Ita/409/2019 Of Punjab Infrastructure Development Board, Chandigarh v. Commissioner Of Income Tax (Tds) Chandigarh

ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH Date of Decision : 18.9.2019 ITA No.409-2019 (O&M) Punjab Infrastructure Development Board woes APPEllant 4#.'+' Commissioner of Income Tax-(TDS) weoeee RESPONCEnt ITA No.407-2019 (O&M) Punjab Infrastructure Development Board wees APPellant 4#.'+' Commissioner of Income Tax-(TDS) eee RESpondent ITA No.413-2019 (O&M) Punjab Infrastructure Development Board wees APPellant 4#.'+' Commissioner of Income Tax-(TDS)woes RESPONGEnt CORAM : HON'BLE MR.JUSTICE AJAY TEWARI* HON'BLE MR. JUSTICK HARNARESH SINGH GILL Present :Mr. Deepak Aggarwal, Advocatefor the appellant. ::: ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) AJAY TEWARI, J. (Oral) inCM19272CII2019 in ITA4092019 This is an application for placing on record the copy of thejudgment in ITA No. 73 of 2016 dated 20.12.2016 passed by this Court, For the reasons recorded in the application, the same isallowed and abovesaid judgment is taken on record, 2 Main Cases This order shall dispose of abovesaid appeals since commonquestion of facts and law are involved therein. For the sake ofconvenience the facts are taken from ITA No. 409 of 2019. 3,This appeal has been filed under Section 260A of the IncomeTax Act, 1961 against the order dated 29.3.2019 of the Income TaxAppellate Tribunal, Division Bench 'B' Chandigarh (ITAT) upholding theorder of the Assessing Officer. 4The following question of law was framed by the ITAT :- “Whether the assessee namely Punjab InfrastructureDevelopment Board (hereinafter referred to as PIDB) wasrequired to collect TCS (tax collect at source) as per theprovisions of Section 206 C (1C) of the Income Tax Act,1961.” 5 Brief facts of the case are that the Punjab Legislature hadpassed Punjab Infrastructure (Development and Regulation), Act, 2002(hereinafter referred to as ‘the Act’) and had constituted a statutory Boardcalled the PIDB (the appellant-Board before us). Under the powersgranted to it, the appellant-Board had entered into concession agreementwith the Concessionaires to develop different highways. The ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) 3 Concessionaire was entitled to collect toll from the vehicles entering thatparticular stretch of the highways. Out of the tolls collected, theConcessionaire had to deposit fee. The issue involved in the present caseis that the Assessing Officer noticed that the appellant-assessee hadreceived certain amounts from the contractor/concessionaire in enteringinto concession agreement, but being ‘Person Responsible’ (PR) it failedto collect TCS and held responsible under the provisions of Section 206C (1C) of the Act. The various authorities having held against it, theappellant is before this Court. 6 Learned counsel has argued that a bare perusal of the variousprovisions of the Act clearly reveal that the appellant-Board is merely anodal agency as confirming party and the agreement has been enteredbetween Government of Punjab and the Concessionaire and the Boarddoes not deal with the Concessionaire on principle to principle basis butacts only as an agent to the Government. He has referred to followingSection °: oo‘Functions and Powers ofthe Board (1)Subject to thelimitations specified in sub section (3), theBoard shall be the apex body in the State of Punjab foroverall planning for development of infrastructure sectorsand infrastructure projects.Board shall be the apex body in the State of Punjab foroverall planning for development of infrastructure sectorsand infrastructure projects. (2)The Board shall:- oo‘Functions and Powers ofthe Board (1)Subject to thelimitations specified in sub section (3), theBoard shall be the apex body in the State of Punjab foroverall planning for development of infrastructure sectorsand infrastructure projects.Board shall be the apex body in the State of Punjab foroverall planning for development of infrastructure sectorsand infrastructure projects. (2)The Board shall:- (1)act as a nodal agency to co-ordinate all efforts of theState Government regarding the development of theinfrastructure sectors, involving private participationandfundingfrom sources other than those provided byState budget and will,-State Government regarding the development of theinfrastructure sectors, involving private participationandfundingfrom sources other than those provided byState budget and will,- (a)identify infrastructure projects for _ privat participation! 