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2014 (12) TMI 1326 - AT - Income TaxTDS u/s 194C - non-deduction of TDS by the assessee on so-called reimbursement of advertisement expenses to its dealers - addition u/s 40(a)(ia) - Held that:- From the facts of the assessee’s case, it appears that it was a structure arrangement wherein the payments are routed through the distributors to circumvent the provisions of Chapter XVII-B of the Act. The bill raised for advertisement in the Danik Bhaskar by DB Corp Ltd., Zone-I, M.P. Nagar, Bhopal was in the name of Spice Communication Ltd. And the client name is also mentioned as Spice Communication Ltd. The SPG Distributors have mentioned in its letter to Mr. Sahil Kohli, Spice Mobile Ltd., placed at page 15 of the paper book, that they have already issued a cheque no.136282 of ₹ 2,24,795/- and asked for reimbursement. Thus, the bill raised by the advertisement agency was not in the name of distributor. This fact itself shows that there was a structure arrangement to avoid the TDS provisions. The assessee himself has submitted letters from various regional distributors that they have complied with the provisions of TDS under the Act. Such confirmations are placed at pages 42 to 45 of the paper book. Certain bills raised by the advertisement agencies are in the name of distributors. Whether these persons have made TDS or not is not clear from the records. CIT (A) was justified in directing the assessee to produce the evidences before Assessing Officer to establish that the parties to whom the reimbursements have been made had actually complied with the provisions of Chapter XVII-B. Such verification is necessary to arrive at the correct facts of the case and to establish the extent of default on the part of the assessee for violating the provisions of TDS in respect of the payments of the advertisement expenses through the structural arrangement.
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