TMI Blog2020 (11) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax (Appeals)-7, Bangalore passed under Section 143(3) and 250 of the Income Tax Act, 1961 (the Act). 2. The assessee has raised the following grounds of appeal : 1. (a) That the Learned CIT (A) has erred in law in sustaining the addition of ₹ 6.8 crores made by the learned Assessing Officer on the contention that tax has not been deducted at source on the amount paid by the appellant during the year to Benett Coleman Company Ltd. (BCCL) towards cost of purchase of advertisement space for selling the same to ultimate advertiser without giving credence to the fact that the provisions of section 194C of the Act are not attracted on this payment. (b) That in this connection the learned CIT(A) has not considered the fact that no disallowance is warranted as no amount (out of ₹ 6.8 crores) is payable as at the close of the financial year. 2. (a) That the learned CIT(A) has misinterpreted the provisions of section 40(a)(ia) of the Act inasmuch as no disallowance is warranted under the said section as BCCL has included the said amount in its return of income for the relevant assessment year, and paid income tax on such income. (b) That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and passed order under Section 143(3) of the Act dt.06.02.2013. Aggrieved by the order, the assessee has filed an appeal with the CIT(Appeals), whereas the CIT(Appeals) has considered the submissions and findings of the AO, and has concurred with the action of Assessing officer and dismissed the assessee appeal. Aggrieved by the CIT(A) order, the assessee has filed an appeal with the Tribunal. 4. The learned Authorized Representative submitted that the CIT(A) has erred in sustaining the addition made by the Assessing Officer for non-deduction of TDS under Section 194C of the Act, where the amount was paid to BCCL for purchase of cost of entire advertisement space in Times of India(Kannada Edition)and relied on circular no 5 of 2016 dated 29-02-2016 of CBDT, were no tax need to be deducted on the payment made to a newspaper company by the agent for procuring and canvassing advertisements. Further relied on the second proviso to Section 40(a)(ia) of the Act. Where the payee, BCCL has included the said amount in their Income Tax Returns for the relevant assessment year and paid the taxes evident by certificate in Form26A.The learned Authorized Representative supported his arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 194C (as work contracted) will be applicable on the first type of payment, there will be no TDS under section 194C on the second type of payment e.g. payment by advertising agency to the media company. 3. However, another issue has been raised in various cases as to whether the fees/ charges taken or retained by advertising companies from media companies for canvassing/ booking advertisements (typically 15% of the billing) is commission or discount . It has been argued by the assessee that since the relationship between the media company and the advertising company is on a principal-to-principal basis, such payments are in the nature of trade discount and not commission and, therefore, outside the purview of TDS under section 194H. The Department, on the other hand, has taken the stand in some cases that since the advertising agencies act on behalf of the media companies for procuring advertisements, the margin retained by the former amounts to constructive payment of commission and, accordingly, TDS under section 194H is attracted. 4. The issue has been examined by the Allahabad High Court in the case of Jagran Prakashan Ltd and Delhi High Court in the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, it is evident that the Commissioner of Income Tax as well as the Income Tax Appellant Tribunal has nowhere held that the contract in question is not a contract for sale and is contract for work. The relevant extract of Circular No.13 of 2006 dated 13.12.2006 read as under: The matter has been examined by the Board and it is considered that exclusive reliance on Question/Answer No.15 of Circular No.715, without taking into account the principles laid down in Circular No.681 is not justified. Before taking a decision on the applicability of TDS under section 194C on a contract, it would have to be examined whether the contract in question is a contract for sale and TDS shall be applicable only where it is a contract for work . 14. Thus, if the order passed by the Commissioner of Income Tax as well as the order passed by the Income Tax Appellant Tribunal are read in conjunction in the light of the Circular No. 13 of 2006 issued by the Central Board of Direct Taxes, it is axiomatic that provisions of Section 194C would apply to a contract for work and not to a contract for sale. The contention of the learned counsel for the Revenue that the Tribunal ought to have re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of law laid down by the Hon ble Allahabad High Court in the case of Jagran Prakashan Ltd. vs. Deputy CIT (2012)(345 ITR 288)(All) and Hon ble Delhi High Court in the case of Living Media Ltd., there was no relationship of principal and agency between advertizing agency and the television channel or newspaper company and it is purely a principal to principal relationship and therefore, the question of deducting tax at source even on commission payment does not arise. 6. We heard rival submissions and perused the material on record. In the present appeal, the issue that arises for consideration is whether provisions of sec.194C are applicable to payments made by the respondent-assessee-company to M/s.Bennet, Coleman Co., for procurement of advertisement agency. Though most of the advertisements belong to respondent-assessee-company s own business, payments are made in the capacity of an advertisement agency to M/s.Bennet, Coleman Co., Therefore, circular No.715 dated 8/8/1995 as well as circular No.5 of 2016 dated 29/2/2016 are squarely applicable. The circular No.5 of 2016 reads as under: Sub: Tax Deduction at Source (TDS) on payments by television channels and pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 05.05.2014, respectively. Though these decisions are in respect of print media, the ratio is also applicable to electronic media/television advertising as the broad nature of the activities involved is similar. 5. In view of the above, it is hereby clarified that no TDS is attracted on payments made by television channels/newspaper companies to the advertising agency for booking or procuring of or canvassing for advertisements. It is also further clarified that 'commission' referred to Question No. 27 of the Board's Circular No. 715 dated 8.8.95 does not refer to payments by media companies to advertising companies for booking of advertisements but to payments for engagement of models, artists, photographers, sportspersons, etc. and, therefore, is not relevant to the issue of TDS referred to in this Circular. It is needless to mention that CBDT circulars are binding on the authorities employed for execution of the provisions of the Income-tax Act so long as they are beneficial to the assessee. The said circular is squarely applicable to the facts of the case as impugned payments were made in the capacity of agent to the publisher of newspaper. The mod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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