed that the assessee had submitted that in order to make the project feasible, the so called grant was provided to GEPIL with the sole purpose of rate reduction towards the cost of the project to such an entity having professional cum technological expertise in this kind of project. The ld CITA also observed that GEPIL had not shown this receipt from the assessee as a revenue receipt rather it had reflected the same under capital reserve. Hence this is not a case where the payee had paid its due taxes. He observed that GEPIL had performed on the basis of contract and therefore amount paid to them was revenue in nature in their hands and hence the assessee is obligated to deduct tax at source on the payments made to them. 5.1. Similarly for the other payments made by the assessee, the ld CITA confirmed the action of the ld AO by treating the assessee as ‘assessee in default’ u/s 201 / 201(1A) of the Act, without having any discussion or giving any finding thereon. 6. Aggrieved, the assessee is in appeal before us on the following grounds:- I.T.A. No. 279/Kol/2016 for assessment year 2010-11 A. For that the CIT(Appeals) has erred in confirming the finding of the Assessing Officer that in respect of the amount paid by the appellant to Gujrat Environment Protection and Infrastructure Limited (in short GEPIL) under the Concession Agreement dated December 23,2008, as and by way of disbursement of a part of the grant provided by the Government of West Bengal, Urban Development Department, Kolkata under the Jawaharlal Nehru National Urban Renewal Mission (in short JNNURM), tax was deductible under Section 194J of the Income Tax Act, 1961 as payment of fees for professional or technical services by the appellant. Section 194J has no application in the undisputed facts of the instant case. B. For that the CIT(Appeals) has erred in confirming the erroneous finding of the Assessing Officer increasing the amount of tax deductible at source under Section 194C 8

9 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 of the Act for the 4th Qr. of A.Y. 2010-11 from Rs. 18,404/- to Rs. 33,307/-. There is no discussion or finding on the issue in the said order. C. For that the CIT(Appeals) has erred in holding that the Assessing Officer had rightly disallowed the amounts involved as per the provisions of Section 40(a)(ia) of the Act. D. For that the CIT(Appeals) has erred in confirming the increase in interest liability by Rs. 77,593/- by the Assessing Officer and that too without any discussion or finding. In the facts and circumstances of the instant case there being no liability to deduct tax under Section 194J of the Act by the appellant, there can be no increased demand of interest. I.T.A. No. 280/Kol/2016 for assessment year 2011-12 A. For that the CIT(Appeals) has erred in confirming the finding of the Assessing Officer that in respect of the amount paid by the appellant to Gujrat Environment Protection and Infrastructure Limited (in short GEPIL) under the Concession Agreement dated December 23,2008, as and by way of disbursement of a part of the grant provided by the Government of West Bengal, Urban Development Department, Kolkata under the Jawaharlal Nehru National Urban Renewal Mission (in short JNNURM), tax was deductible under Section 194J of the Income Tax Act, 1961 as payment of fees for professional or technical services by the appellant. Section 194J has no application in the undisputed facts of the instant case. B. For that the CIT(Appeals) should have held and erred in not doing so that the finding of the Assessing Officer that deduction of tax in respect of payment towards lift installation cost in a building is a works contract and hence deduction of tax for payment therefore had to be under Section 194C of the Act and not under Section 194J thereof. C. For that the CIT(Appeals) has erred in upholding the finding of the Assessing Officer that due to alleged non-availability of PAN No. of Durgapur Ex Services Welfare Association tax is required to be deducted at source @ 20% in respect of payments made to the said Association and not @ 2% under Section 194C of the Act. D. For that the CIT(Appeals) has erred in holding that the Assessing Officer had rightly disallowed the amounts involved as per the provisions of Section 40(a)(ia) of the act. E. For that the CIT(Appeals) has erred in confirming the demand of interest by the Assessing Officer, there being no liability to deduct tax under Section 194J of the Act by the appellant in the instant case, contrary to what has been erroneously held by the Assessing Officer. 7. We have heard the rival submissions and perused the materials available on record. We find that for development of an Integrated Municipal Solid Waste Management for ULBs of Asansol, Durgapur, Ranigunj , Jamuria and Kulti Urban area on BOOT transfer basis, a Concession Agreement was entered into on 23.12.2008 between Durgapur Municipal Corporation, Asansol Municipal Corporation, Raniganj Municipality, Jamuria Municipality, Kulti Municipality and the asesseee, of the one 9

