Commissioner Of Income Tax (Tds) - 2 v. National Highway Authority Of India

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment reserved on: 17 September 2024 Judgment pronounced on: 12 November, 2024 + ITA 1145/2017 COMMISSIONER OF INCOME TAX (TDS) - 2.....Appellant Through: Mr. Sanjay Kumar & Ms. Easha, Advs. Advs. versus NATIONAL HIGHWAY AUTHORITY OF INDIA .....Respondent OF INDIA .....Respondent Through: Mr. Santosh Kumar, St. Counsel with Mr. Adithya Ramani & Mr. Devansh Malhotra, Advs. with Mr. Adithya Ramani & Mr. Devansh Malhotra, Advs. + ITA 159/2021 COMMISSIONER OF INCOME TAX (TDS)-2.....Appellant Through: Mr. Sanjay Kumar & Ms. Easha, Advs. Advs. versus NATIONAL HIGHWAY AUTHORITY OF INDIA OF INDIA .....Respondent Through: Mr. Santosh Kumar, St. Counsel with Mr. Adithya Ramani & Mr. Devansh Malhotra, Advs. with Mr. Adithya Ramani & Mr. Devansh Malhotra, Advs. CORAM:HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA J U D G M E N T YASHWANT VARMA, J. 1.The Commissioner of Income Tax (TDS)impugns the judgment rendered by the Income Tax Appellate Tribunal[1] on 10 April 2017 1 Tribunal ITA 1145/2017 & other connected matter Signature Not Verified and which has principally held that the capital grant subsidy given by the respondent-assessee to its Concessionaires would not be subject to a withholding tax as contemplated under Section 194C of the Income Tax Act, 1961[2]. 2.We had upon hearing learned counsels for respective sides on 19 March 2024 admitted the appeal on the solitary issue of deduction of tax at source. The said order is reproduced hereinbelow:- “1. Having heard Mr. Sanjay Kumar and Mr. Santosh Kumar, leamed counsels appearing for respective sides, we are of the considered opinion that the appeals would merit further consideration. 2. We note that undisputedly the viability gap funding was part of a prescription of the concession agreement itself. It is in the aforesaid context that, prima facie, we find ourselves unable to sustain the view taken by the Income Tax Appellate Tribunal [„ITAT‟] which has observed in paragraph 7 that the said payment was not in discharge of a contractual obligation. We, consequently, admit these appeals on the following question of law: - A. Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that the assessee was not liable to deduct tax at source from non-refundable sums paid under any name by NHAI to the Concessionaries particularly when such sums have been paid as per Concession Agreement for securing rights of NHAI? 3. List again on 15.07.2024.” 3.Shorn of unnecessary details, it would be the following facts which would merit being noticed for the purposes of disposal of the present appeals. For the sake of brevity, we propose to take note of the facts as they emanate from ITA 1145/2017. The respondent-assessee, 2 Act ITA 1145/2017 & other connected matter Signature Not Verified the National Highways Authority of India[3], is a body constituted under the National Highways Authority of India Act, 1988[4]and charged with the responsibility of development, maintenance and operation of National Highways and associated facilities. It functions through various Project Implementation Units[5] which are spread out across the length and breadth of the country and obligated to oversee and administer projects being undertaken by the NHAI. 4.As per the disclosures made in the appeal, the PIUs‟are entrusted with funds made available by the concerned Ministry in the Union Government and which are routed through the Head Office of the NHAI to those units. We are in the present case concerned with the capital grant subsidy which has been disbursed by the NHAI to a Concessionaire who was awarded the project work on Build-Own-Operate-Transfer[6] basis. 4.As per the disclosures made in the appeal, the PIUs‟are entrusted with funds made available by the concerned Ministry in the Union Government and which are routed through the Head Office of the NHAI to those units. We are in the present case concerned with the capital grant subsidy which has been disbursed by the NHAI to a Concessionaire who was awarded the project work on Build-Own-Operate-Transfer[6] basis. 5.In terms of an order framed by the Assessing Officer[7] on 28 March 2012, it was held that NHAI had failed to comply with the obligation to deduct taxes in terms of Section 194C on the capital grant subsidy released by it to its Concessionaires. Aggrieved by the aforesaid order, NHAI is stated to have preferred an appeal before the Commissioner of Income Tax (Appeals)[8] and which in terms of its order of 20 May 2013 affirmed the view as expressed by the AO. 3 NHAI 4 NHAI Act 5PIUs‟ 6 BOOT 7 AO 8 CIT(A) ITA 1145/2017 & other connected matter Signature Not Verified Page 3 of 50 6.The NHAI, being aggrieved by the aforesaid decision, had approached the Tribunal and which appeal has come to be allowed in terms of its order dated 10 April 2017 for Assessment Year[9] 2010-11, leading to the institution of the present challenge by the appellant. 