a) The National Highway Authority of India (NHAI) granted a project to Oriental Pathways Pvt. Ltd. (OPPL) to develop a National Highway on BOT (Build, Operate and Transfer) basis. As per the agreement, OPPL was required to pay Rs. 1 per year to NHAI during the term of the agreement.
b) The development cost of highway was to be recovered by OPPL through collection of toll. However, the toll collection was required to be deposited in an escrow account jointly held by both the parties. The purpose of depositing the amount in escrow account was to make a provision, in case NHAI had to recover any amount from OPPL.
c) Assessing Officer (AO) contended that NHAI was liable to collect TCS from OPPL on toll fee collected by it as per section206C(1C).
d) The CIT(A) set aside the order of the AO by holding that the OPPL was required to pay only Re. 1 per year to NHAI and not the toll fee. Therefore, provisions of section 206C(IC) could not be applied on this very nominal and insignificant amount.
e) Aggrieved by the order of CIT(A), revenue filed the instant appeal before the tribunal.
The tribunal held in favour of assessee as under-