9 (b)promote competitiveness and_ progressivelinvolve private participation while ensuring fairdeal to the consumers;involve private participation while ensuring fairdeal to the consumers; (Ccidentify bottlenecks in the infrastructure sectorsand recommend to the State Government, policyinitiatives to rectify the same;and recommend to the State Government, policyinitiatives to rectify the same; (d)select, prioritise and determine sequencing ofinfrastructure projects;infrastructure projects; (e)formulate clear and transparent policies relatedto the infrastructure sectors so as to ensure thatproject risks are clearly identified and allocatedbetween the stakeholders; andto the infrastructure sectors so as to ensure thatproject risks are clearly identified and allocatedbetween the stakeholders; and ()identify the sectoral concessions to be offered toconcessionaires to attract private participationand secure availability of viable infrastructurefacilities to the consumers;concessionaires to attract private participationand secure availability of viable infrastructurefacilities to the consumers; (11)prepare internally or through external consultants or serviceproviders engagedfor the purpose, all necessary documentsincluding the bid or tender documents, draft contractsincluding the various contractual arrangements andincentives to be offered by the State Government;providers engagedfor the purpose, all necessary documentsincluding the bid or tender documents, draft contractsincluding the various contractual arrangements andincentives to be offered by the State Government; (111)create a Fund to be known as Punjab Infrastructure[nitiative Fund, which shall vest in the Board to carry out the pre-feasibility and feasibility studies and the preparing of reports forthe proposed infrastructure projects, along with the collection ofthe relevant data. The Punjab Infrastructure Initiative Fund willhave contributions from the Development Fund, budgetaryresources of State Government, public bodies and multilaterallending agencies andfinancial institutions; (iv)assist public infrastructure agencies and concessionaires inobtaining statutory and other approvals;obtaining statutory and other approvals; (v)recommend the grant of concessions to a_ publiinfrastructure agency in accordance with the provisions ofinfrastructure agency in accordance with the provisions of ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) this Act, the rules and the regulations made there under,| (v1)assist in determining the level and structuring of investmentsof the State Government and _ public bodies ininfrastructure projects with private participation includingholding the investment or part thereof,of the State Government and _ public bodies ininfrastructure projects with private participation includingholding the investment or part thereof, (iv)assist public infrastructure agencies and concessionaires inobtaining statutory and other approvals;obtaining statutory and other approvals; (v)recommend the grant of concessions to a_ publiinfrastructure agency in accordance with the provisions ofinfrastructure agency in accordance with the provisions of ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) this Act, the rules and the regulations made there under,| (v1)assist in determining the level and structuring of investmentsof the State Government and _ public bodies ininfrastructure projects with private participation includingholding the investment or part thereof,of the State Government and _ public bodies ininfrastructure projects with private participation includingholding the investment or part thereof, (v11)create special purpose vehicles for implementinginfrastructure projects in terms of section 38 in co-ordination with the State Government or _ publinfrastructure agencies; andinfrastructure projects in terms of section 38 in co-ordination with the State Government or _ publinfrastructure agencies; and (vill) manage and administer the Development Fund and_ tPunjab Infrastructure Initiative Fund.Punjab Infrastructure Initiative Fund. (3)The Board shall not play any role in the infrastructureprojects undertaken by the State Government exclusivelythrough its budgetary provisionprojects undertaken by the State Government exclusivelythrough its budgetary provision (4)In order to carry out its functions consistent with theprovisions of this Act, the Board shall have the powers to doall or any ofthefollowing, namely:-provisions of this Act, the Board shall have the powers to doall or any ofthefollowing, namely:- (1)acquire, hold, develop or construct such property, bothmovable and immovable, as the Board may deem necessaryfor the performance of any of its activities related to thedevelopment of infrastructure sectors or infrastructureprojects,movable and immovable, as the Board may deem necessaryfor the performance of any of its activities related to thedevelopment of infrastructure sectors or infrastructureprojects, (11)advise or recommend to the State Government acquisition ofland under the Land Acquisition Act, 1894 for the purposesof infrastructure projects;land under the Land Acquisition Act, 1894 for the purposesof infrastructure projects; (111)lease, sell, exchange, or otherwise make allotments of theproperty referred to in clause (1) to concessionaire and tomodify or rescind allotments, including the right and powerto evict the allottees concerned on breach ofany ofthe termsor conditions ofsuch allotment;property referred to in clause (1) to concessionaire and tomodify or rescind allotments, including the right and powerto evict the allottees concerned on breach ofany ofthe termsor conditions ofsuch allotment; (iv)borrow and raise money in such manner as the Board maythink fit and to secure the repayment of any moneyborrowed, raised or owing by mortgage, charge, standardsecurity, lien or other security upon the whole or any part ofthink fit and to secure the repayment of any moneyborrowed, raised or owing by mortgage, charge, standardsecurity, lien or other security upon the whole or any part of ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) 