7.The Tribunal has held that in terms of the Concession agreements, the Concessionaires develop roads and highways based on the Public Private Partnership[10] model and in terms of which the construction of expressways and roads is undertaken by the Concessionaire at its own risk and cost. It was this decision which was followed by the Tribunal in its decision dated 18 March 2021 rendered for A.Y. 2011-12 and which forms the subject matter of challenge in ITA 159/2021. 8.In terms of the concession agreements, the Concessionaires are obliged to develop and maintain the highways during the concession period and are also enabled to charge and collect user fee as per rates prescribed by the Union Government. The capital grant subsidy is explained by NHAI as essentially being financial support which is rendered by it to the Concessionaire in relation to projects where, on account of various factors, the revenue that the Concessionaire generates is less than the expected projection or where it may be found that the Concessionaire would be unable to recover the total project cost. In order to attend to this viability gap, NHAI provides funding to the Concessionaire as a capital grant on the basis of a competitive 9 A.Y. 10 PPP 10 PPP ITA 1145/2017 & other connected matter Page 4 of 50 bidding process. According to the disclosures made before the Tribunal, the bidders are selected for the award of the “Build, Operate Transfer”[11] contracts based on the lowest viability gap funding requirement bid for. 9.NHAI had before the Tribunal explained the nature of BOT contracts as envisaging the Concessionaire to be recognized as the owner of the assets which come to be created, conferred with the right to collect toll over the concession period and at the end of which the highway would revert to the NHAI. It had contended before the Tribunal that the capital grant subsidy is essentially in the nature of financial support which is extended by NHAI and is not liable to be viewed as a revenue receipt in the hands of the Concessionaire. 10.NHAI had averred that in terms of the obligations placed under the BOT contract, the Concessionaire is obliged to construct appropriate buildings, superstructures, toll plazas, drains, bridges, tunnels, tube wells, flyovers and create facilities for the benefit of users of the expressway. According to the respondent-assessee, since the capital grant support could not possibly be viewed as a sum paid to the Concessionaire for carrying out a „work‟, the provisions of Section 194C were clearly inapplicable. 11.The Tribunal while dealing with the nature of a BOT contract and the statutory obligations that are placed upon a Concessionaire rendered the following observations:- 11 BOT Signature Not Verified Page 5 of 50 10.NHAI had averred that in terms of the obligations placed under the BOT contract, the Concessionaire is obliged to construct appropriate buildings, superstructures, toll plazas, drains, bridges, tunnels, tube wells, flyovers and create facilities for the benefit of users of the expressway. According to the respondent-assessee, since the capital grant support could not possibly be viewed as a sum paid to the Concessionaire for carrying out a „work‟, the provisions of Section 194C were clearly inapplicable. 11.The Tribunal while dealing with the nature of a BOT contract and the statutory obligations that are placed upon a Concessionaire rendered the following observations:- 11 BOT Signature Not Verified Page 5 of 50 “5.Having gone through the orders of the authorities below, we find that assessee is the head office having its project implementation unit (PIUs) at several state head-quarters and different places all over India. The head office is run by Ministry of Surface Transport, Transport Bhawan, New Delhi. The PIUs get the funds from Ministry through head office and HAI disburse the funds to different concessionaries, who are the private limited companies firms etc. Who get the project work on built-own-operate-transfer (BOOT) basis, then transfer the project to Government of India after -a period of 12/15years. Thus it is the model of publicprivate partnership between private business concerns and Government of India so that the role of private companies in nation building/infrastructure is enhanced and utilized by the Government of India to the maximum possible extent. The private business concerns also get their benefits of employing their man power along with resources and nation‟s wealth is created in this manner with modern infra-structure facilities like high quality roads, as found in developed countries. The Assessing Officer applying the provisions of section 194C of the I. T. Act on capital grant subsidy given by the assessee to its concessionaries as per concession agreement and creating it to be a contractual payment, held the grant given by the assessee as a contract payment and thus, TDS should be deducted on the capital grant. The contention of the assessee, on the other hand, remained that the private concessionaries are owners of the project for 15 years and they receive the capital grants from the assessee on which no TDS should be deducted. It was submitted that there are hundred and