10 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 part, with GEPIL. The Ministry of Environment and Forests, Government of India, formulated the Municipal Solid Wastes (Management and Handling) Rules, 2000 which made it mandatory for every municipal authority to implement a scientific solid waste management system wherein the municipal solid waste is duly processed and the residual inert / non-biodegradable sold wastes disposed in an Engineered Sanitary Landfill. The Project under the said agreement was, inter alia, included in JNNURM. Accordingly from time to time, funds were made available as and by way of grants from the Government of India and budgetary support from the State Government and contribution from ULBs as per ratio suggested under JNNURM (i.e 50:20:30). For disbursement of such grants, the Government of West Bengal appointed Kolkata Metropolitan Development Authority (KMDA) as the nodal agency for the state for JNNURM. Funds were made available under JNNURM schemes to KMDA for distribution and release thereof to the concerned projects. KMDA would make available the funds to the assessee who in turn would disburse the same to the ‘Concessionaire’ i.e GEPIL. Now the short question that arises for our consideration to address the dispute before us is whether the amounts disbursed by the assessee to GEPIL in both the years being grants received through KMDA from the State Government under JNNURM for the subject project would come under the purview of provisions relating to deduction of tax at source under the Act. We find that the ld AR drew our attention to the relevant provisions of The West Bengal Town and Country (Planning and Development) Act, 1979 as under:-

Section 11 – Constitution of Planning Authority and Development Authority’ (1) As soon as may be , after declaration of an area as a Planning Area, the State Government may, by notification, constitute for the purpose of this Act a Planning Authority for that area or a Development Authority in respect of the Plannign Area or a part of it. (2) A Planning Authority or a Development Authority , if it is not a local authority or a Government department or agency, shall be a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of property , both movable and immovable, and to enter into contracts and shall by its corporate name sue and be sued. (3) Every Planning Authority or Development Authority constituted under sub-section (1) shall consist of a Chairman and not more than thirteen but not less than seven other members to be appointed by the State Government. (4) The State Government may appoint a local authority or any other authority or Corporation (statutory or otherwise), or any officer of the State Government, as the Planning Authority or the Development Authority for the area within the jurisdiction of that authority. (5) The provisions of sub-section (3) of this section and sections 12, 14 and 15 shall not apply to a Planning Authority or a Development Authority appointed under sub-section (4) and the provisions of this Act by which such authority is constituted shall continue to apply in respect of the area within the jurisdiction of that authority.

11 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 7.1. We find that the assessee has been constituted under sub-section (1) of section 11 above vide Notification No. 1881/T&CP/1R-6/80 dated 17.3.1980 which is enclosed in page 3 of the second paper book. We find that the key officials of the assessee were appointed by the Government of West Bengal, Urban Development Department, Town & Country Planning Branch as evident from page 5 of the second paper book. We find that the grants are given to GEPIL through the assessee by the State / Central Government. The assessee is merely a disbursing authority and is required to oversee the proper utilization of the funds given for and on behalf of the ULBs of the State Government. We also find that the State Government also directs the assessee to make use of the funds collected such as land premium , ground rent, etc on behalf of the Government and according permission for the same to be invested in bank for onward utilization of its earmarked purposes. This is enclosed in page 4 of the second paper book. All these documents clearly prove that the assessee is acting only at the behest of the State Government and accordingly could be safely concluded that it is only an agent of the Government. Even the financial statements of the assessee reflect that the grants provided by Government of West Bengal Urban Development Department under Jawaharlal Nehru National Urban Renewal Mission ( in short JNNURM) scheme through the Kolkata Metropolitan Development Authority, that these amounts are specifically retained in earmarked accounts and eventually reduced as and when they are disbursed for its intended purposes. Hence it could be safely concluded that the assessee is only a pass through agency of these funds and had merely acted as a custodian of funds belonging to the Government. 7.2. Now let us examine the applicability of provisions of section 194C / 194J of the Act with regard to the aforesaid payments. The grant paid under the JNNURM scheme by the State Government in the instant case to GEPIL, disbursed through the assessee in a self financing project under the Concessionaire Agreement, is not a payment which the assessee is obliged or responsible for paying to GEPIL and as such the primary requirement of section 194C or 194J of the Act squarely fails in the instant case, as admittedly the assessee is not the person responsible for payment within the meaning of provisions of Chapter XVIIB of the Act. Hence we hold that the assessee is not obligated to deduct tax at source on the subject mentioned payments and hence consequentially the assessee could not be invited with liability u/s 201 and 201(1A) of the Act in respect of payments made to GEPIL.

