CHENNAI PORT TRUST Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE following is the substantial question of law raised by the assessee in the Tax Case Appeals filed against the order of the Tribunal:

(2.) THE assessee - Chennai Port Trust floated a tender for the breakwater construction project at Ennore Port. The contract was awarded to a joint venture of Hindustan Construction Company Ltd., a company registered under the Companies Act in India and Van Oord ACZ BV (VOACZ) of Netherlands. In respect of the execution of the work, the assessee deducted tax under Section 195C of the Income Tax Act at the rate of 2%, treating the joint venture as an Association of Persons. The deduction in the above manner was made for the assessment years 1998 -99, 1999 -2000 and 2000 -2001.

(3.) PURSUANT to the said order, the said foreign company made an application before the Deputy Commissioner of Income Tax dated 16th October 2000 and pointed out to the order of the Advance Ruling Authority that in view of the said decision, 10% of the receipt, payable as per Section 44BBB of the Act was offered as taxable income and that flat rate of 15% was chargeable on the interest earned on the Fixed Deposit as per Article 11 of the DTA between India and Netherlands. They also pointed out that the Chennai Port Trust had withheld the income tax under Section 194C from all the payments made, which included the portion of work carried out by the foreign company. Hence, it was entitled to claim credit of the proportionate share of the TDS made in the status of consortium. The original certificates, hence, would be filed along with the return of Hindustan Construction Company Limited who was entitled to 80% of the TDS. After claiming credit, the company had also remitted the balance tax.