sixteen PIUs all over India, who disburse the money at project level being branch office of head office of NHAI and the branch offices (PIUs) are having their own TAN number and, therefore, there should not be double deduction of TDS at head office level, PIU level. It was submitted that the relation between head office of the assessee and PIUs is like that 'of head office and branch office. Since PIUs have done their duty of tax deduction at source at different places all over India, there should not be double deduction of TDS at assessee‟s head office level. The assessee thus claimed that it should get full relief on the issue. It was pointed out that the assessee had disbursed capital grants to different concessionaires during the financial year which was about 2% to 40% of total project cost. It was argued that since the capital grant is given by the Government through the assessee as a capital work in progressthere should not be any TDS under section 194C on this capital grant. 5.1. Some undisputed facts in the present case are that the concessionaire is constructing the toll plaza at its own risk for owning and maintaining the same for a period specified in ITA 1145/2017 & other connected matter Signature Not Verified Page 6 of 50 5.1. Some undisputed facts in the present case are that the concessionaire is constructing the toll plaza at its own risk for owning and maintaining the same for a period specified in ITA 1145/2017 & other connected matter Signature Not Verified Page 6 of 50 concession agreement and not under a work contract agreement between the assessee and concessionaire. The concessionaire will -ultimately transfer to NHAIassessee the plaza by executing a conveyance or any deed or document and other writings as the assessee may deem fit. The grant paid by assessee to concessionaire is in the nature of capital subsidy/equity support to make the project ”lucrative and viable for the concessionaire. 12. 12.The aspect of creation of infrastructure being an activity undertaken by the Concessionaire at its own risk and cost was one which came to be reiterated in paragraph 7 of the decision of the Tribunal and is reproduced below:- “7. When we examine the facts of the present case in view of the above cited decisions, we find certain undisputed facts that the concessionaire is constructing the toll plaza at its own risk for owning and maintaining the same for a period specified in concession agreement and not under a work contract between the assessee and the concessionaire. The concessionaire will ultimately transfer to NHAI the plaza by executing a conveyance or any deed or documents and other writings as the NHAI may deem fit. It proves beyond doubt that the concessionaire is the owner of the toll plaza during the concession periods.The right of concessionaire to claim depreciation on the toll plaza (as per Income Tax Act) has been upheld by Court of Law [(CIT Vs. Noida Toll Bridge Co. Ltd., Gujarat Road & Infrastructure Co. Ltd. vs. CIT (supra)] which also proves that it is owner of the toll plaza during the concession period as defined in the Income Tax Act. Thus, it is evident that theagreement is actually public private partnership for development of the infrastructure. The agreement between the assessee and the concessionaire is not that of principal and contractor, but that of principal and principal. It is also pertinent to mention over here that in the first appellate order for the assessment year 2004-05 vide its order dated 2.12.2011 in appeal No. 418/JPR/2010-11 in the case of assessee itself has decided the issue in favour of the assessee and there is no information brought on record that the Revenue had preferred any appeal questioning the said first appellate order. It is also an undisputed fact that the Government of India have approved in Model Concession Agreement (MCA) that to make such projectviable in / private partnership models, the assessee provides viability gap funding as capital grant on competitive bidding process. Therefore, the assessee has not deducted the TDS on the payment of VGF (Grant) as it is not contractual payment liable for deduction of ITA 1145/2017 & other connected matter Signature Not Verified ITA 1145/2017 & other connected matter Signature Not Verified tax at source under section 194C of the Act as VGF is not a revenue receipt in the hands of the concessionaire. The ratio laid down in the above cited decisions also support this stand of the assessee. We thus hold that the authorities below were not justified in coming to theconclusion that grant given by the assessee to concessionaire as a contract payment and not in the nature of grant/subsidy given by the assessee for building, operating and maintaining the toll road withthis observation that relationship between assessee and concessionaires is contractor- builder or a contractor - maintainer, concessionaires assets for the purpose of Income Tax, the word grant has been used as it is not expected to be returned hack and that relationship between the assessee and the concessionaire is that of contractor builder or a contractor - maintainer.The nature of the work between the assessee and concessionaires, as discussed above, does not support the above observations made by the Assessing Officer to justify his action for application of the provisions of section 194C of the Act on the capital grant subsidy given by the assessee to its concessionaires as per concession agreement on BOT basis based on the policies of Government of India and treating it to be a contractual payment. We thus, while setting aside orders of the authorities below, direct the Assessing Officer to accept the claim of the assessee that provisions of section 194C of the Act are not applicable on the capital grant subsidy given by the assessee to its concessionaires. The grounds are accordingly allowed.” 