TMI Blog2007 (9) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has not paid any commission to the advertising agents. Rather the assessee has sold the air time to the advertising agents who in their turn have sold such air time to various other advertisers. The assessee was to receive certain consideration for selling the air time to the advertising agent and the advertising agents had retained part of that commission which is in the nature of agency commission. Thus, the assessee received payment from the advertising agent net of such agency commission. These are in the form of trade discount offered and not in the form of commission paid. On the payment made by advertising agents to the assessee, tax is deducted at source u/s 194C of the Act. Since the assessee has not paid any commission within the meaning of section 194H of the Act to the advertising agents rather have received the amount from such advertising agents, there is no occasion for the assessee to deduct tax at source as no payment is made by the assessee to such advertising agents. The decision of ITAT, Cuttack Benches in the case of Asstt. CIT v. Samaj [ 2000 (5) TMI 166 - ITAT CUTTACK] squarely applies. The facts being identical, the amount deducted by var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, nominees, assignees and successors-in-interest. Whereas M/s. TVAM (India) Private Ltd. is a company set up to produce T.V. Programmes for Doordarshan and is producing a morning programme Subah Savere . And whereas M/s. Moving Picture Company (India) Ltd. is an already established Company involved in the business of Media, Promotion, Television, Advertising for the last 10 years. And whereas M/s. TVAM (India) Pvt. Ltd. being desirous of promoting its sale etc., are desirous of appointing M/s. Moving Picture Company (India) Pvt. Limited as their sole marketing representative and exclusive holder of the world rights for subsequent resale/re-telecast of the programme or any portion thereof. Now this deed witnesseth as under: (1)That to Party of the Second Part is producing a TV Programme under the name and title Subah Savere which is shown on DD National in the morning hours. (2)That the Party of the Second Part has agreed to appoint the Party of the First Part as the sole marketing agent for selling the rights, of free commercial time for the Programme Subah Savere with effect from 15-2-1999. The Party of the Second Part also agrees that the party of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001-02 Rs. 3,58,45,469 The Assessing Officer held that the amount paid to TVAM is to be considered as fees for technical services. The assessee should have deducted tax at source as per provision of section 194J of the Act. Since no tax was deducted, the assessee was treated as assessee-in-default under section 201(1) of the Act. 2.2 The Assessing Officer also noted that the FCT which was available to the assessee was sold to various advertising agents. The advertising agents were given commission on such FCT sold through them. The assessee should have deducted tax at source on such agency sales commission as per provision of section 194H of the Act. Since no tax was deducted, the assessee is to be treated as assessee-in-default. The contention raised by the assessee in this behalf were not accepted and a demand was raised for failure to deduct tax at source. Interest under section 201(1A) was also charged. 2.3 Learned CIT(A) after considering rival submissions held as under: Ground No. 2 [194H and 201(1)] : The facts of the case are that M/s. TVAM, the producer of programme Subah Savere had got Free Commercial Time (FCT) which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngh submitted that the assessee was treated as assessee-in-default based on the statement of Shri M.M. Pokhrian recorded during the course of survey. The assessee was making periodic payment to TVAM towards production of TV serial. This serial was produced for and on behalf of assessee. Thus, the services rendered by TVAM should be treated as technical services within the meaning of section 194J and hence, for failure to deduct tax, the assessee is to be treated as assessee-in-default. He further submitted that the FCT was sold by the assessee through various agents. The agents were paid commission. Thus, on payment of such commission the assessee should have deducted tax as per provision of section 194H of the Act. For failure to deduct tax under section 194H, the assessee is to be treated as assessee-in-default under section 201(1) of the Act. Since the assessee is to be treated as assessee-in-default under section 201(1), the interest is consequential and hence, interest under section 201(1A) is also to be charged. 2.5 Learned counsel for assessee, on the other hand, strongly relied by the appellate authority. He submitted that Survey was conducted on assessee s premises on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rogramme, Doordarshan allowed M/s. TVAM Free Commercial Times (FCT). In turn M/s. TVAM appointed the appellant-company as a sole marketing representative and exclusive holder of the world rights for subsequent resale/re-telecast of the programme as well as the FCT. The programme was only produced by TVAM who had been commissioned by M/s. Doordarshan. In such facts and circumstances, the Assessing Officer fell into error, under a wrong appreciation of facts, by inferring that the producer of the programme was the appellant-company and consequently since the programme had been produced by M/s. TVAM the latter had rendered technical services to the appellant-company on which the provisions of section 194J were attracted. In such facts and circumstances of the case, as the provisions of section 194J are not applicable, the impugned demand raised by the Assessing Officer is to be quashed. He pleaded that the order of CIT(A) needs to be upheld. 3. We have considered rival submissions. From the agreement, it is clear that the programme was produced by TVAM only. The expenditure was incurred by TVAM for production of the TV programme. To earn the revenue out of production of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of such agency commission. These are in the form of trade discount offered and not in the form of commission paid. On the payment made by advertising agents to the assessee, tax is deducted at source under section 194C of the Act. Since the assessee has not paid any commission within the meaning of section 194H of the Act to the advertising agents rather have received the amount from such advertising agents, there is no occasion for the assessee to deduct tax at source as no payment is made by the assessee to such advertising agents. The decision of ITAT, Cuttack Benches in the case of Asstt. CIT v. Samaj [2001] 77 ITD 358 squarely applies. The Tribunal held as under: As regards the commission to advertising agencies, the newspaper published by the assessee was used by various advertising agencies for placing advertisements. The said agencies purchased space on the newspaper and supplied the material to be published in such space. From the bill raised by the assessee for the space and printing charges the agencies deducted a specified percentage as their charges and paid the balance to the assessee. Although the payment deducted by the advertising agencies was described a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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