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2014 (12) TMI 721 - AT - Income TaxTDS u/s 194C – Putting up a logo on aircraft is also a type of hoarding which is advertising contract or not – Board's Circular No.715 dated 8th Aug. 1995 - Nature of payment and the impact of non-deduction of tax - Held that:- The payment made to M/s Sahara Airlines Ltd. was in the form of subsidy against passenger’s ticket sale and in return thereof M/s Sahara Airlines Ltd. was entrusted with the job of printing of logo and colour scheme, etc of the appellant-company on the boarding card, ticket, baggage tag on board on their aircraft so that the passengers travelling could know about the company. In Re: Google Online India Private Ltd. (GIPL) [2005 (12) TMI 1 - Authority for Advance Ruling, New Delhi] it has been held that it has an inclusive definition that the advertisement means to make something known to the public or a segment of the public, to announce publicly by a printed notice or broadcast to call public attention to, especially by emphasizing, desirable qualities so as to arouse a desire to buy and patronize and it includes notices, circular, label, wrapper, document, hoarding or any other audio or visual representation made by means of light, sound, smoke or gas - an advertisement is generally of goods and services and is information intended for potential customers - the “advertisement” includes publicity, but vice-versa may not be possible - but whenever publicity of a brand or logo brings commercial benefit either apparent or hidden, it will assume the character of “advertisement”. It is very hard to believe that a businessman would publicize his logo or brand without visualizing any commercial benefit out of it - if the agreement is read carefully, it has been mentioned that the parties to the agreement have agreed that it was executed to give extensive publicity to the activities of the assessee in order to promote their business and area of operation and for doing so M/s Sahara Airlines Ltd. was required to display the logo of the appellant-company on both sides of the aircraft, tickets, boarding passes, baggage tags, newspapers, hoardings etc. - the only inference can be drawn from the agreement and the revised agreement that it was executed for the purpose of “advertisement” of the logo of the appellant-company - the assessee has agreed for advertisement of its logo for which it is required to deduct TDS u/s 194C of the Act. Whether provisions of section 201(1) of the Act can be invoked in the light of the fact that the deductee/recipient i.e. M/s Sahara Airlines Ltd. has already paid taxes or it did not have any tax liability on account of continuous business loss returned by it – Held that:- In Hindustan Coca Cola Breweries P. Ltd. vs. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] it has been held that recovery provisions u/s 201(1) of the Act can be invoked only when loss to the Revenue is established and that can only be established when it is demonstrated that recipient of income has not paid taxes on the income - recovery provision u/s 201(1) of the Act can only be invoked when loss to the Revenue is established and the onus is upon the Revenue to demonstrate that the recipient of income has not paid due taxes - in the absence of the statutory powers to requisition any information from the recipient of income, the assessee is indeed not always able to obtain the same - the provisions to make good the short fall in collection of taxes may thus end up being invoked even when there is no shortfall in fact - once assessee furnishes the requisite basic information, the AO can very well ascertain the related facts about payment of taxes on income of the recipient directly from the recipients of income. Levy of interest u/s 201(1A) – Held that:- This interest is compensatory interest in nature and it seeks to compensate the revenue for delay in realization of taxes – the same has been held in Bennett Coleman & Co Ltd. Vs ITO [1984 (11) TMI 58 - BOMBAY High Court] - this aspect was not examined by the CIT(A) as he was not required to do so in the light of the fact that he has concluded that the impugned payment was made for publicity and not for advertisement, for which the assessee was not required to deduct TDS - But now as it has been concluded that the payments were made for advertisement, this aspect of the issue requires a proper examination – thus, the matter is remitted back to the AO for verification and adjudication – Decided in favour of revenue. Deletion of penalty u/s 271C – Liability to deduct TDS u/s 194C – Held that:- The assessee has made the payments for advertisement and not for publicity and therefore, it was required to deduct the TDS u/s 194C of the Act - once it is held that there was no tax liability upon the recipient/deductee at any point of time with regard to the receipts, the assessee can neither be held to be in default nor chargeable to interest u/s 201(1A) - the difference between the publicity and advertisement is very thin as defined in various dictionaries – as decided in Woodward Governor India P. Ltd. Vs Commissioner of Income-tax [2001 (4) TMI 34 - DELHI High Court] section 273B starts with a non obstante clause which means that it has overriding effect over other provisions of law and initial burden is on the assessee to show there existed reasonable cause which was the reason for the failure referred to in section 271 - assessee has not deducted TDS on the impugned payments under the bonafide belief that the payments made by it is in the nature of publicity and not for advertisement for which he was required to deduct tax u/s 194C - the payments were made to the group concern of the assessee i.e. M/s Sahara Airlines Ltd., whose financial position might be known to the assessee - the assessee had a bonafide belief or reasonable cause for non-deduction of TDS for which penalty u/s 271C of the Act cannot be levied - assessee had a reasonable cause for non-deduction of TDS and thus the penalty levied u/s 271C of the Act is not leviable – thus, the order of the CIT(A) in setting aside the penalty is upheld – Decided against revenue.
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