13.It is the correctness of the aforesaid view which is questioned before us by Mr. Sanjay Kumar, learned counsel who appeared for the appellant. Mr. Kumar would contend that the Tribunal has clearly erred in construing Section 194C and has failed to bear in consideration that as long as a sum is paid to a contractor for work, any such disbursement would fall within the ambit of that provision. According to learned counsel, the Tribunal has erred in relying upon various decisions which had principally considered the issue of whether a works contract alone would fall within the scope of Section 194C. 14.According to Mr. Kumar, the word „work‟ as it appears in Section 194C is clearly intended to be conferred an expansive meaning ITA 1145/2017 & other connected matter Signature Not Verified Page 8 of 50 and thus not restricted to a works contract alone. It was his submission that all payments, therefore, as made to a Concessionaire by NHAI would be subject to a withholding tax in terms of Section 194C. 15.Mr. Santosh Kumar, learned counsel appearing for the NHAI, on the other hand, submitted that the Tribunal has rightly appreciated the nature of a BOT contract and the capital grant subsidy which is paid in terms of the covenants contained in the Concession Agreement. According to learned counsel, the subsidy which is paid to the Concessionaire is essentially to meet the shortfall in revenue and which may render the project itself economically unviable and has been rightly understood by the Tribunal to constitute a viability gap funding measure. 16.Mr. Kumar would contend that the challenge which stands raised is no longer res integra and was duly examined by the Jaipur Bench of the Tribunal in Deputy Commissioner of Income Tax (TDS) v. National Highway Authority of India Ltd.[12] and where the following pertinent observations came to be rendered:- “4.1 The ld. CIT D/R vehemently argued that the ld. CTT (A) was not justified in deleting the addition. He submitted that the assessee has given colour of contractual payment as 'grant'. He submitted that the payment made to the concessionaires is nothing but a contractual payment. Therefore, the assessee was required to deduct tax thereon as per section 194C of the Act. The assessee has grossly failed to do so, therefore, the AO was justified in treating the assessee in default. 16.Mr. Kumar would contend that the challenge which stands raised is no longer res integra and was duly examined by the Jaipur Bench of the Tribunal in Deputy Commissioner of Income Tax (TDS) v. National Highway Authority of India Ltd.[12] and where the following pertinent observations came to be rendered:- “4.1 The ld. CIT D/R vehemently argued that the ld. CTT (A) was not justified in deleting the addition. He submitted that the assessee has given colour of contractual payment as 'grant'. He submitted that the payment made to the concessionaires is nothing but a contractual payment. Therefore, the assessee was required to deduct tax thereon as per section 194C of the Act. The assessee has grossly failed to do so, therefore, the AO was justified in treating the assessee in default. 4.2. On the contrary, the ld. Counsel for the assessee reiterated the submissions as made in the written submission. The ld. Counsel for the assessee submitted that as per clause XXIII of the agreement 12 ITA Nos. 236, 237 & 238/JP/2012 ITA 1145/2017 & other connected matter with M/s. GVK, the total contributions made by the NHAI of Rs. 211 crores in A.Y. 2004-05, 2005-06 & 2006-07 towards its shares in respect of the cost of the project. Such contributions have been nomenclature as „grant‟ to meet out the capital cost of the project and treated the same as part of the share holders funds or equity support from the above specific intention of the appellant as declared in the BOT agreements. It is quite clear that the above contributions were not contractual payments to a contractor but amount to capital participation by a member of joint venture towards its equity support as such. Obviously, it is felt that the provisions of section 194C do not apply to such capital contribution/equity participation made by an assessee, under such circumstances. The ld. Counsel reiterated that the principal NHAI and the concessionaires were required to be contributed the costs of the project and also they are eligible