7.3. We find that in the case of CIT vs Pandavpur Sahakara Sakkara Kharkhane Ltd (1992) 198 ITR 690 (Kar) , it was held that the amount set apart and meant for utilization only as per the directions of the State Govt. represents diversion of income and the same cannot be credited. It was held that the amount so set apart as per the statutory obligation is not liable to tax in the hands of the assessee. The SLP of the department before the Hon’ble Supreme Court against the above decision was also dismissed vide (1992) 195 CTR (SC) 136. 7.4. We also find that the co-ordinate bench of Ahmedabad Tribunal in the case of The /Ahd/tant Geologist , Geology & Mining Dept. vs ITO TDS in ITA No. 810/Ahd/2010 for 11

12 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 Asst Year 2008-09 dated 10.7.2013 had addressed a similar issue. The facts before the Ahmedabad Tribunal was that the assessee in that case had paid Rs 6,93,16,000/- to Gujarat Mineral Development Corporation (GMDC) and Gujarat Mineral Research & Development Society (GMRDS) for construction of Marble Park for Artisans and using of mineral without deducting tax at source u/s 194C of the Act. A show cause notice was issued to that assessee to explain as to why demand may not be raised u/s 201(1) and interest may not be charged for the above default u/s 201(1A) of the Act. The assessee in that case replied that since the amounts paid to the aforesaid parties are grant-in-aid, therefore, the assessee is not required to deduct tax at source on such payment. The assessee also submitted in that case, that its role was intermediary whose responsibility was to make proposal to the concerned Government Department for release of funds to GMDC and GMRDS and for monitoring and controlling the expenditure incurred by it. It was held as under:- 7. Further, as pointed by the learned AR, it is evident that the state government had made resolution for providing grant-in-aid to GMDC and GMRDS for Rs 4,78,76,000/- and Rs 2,15,00,000/- respectively and these grant-in-aid were routed to the above said corporations through the assessee. Therefore, these are not payments made for carrying out any work; however, instead they are grant-in-aid given to the corporation through the assessee by the state government. These facts are evident from the paper books filed by the assessee viz. page no. 18 to 29. Therefore, the provisions of section 194C of the Act would not be attracted in the assessee’s case and consequentially the provisions of section 201(1) and 201(1A) of the Act will also not be applicable. Therefore, the ground raised by the assessee is allowed in its favour.

7.5. We find that the assessee had acted only as a custodian for disbursement of funds for earmarked purposes as a nodal agency for the smooth implementation of the Municipal Solid Waste Management in the designated areas. Though the funds continue to remain with the assessee, the ownership or utilization does not vest in it. Hence we hold that when these funds are disbursed to GEPIL, there cannot be any obligation of deduction of tax at source as the payment is effectively made by the Government through the assessee. Accordingly the grounds raised by the assessee in this regard for both the years are allowed. 8. With regard to deduction of tax at source u/s 194C of the Act for the fourth quarter of Asst Year 2010-11, the same has been enhanced from Rs 18,404/- to Rs 33,307/- by the ld AO. We find that this enhancement of Rs 14,903/- has been made without any supporting evidence by the ld AO . We find that the assessee has not been confronted with this issue of enhancement by clearly pointing out the error committed by the assessee in this regard. Hence in the interest of justice and fair play, we deem it fit and appropriate, to remand this issue to the file of the ld AO for adjudication afresh, in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard in this regard. Accordingly, the ground raised in this regard by the assessee is allowed for statistical purposes.

