TMI Blog2009 (11) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... it fell with in the definition of commission. Thus tax deducted at source on the commission charges of 15 percent. had to be paid by Doordarshan to the Income Tax Department with reference to the date on which 85 percent of the advertisement charges were received from the agent. - 27 and 62 of 2009 - - - Dated:- 20-11-2009 - RAMACHANDRAN NAIR C. N., MOHANAN V. K. JJ. P.K.R. Menon and Jose Joseph for the appellant. Dale P. Kurian for respondent. No. 1. JUDGMENT The judgment of the court was delivered by C. N. Ramachandran Nair J.- The question raised in the appeals filed by the Revenue is whether the Income-tax Appellate Tribunal was justified in holding that the commission paid by the Doordarshan Kendra which is unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of 15 per cent. by the respondent on advertisement charges remitted by the advertising agencies is subject to tax deduction at source as commission under section 194H of the Act. For easy reference, we extract hereunder the relevant portion of section 194H for the purpose of deciding this case : "194H. Commission or brokerage.-Any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after the 1 st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice shall be in the form of standard agency com-mission of 15 (fifteen) per cent. to be paid by the Doordarshan Commercial Service. 4. From the above it is very clear that parties have understood their relationship as principal and agent and what is paid to the agent by Doordarshan is 15 per cent. of advertisement charges collected and remitted to it by the agent which is in the form of commission payable to the agent by Doordarshan. Counsel for the respondent referred to one of the agreements where the commission is referred to as standard discount and con-tended that the arrangement between the respondent and advertising agency is not agency but is a principal to principal arrangement of sharing advertisement charges. We are unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent. commission paid to the advertising agencies by Doordarshan is for canvassing advertisements on behalf of the respondent. So much so, the payment of 15 per cent., by whatever name called, whether discount or commission, falls within the definition of "commission" as defined under Explanation (i) to section 194H of the Act. 5. The next question to be considered is whether the provision in the agreement permitting advertising agencies to retain 15 per cent. of the advertising charges payable by them to the respondent towards commission from out of the charges received for advertising services from customers will exonerate the respondent from their liability to deduct tax at source under section 194H of the Act. In this context, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually officers in the service of the Government have violated the provisions of the Act by taking untenable contention before the income-tax authorities that the transaction does not attract the provisions of section 194H. In our view, the Department should take serious note of the violation by officers of the Central Government agency and take up the matter with the Ministry for taking appropriate action for violation of the Act and for engaging in evasion of tax. 7. Advertisement charges collected by agents are for the respondent and agents are allowed to retain 15 per cent. of the commission by the respondent only to avoid the hassle of deposit of the full amount and repayment of 15 per cent. thereof towards commission. Since permissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment with reference to the date on which 85 per cent. of the advertisement charges are received from the agent. In fact, it is only to comply with the provision, clause 2(e) extracted above is incorporated in the agreement wherein it is stated that agent will pay to Doordarshan through DD or cheque the TDS amount payable on the commission retained by agents which we have already found as payment of commission by the respondent to the agent. 8. Even though counsel for the respondent has relied on the decision of the Gujarat High Court in Ahmedabad Stamp Vendors Association v. Union of India [2002] 257 ITR 202 and a decision of the learned single judge of this court in M. S. Hameed v. Director of State Lotteries [2001] 249 ITR 186 and conte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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