to share the revenue generated out of such project and the entire inflow and outflow of revenue are being managed through a common escrow account. Thus, in view of such financial arrangement, their relationship is found more of like partners/joint owners of a project than a contractor and contractoree. Moreover, another unique arrangement i.e. ownership of the assets/project is rested with the concessionaires for initial phase only and subsequently requires to be passed on to the NHAI also suggests that such unusual phase-wise ownership arrangement is not at all possible. In a normal contractual agreement, having such unique characteristics and dimensions cannot be subject matter of Section 194C of the Act, which deal with simple contractual matters. In other words, the phase-wise ownership arrangements entered between BOT concessionaires and NHAI is found absolutely different from the relationship, normally the NHAI is having with the other contractors who are engaged for road construction in routine manner. Since the NHAI and the BOT concessionaires are found investing in the project are like carrying out its own business and the same are not found similar to a relationship of the principal and contractor as such accordingly, any contribution made by NHAI is out of purview of section 194C. He further submitted that normally in works contract agreement, the principal pays to the contractor against the works completed under the contractual obligation on agreed upon quantum thereof. However, in the present case the contribution towards cost of the project i.e. concessionaires also. Like co-owner of the project, they are also entitled to share the revenue/income received as toll collection, through the method of escrow accounting system. These peculiar features also differentiate the present agreements from the normal works contract agreement. Accordingly, the AO‟s findings given in this regard are irrelevant and incorrect. He further submitted that in the works contract agreement, the ownership of the ITA 1145/2017 & other connected matter Signature Not Verified project/assets lies with the principal only and the contractor is not having any sort of rights, be of real ownership or beneficial in nature, in this regard. However, it can be noticed that as per clause XXXVIII of the concession agreement, till the specified time period therein, the BOT concessionaires would have the ownership rights of the project and its assets for all practical and legal purposes. Thus the concessionaires are not only executors of the project, but they also assumed status of the co-owners of the same. The ld. Counsel submitted that in the case of M/s. GVK, the Coordinate Bench of the Tribunal allowed depreciation to the concessionaires on such assets while treating them beneficial ownership in the project as such. He submitted that the AO has erred in not appreciating Escrow Accounting System, as specified in such agreements. By doing so, the AO has given a different meaning or connotation to such phrases than the obvious and literal meaning of such aspects. He submitted that the 'cardinal rule of interpretation of law suggest that when the meaning of the words/phrase used in a statute is clear and unambiguous, then such words to be given its plain and grammatical meaning and effect of the law has to be given in such context only. In In simpler term, when there is no ambiguity in the language of the statute, then such provision cannot be interpreted in different manner to arrive at a particular conclusion as such. In support of this contention, the ld. Counsel placed reliance on the judgments of the Hon'ble Supreme Court reported in 306 ITR 277 (SC) and 266 ITR 521 (SC). The Id. Counsel then drew our attention to various articles of the agreement and vehemently argued that the AO was not justified in holding the assessee in default for non deduction of tax under section 201(1) and also charged interest under section 201(1A) of the Act. On the facts and circumstances of the case, the Id. Counsel further submitted that all the BOT concessionaires have already discharged the duty and duly filed their returns of income for all assessment years after paying due taxes, hence there is no liability on the deductor for deduction of tax under section 194C. The ld. Counsel placed reliance on the judgment of Hon'ble Supreme Court rendered in the case of Hindustan Coca Cola Beverage Pvt. Ltd. vs. CIT (2007) 293 ITR 226 (SC). Therefore, he submitted that even otherwise also the demands so raised deserve to be deleted. 4.3. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. The only issue to be adjudicated under the facts of the case whether provisions of section 194C of the Act is applicable or not. For the sake of clarity, section 194C is reproduced as under:- xxxx xxxx xxxx A bare reading of above section, makes it explicit that any person ITA 1145/2017 & other connected matter Signature Not Verified 4.3. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. The only issue to be adjudicated under the facts of the case whether provisions of section 194C of the Act is applicable or not. For the sake of clarity, section 194C is reproduced as under:- xxxx xxxx xxxx A bare reading of above section, makes it explicit that any person ITA 1145/2017 & other connected matter Signature Not Verified responsible being the contractor for carrying out any work In pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or any other mode, whichever is earlier, deduct an amount equal to two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family of such sum as income-tax for A.Y. 2011-12 of such sum as income comprised therein. Therefore, specified personthe deductor herein i.e. NHAI is required to deduct tax in the event the payment is made to the contractor in pursuance of a contract. In the case in hand, we need to examine whether the payments made by the NHAI under the head „Grant‟ to M/s. GVK Kishangarh Expressway Pvt. Ltd. was liable to deduction of tax or not.Undisputed facts remain that the NHAI has made payment to M/s. GVK Kishangarh Expressway Pvt. Ltd. under the head 'Grant'. The AO treated such payments as payment made under the contract. The AO examined various terms of the agreement between NHAI and M/s. GVK Kishangarh Expressway Pvt. Ltd. and has also reproduced certain terms of agreement. The AO, therefore, treated the assessee in default. However, the ld. CIT (A) after examining the terms of agreement came to the conclusion that such payments are not in the nature of payment made to the contractor. By doing so, he observed in para 3.3.1 of his order as under:- xxxx xxxx xxxx The contention of the assessee in substance is that from the terms of the agreement it can be inferred that the payments made to the concessionaires in the form of 'Grant' would not attract the provisions of section 194C. Essentially these payments are in the nature of contribution in the joint venture. We have gone through the terms of the agreement. The inference drawn by the AO is that the 'Grant' is nothing but payment to the contractor is mis-placed. As per section 194C, the payment is required to be made to the contractor but in the given case payment is not made to the contractor. The agreement cannot be stated to be purely a contract agreement but it is a contract agreement of joint venture. Hence, we do not see any infirmity in the order of ld. CIT(A), therefore, the same is hereby ”upheld. 17.Our attention was also drawn to the order passed by the High Court of Rajasthan on an appeal which was taken against the aforenoted decision of the Tribunal and which came to be dismissed on 21 April ITA 1145/2017 & other connected matter Signature Not Verified 2017. While affirming the view expressed by the Tribunal, the High Court had held as follows:- 17.Our attention was also drawn to the order passed by the High Court of Rajasthan on an appeal which was taken against the aforenoted decision of the Tribunal and which came to be dismissed on 21 April ITA 1145/2017 & other connected matter Signature Not Verified 2017. While affirming the view expressed by the Tribunal, the High Court had held as follows:- “3. The facts of the case are that The assessee has entered into concession agreements with these companies and the agreement is on Build Operate and Transfer (BOT) Model. As per these agreements, NHAI has conveyed the concession to construct the Highways, operate and maintain them and collect Toll on these Highways to the abovenamed Concessionaries. As per these agreements, the concessionaries were to be given certain amount for construction of roads by the NHAI. The AO observed that the assessee (NHAI) had not made TDS as per section 194 C of the IT Act, 1961 which appeared to be applicable in the instant case in respect of the above concessionaries. The AO passed order u/s 201 (1)/ 201(1A,) on 18.03.2011 creating demand of Rs. 6,56,58,200/- for AY 2006-07 for non deduction of TDS on the payment of „Contract Money‟ to the concessionaries. 4. While considering the case, the Tribunal has observed as under:- “We have gone through the terms of the agreement. The inference drawn by the AO is that the "Grant" is nothing but payment to the contractor is mis-placed. As per Section 194C, the payment is required to be made to the contractor but in the given case payment is not made to the contractor. The agreement cannot be stated to be purely a contract agreement but it is a contract agreement of joint venture. Hence, we not see any infirmity in the order of ld. CIT(A), therefore, the same is hereby upheld.” 5. In view of the concurrent finding of all the authorities below regarding payments in the nature of contribution in the joint venture, no interference is required in this appeal.” 