13 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 9. With regard to the interest liability of Rs 77,593/- which has been enhanced by the ld AO, the ld AR stated that the assessee had deposited the admitted tax of Rs 6,70,224/- and the same was duly communicated to the ld AO vide letter dated 3.1.2013 (enclosed in paper book). Here also this additional interest liability has been fastened on the assessee by the ld AO without any speaking order. Hence in the interest of justice and fair play, we deem it fit and appropriate, to remand this issue to the file of the ld AO for adjudication afresh, in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard in this regard. Accordingly, the ground raised in this regard by the assessee is allowed for statistical purposes. 10. With regard to the payment amounting to Rs 9,03,541/- made by the assessee to Durgpaur Ex-Services Welfare Association in the first quarter of Financial Year 2010- 11 (Asst Year 2011-12) , the ld AO held that due to non-availability of PAN of the said party, tax is required to be deducted at source @ 20% and not 2% u/s 194C of the Act. The ld AR submitted that the ld AO had failed to take into consideration that TDS returns submitted for the past periods contained the correct PAN of the said party and hence the assessee has correctly deducted tax at source @ 2% u/s 194C of the Act. In the interest of justice and fairplay, we deem it fit and appropriate, to remand this issue to the file of the ld AO, to verify the earlier TDS returns and if the contention of the assessee is found to be correct, then the appropriate relief should be granted to the assessee thereon. Accordingly, the ground raised in this regard by the assessee is allowed for statistical purposes. 11. With regard to the payment made towards lift installation charges, the assessee had deducted tax at source u/s 194C of the Act, but the ld AO held that the same would have to be deducted at higher rate u/s 194J of the Act. We find that this issue is now squarely covered by the Constitution Bench of the Hon’ble Supreme Court in the case of Kone Elevator India (P) Ltd vs State of Tamil Nadu reported in (2014) 7 SCC 1 dated 6.5.2014. The relevant Head Notes of the said judgment are reproduced hereunder:- Sales tax and VAT – Works Contract – Transaction for supply and installation of lift in a building – Nature of – “Works Contract” or “contract for sale of goods” – Determination of – Composite Contract for supply and installation of lifts , held (per majority) , has to be treated as a works contract and not as a sale of goods / chattels simpliciter – However, if there are two contracts, one for purchase of components of the lift and another for installation of the lift, then the first contract could be a contract of sale and the second a contract for labour and service – In the present cases all the contracts concerned for installation of lifts are composite contracts , hence, held ( per majority) , they are works contracts

14 ITA No.1494,2185,1440,1453,1439,1452&2155/Kol/2016 Asansol Durgapur Development Authority. A.Yrs. 2012-13,13-14 & 11-12 13. The other ground raised by the assessee is with regard to chargeability of interest u/s 201(1A) of the Act, which is only consequential in nature and does not require any specific adjudication.

Accordingly the grounds raised by the assessee are allowed for statistical purposes.

Order pronounced in the Court on 29.06.2018

Sd/- Sd/- [S.S. Godara] [ M.Balaganesh ] Judicial Member Accountant Member

Dated : 29.06.2018 SB, Sr. PS Copy of the order forwarded to: 1. Asansol Durgapur Development Authority, 1st Administrative Building, City Centre, Durgapur-713216 2. i) ITO(TDS), Durgapur ii) DCIT, Cir-1, Durgapur iii)ACIT, Cir-1, Durgapur Income Tax Department, Aayakar Bhawan, City Centre, Durgapur-713216 iv) DCIT(E), Circle-2, Kolkata, 10B, Middleton Row, 5th Floor, Kolkata-700071. 3..C.I.T.- 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.