CIT (TDS)-2 Vs National Highway Authority of India (Delhi High Court)
Delhi High Court held that TDS under section 194C of the Income Tax Act not deductible on capital grant subsidy extended by NHAI to the Concessionaire since it cannot be construed as payment made for a work undertaken by the contractor.
Facts- The Commissioner of Income Tax (TDS) impugns the judgment rendered by the Income Tax Appellate Tribunal on 10 April 2017 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.
Conclusion- Held that the capital grant subsidy was essentially aid and support that the NHAI extended to the Concessionaire as opposed to payment that it would have ordinarily made to a contractor and would be directly connected with or constitute recompense for physical work that was performed. As the precedents noticed hereinabove bid us to acknowledge, the word „work‟ in the context of Section 194C is liable to be understood as relating to labour that is expended, the undertaking of a task or operation which produces a result. The infusion of equity capital as a measure of financial support, while surely a contractual obligation, cannot consequently be understood to mean the payment for a work undertaken.