18.At the outset, it becomes pertinent to note that undisputedly, Section 194C is not confined to works contracts. This aspect has been authoritatively settled by the Supreme Court in AssociatedCement Company Ltd. v. Commissioner of Income Tax[13] and where it had held as follows:- 13 (1993) 2 SCC 556 ITA 1145/2017 & other connected matter Signature Not Verified “4. Section 194-C(l) of the Income Tax Act on the proper construction of which the decision on the aforesaid question should necessarily rest, runs thus: xxxx xxxx xxxx No ambiguity is found in the language employed in the sub-section. What is contained in the sub-section, as appears from its plain reading and analysis, admit of the following formulations: (1) A contract may be entered into between the contractor and any of the organisations specified in the sub-section. of the organisations specified in the sub-section. (2) Contract in Formulation 1 could not only be for carrying out any work but also for supply of labour for carrying out any work. work but also for supply of labour for carrying out any work. (3) Any person responsible for paying any sum to a contractor in pursuance of the contract in Formulations 1 and 2, could credit that sum to his account or make its payment to him in any other manner. pursuance of the contract in Formulations 1 and 2, could credit that sum to his account or make its payment to him in any other manner. (4) But, when the person referred to in Formulation 3 either credits the sum referred to therein to the account of or pays it to the contractor, he shall deduct out of that sum an amount equal to two per cent as income tax on income comprised therein. the sum referred to therein to the account of or pays it to the contractor, he shall deduct out of that sum an amount equal to two per cent as income tax on income comprised therein. (3) Any person responsible for paying any sum to a contractor in pursuance of the contract in Formulations 1 and 2, could credit that sum to his account or make its payment to him in any other manner. pursuance of the contract in Formulations 1 and 2, could credit that sum to his account or make its payment to him in any other manner. (4) But, when the person referred to in Formulation 3 either credits the sum referred to therein to the account of or pays it to the contractor, he shall deduct out of that sum an amount equal to two per cent as income tax on income comprised therein. the sum referred to therein to the account of or pays it to the contractor, he shall deduct out of that sum an amount equal to two per cent as income tax on income comprised therein. 5. Thus, when the percentage amount required to be deducted under the sub-section as income tax is on the sum credited to the account of or paid to a contractor in pursuance of a contract for carrying out a work or supplying labour for carrying out a work, of any of the organisations specified therein, there is nothing in the sub-section which could make us hold that the contract to carry out a work or the contract to supply labour to carry out a work should be confined to 'works contract' as was argued on behalf of the appellant. We see no reason to curtail or to cut down the meaning of plain words used in the section. “Any work” means any work and not a “works-contract”, which has a special connotation in the tax law. Indeed, in the sub-section, the „work‟ referred to therein expressly includes supply of labour to carry out a work. It is a clear indication of legislature that the „work‟ in sub-section is not intended to be confined to or restricted to „works contract‟. „Work‟ envisaged in the sub-section, therefore, has a wide import and covers „any work‟-which one or the other of the organisations specified in the subsection can get carried out through a contractor under a contract andfurther it includes obtaining by any of such organisations supply of labour under a contract with a contractor for carrying out its work which, would have fallen outside the „work‟, but for its specific inclusion in the sub-section.” ITA 1145/2017 & other connected matter 19.That still leaves us to consider whether the capital grant subsidy which was extended by NHAI could be construed as being payment for „‟a work to a contractor and which forms the subject matter of Section 194C. In order to appreciate the question which stands posited, we deem it apposite to extract Section 194C hereunder: “Payments to contractors. 194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to- (i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family; being given to an individual or a Hindu undivided family; (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub-section (1) is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source- (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub-section (1) is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source- (i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or value is mentioned separately in the invoice; or (ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice. not mentioned separately in the invoice. (4) No individual or Hindu undivided family shall be liable to deduct income tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu ITA 1145/2017 & other connected matter Signature Not Verified undivided family. (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed [thirty thousand rupees]: Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds [one lakh rupees], the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income tax under this section. (6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, [where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with] his Permanent Account Number, to the person paying or crediting such sum. (7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed. Explanation.