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 bythe Board of any obligation or liability, it may haveundertaken or which may become binding on It. (v)constitute a Project Management Team and one or moreAdvisory Committee or Committees or Sectoral Sub-Committee or Project Implementation Sub-Committee, orengage suitable service providers or advisors or consultantsto advise the Board for the efficient discharge of itsfunctions, (v1)enter into and perform all such contracts as it may thinknecessary or expedient for performing any of its functions;andnecessary or expedient for performing any of its functions;and 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 bythe Board of any obligation or liability, it may haveundertaken or which may become binding on It. (v)constitute a Project Management Team and one or moreAdvisory Committee or Committees or Sectoral Sub-Committee or Project Implementation Sub-Committee, orengage suitable service providers or advisors or consultantsto advise the Board for the efficient discharge of itsfunctions, (v1)enter into and perform all such contracts as it may thinknecessary or expedient for performing any of its functions;andnecessary or expedient for performing any of its functions;and (vil)do such other things and perform such other acts as it maythink necessary or expedient for the proper conduct of itsfunctions and for carrying into effect the purposes of thisAct|think necessary or expedient for the proper conduct of itsfunctions and for carrying into effect the purposes of thisAct| vaIn particular, learned counsel has emphasized on the opening part of Sub Section 2 of Section 20 of the Act (supra) wherein it has beenmentioned that Board will act as a nodal agency to co-ordinate all effortsof the State Government regarding the development of the InfrastructureSectors... It is his contention that this statutory stipulation as well as theterms of the concession agreement clearly lend themselves to this view. | 8.In our opinion, these appeals must fail. The Tribunal hasnoticed not only the above quoted provisions of Section 20 of the Act, but has also noticed the provisions of Clause (i), (iil) and (iv) of Sub Section(4) of Section 20 of the Act (supra) and has come to the conclusion thatdespite the stipulation in the statute regarding the Board as being a nodal ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) acting on principle to principle basis and even a contrary stipulation in theconcession agreement does not take away this essential characteristic,Moreover, if the argument of the learned counsel is to be accepted, then itwould result in an anomalous situation because as per Section 206 C (1C)of the Act, any person who grants a lease or licence is the same personwho collects the concession fee. But as per the case of the appellant inthe present case, the grantor is the Government while the concession feeis to be collected by the appellant. Thus the appellant can well foist theliability on the Government and the Government can foist the liability onthe appellant. This stipulation could result in leakage of tax. We find thejudgment of the Tribunal to be well considered and confirm the findingthat the mere usage of the term ‘nodal agency’ or ‘confirming party’ wouldnot determine the facts of the present case. It may be apposite to mentionhere that this possibility was envisaged by a Division Bench of this Courtadjudicating upon a previous round of litigation pending betweenbetween the parties in ITA No. 73 of 2016 decided on 20.12.2016 titledasThe Commissioner of Income Tax (IDS)-I Chandigarh vs.M/sPunjab Infrastructure Dev. Board, Chandigarh.when it held as follows 67. If we answer the questions of law in favourof the assessee, the entire matter ends there. If, however, weanswer the question in favour of the Revenue, as we have, itwould be necessary to remit the matter to the Tribunal todecide the assessee’s main contention that the provisions ofSection 194C are not applicable to the case at all. Werefrain from answering that question in this appeal as inour view, it ought to be decided by the Tribunal in the first ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) * 67. If we answer the questions of law in favourof the assessee, the entire matter ends there. If, however, weanswer the question in favour of the Revenue, as we have, itwould be necessary to remit the matter to the Tribunal todecide the assessee’s main contention that the provisions ofSection 194C are not applicable to the case at all. Werefrain from answering that question in this appeal as inour view, it ought to be decided by the Tribunal in the first ITA No.409-2019 (O&M)ITA No.407-2019 (O&M)ITA No.413-2019 (O&M) * instance. [here is a possibility of questions offact arising.For instance, it would be necessary to consider whether theassessee was merely a nodal agency for the Government ofPunjab or whether it was acting on its own on a principle toprinciple basis with the concessionaire. The answer to thisissue may not depend only upon the terms ofthe agreement. " Q In view of these circumstances, the appeals stand dismissed. 10.Since the main cases have been dismissed, the pending CM,if any, also stands disposed of, (AJAY TEWARIT) JUDGE 18.9.2019!(+.!3>! (HARNARESH SINGH GILL)JUDGE Whether speaking/reasoned5Yes/NoWhether reportable5Yes/No