In a partial relief to the Bangalore Metro Rail Corporation Limited (BMRCL), the Karnataka High Court remanded the matter to ITAT to decide Income Tax applicability on Service Charges.
The appellant assessee is a Special Purpose Vehicle entrusted with the task of implementation of the Bangalore Metro Rail Project, a joint venture of the Government of India and the Government of Karnataka. For the purpose of construction of piers/portals viaduct across the precincts of the Bengaluru region, the assessee approached the Karnataka Industrial Area Development Board for the acquisition of land in a smooth manner and entered into an agreement with M/s KIADB. The appellant paid a sum of Rs.1,225 Crores to KIADB during 2005-06 to 2012-13 which the appellant-assessee claims to be the payments made towards acquisition of the land.
The Assessing Officer initiated proceedings under Section 201 of the Act for the assessment years under consideration on the ground that the appellant ought to have deducted tax at source on payments made to KIADB and passed separate orders holding that the appellant, as an assessee in default under Section 201(1), levied interest under Section 201(1A) of the Act negating the submissions made by the assessee.
The division bench of Justice S. Sujatha and Justice Ravi V.Hosmani held that factual aspects require re-examination by the Tribunal being the last fact-finding authority inasmuch as the payment of Rs.1225 Crores made by the assessee vis-à-vis the accounts of KIADB elating to the said transaction. Given the circumstances, a finding is necessary whether Rs.1225 Crores includes the service charges or not which is the primary dispute. Hence, restored the matter to the file of the Tribunal sans answering the substantial questions of law, setting aside the impugned order, keeping open all the rights and contentions of the parties.
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