— For the purposes of this section,— (i) “specified person” shall mean,— (a) the Central Government or any State Government; or (b) any local authority; or (c) any corporation established by or under a Central, State or Provincial Act; or or Provincial Act; or (d) any company; or (e) any co-operative society; or (f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or (h) any trust; or (i) any university established or incorporated by or under a Central, State or Provincial Act and an institution Central, State or Provincial Act and an institution ITA 1145/2017 & other connected matter Signature Not Verified Signature Not Verified (g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or (h) any trust; or (i) any university established or incorporated by or under a Central, State or Provincial Act and an institution Central, State or Provincial Act and an institution ITA 1145/2017 & other connected matter Signature Not Verified Signature Not Verified declared to be a university under Section 3 of the University Grants Commission Act, 1956 (3 of 1956); or (j) any Government of a foreign State or a foreign enterprise or any association or body established outside India; or or any association or body established outside India; or (k) any firm; or (l) any person, being an individual or a Hindu undivided family or an association of persons or a body of —family or an association of persons or a body of —individuals, if such person, (A) does not fall under any of the preceding sub-clauses; and clauses; and (B) [has total sales, gross receipts or turnover from business or profession carried on by him exceeding one crore rupees in case of business or fifty lakh rupees in case of profession] during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor; business or profession carried on by him exceeding one crore rupees in case of business or fifty lakh rupees in case of profession] during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor; (ii) “goods carriage” shall have the meaning assigned to it in theExplanation to sub-section (7) of Section 44-AE; Explanation to sub-section (7) of Section 44-AE; (iii) “contract” shall include sub-contract; (iv) “work” shall include— (a) advertising; (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; programmes for such broadcasting or telecasting; (c) carriage of goods or passengers by any mode of transport other than by railways; transport other than by railways; (d) catering; [(e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer or its associate, being a person placed similarly in relation to such customer as is the person placed in relation to the assessee under the provisions contained in clause (b) of sub-section (2) of section 40-A,] requirement or specification of a customer by using material purchased from such customer or its associate, being a person placed similarly in relation to such customer as is the person placed in relation to the assessee under the provisions contained in clause (b) of sub-section (2) of section 40-A,] but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer [or associate of such customer].]” 20.It would also be beneficial to advert to some of the relevant provisions contained in the Model Concession Agreement[14] which stands placed on our record. Article 2 of the MCAdefines the scope of the project in the following terms:- “ARTICLE 2 SCOPE OF THE PROJECT 2.1.Scope of the Project The scope of the Project (the “Scope of the Project”) shall mean and include, during the Concession Period: mean and include, during the Concession Period: (a) construction of the Project Highway on the Site set forth in Schedule A and as specified in Schedule-B together with provision of Project Facilities as specified m Schedule-C, and in conformity with the Specifications and Standards set forth in Schedule-D, Schedule A and as specified in Schedule-B together with provision of Project Facilities as specified m Schedule-C, and in conformity with the Specifications and Standards set forth in Schedule-D, “ARTICLE 2 SCOPE OF THE PROJECT 2.1.Scope of the Project The scope of the Project (the “Scope of the Project”) shall mean and include, during the Concession Period: mean and include, during the Concession Period: (a) construction of the Project Highway on the Site set forth in Schedule A and as specified in Schedule-B together with provision of Project Facilities as specified m Schedule-C, and in conformity with the Specifications and Standards set forth in Schedule-D, Schedule A and as specified in Schedule-B together with provision of Project Facilities as specified m Schedule-C, and in conformity with the Specifications and Standards set forth in Schedule-D, (b) operation and maintenance of the Project Highway in accordance with the provisions of this Agreement; and with the provisions of this Agreement; and (c) performance and fulfilment o