TMI Blog2014 (12) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... el, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined by Calcutta High Court in (1991) 191 ITR 518(Cal). The payment made by assessee to M/s Sahara Air Line for display a logo on aircraft, ticket etc is not covered under head subsidy but is a contractual payment. 5. Under the facts and in the circumstances of the case the Ld. CIT(A) failed to appreciate the fact that section 194-C is constitutionally valid and it does not violate article 31 of constitution. The deductor is liable to deduct tax even though tax is to be paid by deductee as held by Patna High Court reported in 120 ITR 444(Pat). 6. Under the fact and in circumstances of case the Ld. CIT(A) erred in allowing the relief to assessee 3. The brief facts borne out from the record with regard to the impugned issue are that the appellant is engaged in the business of real estate development, construction and media activities etc. and it entered into a business arrangement with M/s Sahara Airlines Ltd. (now known as M/s Jetlite (India) Ltd.) vide agreement dated 30.3.1995 for giving publicity to promote the business and area of operation of the appellant. As per agreement dated 30.3.1995, M/s Sahara Airlines Ltd. was required to display the logo of M/s Sahara Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlines Ltd. has only given the boarding cards, baggage tag, aboard the aircraft and they are not entrusted with the job of any advertising in newspaper, periodicals, radio, T.V. or production of programmes for broadcasting or telecasting, etc. It was further contended that the payment of subsidy towards passenger fare to M/s Sahara Airlines Ltd. is only in the nature of facilitation arrangement with them for branding the realty projects undertaken by the appellant-company and cannot be treated as advertising and this fact will also find support from the accounting entry made in the books of the appellant-company as well as the books of M/s Sahara Airlines Ltd. The appellant-company has debited this amount directly to work-in-progress in its books of account while in the books of account of M/s Sahara Airlines Ltd. the amount due from the appellant-company has been credited under the head passenger revenue and not advertisement . Therefore, subsidy against passenger s fare of the airlines does not tantamount to payment made for any advertising or publicity and, therefore, there was no liability for deduction of tax at source. 5. The Assessing Officer carefully examined the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prominently displayed outside of both sides of each and every aircraft in the manner that the same is clearly visible to General public at least from the distance of 200 meters. (2) You will use our loop and its colour scheme on all your tickets, boarding Passes, Baggage tags, publicity materials and advertisements in newspapers, hoardings, etc. (3) Our brouchers (to be supplied by us) will have to be distributed with each ticket issued by you. (4) You have agreed to make other arrangements required from our side to popularize our business as may be intimated by us to you after mutual consent. (5) Since the publicity is, mainly, directly linked with the tickets issued by you and/or passengers to be carried by in your aircrafts, we shall pay you ₹ 1075/-per passenger on long sector and ₹ 400/- per passenger on short sector carried by you. (6) It is also further agreed that to popularize our scheme and business activities and for that purposes to increase exposure to the general public, you mil allow on trunk routes a minimum discount of ₹ 5000/- to passenger on every trip till such time arrangements as above remain in force. (7) That the above arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kin- progress or otherwise is again not acceptable as the nomenclature of posting entry would not change the nature of payment. Now it has become important to focus on literal meaning of advertisement and publicity. The idea conveyed by the words advertisement publicity are the idea of inducing the public to buy the commodity or the article in question. Accordingly, the word advertisement conveys the idea of propaganda and similarly the meaning of the word publicity should comprise an act of persuading the public to buy the commodity or a manufactured article. Thus the advertisement publicity or sales promotion should be confined to the act of media propaganda and a direct approach to the consumers by publishing the product through newspaper advertisements, posters or some other similar methods. The question raised herein necessarily gives rise to another question as to what is an advertisement. In Black's Law Dictionary, sixth edition, 1992, the word advertise has been stated, inter alia, to mean to give notice of, make known, publish or to call a matter to the public attention by any means whatsoever. The word advertisement has been stated to mean a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uy his product or service or attract towards his product or service then it would be a guiding factor to identify whether a particular communication of the communicator is tantamount to an advertisement. Now focus is being given to definition of word Publicity . The definition of the word publicity has been defined in different dictionary as below. 1. activity stimulating public interest: activity, especially advertising and the dissemination of Information, designed to increase public interest in or awareness of something or somebody (often used before a noun) 2. Interest created by publicity: public or media interest gained as a result of publicizing something 3. attention-getting Information: Information, material, or other means used to publicize. 4. something or somebody condition of being public: the condition of being known or available to the public (formal) As per Microsoft Encarta 2006. Publicity:- Openness to general observation, notoriety, the business of advertising goods persons. As per Oxford Dictionary: Publicity:- State of being open to the knowledge of all. As per The Law Lexicon: Thus, after thorough perusal of above mentioned def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic Dictionary Vol. II (M-Z) 2. Financial aid given by government towards expenses of an undertaking or institution held to be of public utility, money paid by government to producers of a commodity so that it can be sold to consumers at a low price...' In addition, our attention has been drawn to the definition given in Words and Phrases permanent edition, vol. 40, where subsidy is described as follows: 'A subsidy is a grant of funds or property from a government as of the state or municipal corporation to a private person or company to assist the establishment or support of an enterprise deemed advantageous to the public; a subvention.' Reference is made to 60 Corpus Juris, Corpus Juris Secundum, vol. 83, page 760, gives the following under the heading of subsidy: 'Something, usually money, donated or given or appropriated by the Government through its power agencies, a grant of funds or property from a Government, as of the state or a municipal corporation, to a private person or company to assist in the establishment or support of an enterprise deemed advantageous to the public ; a subvention. Pecuniary premiums offered by the Government to persons en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 within the time stipulated in the notice of demand. Issue notice of demand and challan under section 156 of the I.T. Act, 1961 for the above calculated amount of short charge of TDS separately for every financial year. Sd/- ITO(TDS). 6. Aggrieved, the assessee preferred appeals before the ld. CIT(A) and reiterated its contentions as raised before the Assessing Officer. Besides, it was contended that subsidy which was being received by M/s Sahara Airlines Ltd. on the passenger s fare from the appellant-company was duly credited by them under the head passenger s revenue in their account and was not shown as any advertisement income and the payment of the said subsidy was debited by the appellant-company to its work-in-progress account. Therefore, accounting entries support the fact that the expenditures incurred by the appellant-company by way of provision of subsidy to M/s Sahara Airlines Ltd. did not tantamount to any advertisement expenditure. It was also pointed out before the ld. CIT(A) that clause No.3 of the agreement relating to distribution of broucher at various airports was withdrawn w.e.f. 1.4.2000 vide revised agreement dated 10.3.2000. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d formed a view that advertisement and publicity are not the same and the payments made are not for the advertisement. Therefore, the assessee is not in default in respect of short/non-deduction of tax. He has also observed in his order that deductees have also paid taxes, therefore, the deductor assessee cannot be held to be in default in the light of the judgment of the Hon'ble Apex Court in the case of Hindustan Coca Cola Breweries P. Ltd. vs. CIT, 293 ITR 226 (SC). While adjudicating the appeal, the ld. CIT(A) has also given a conclusive finding pertaining to assessment years 2003-04 and 2004-05 that the order passed under section 201(1) of the Act are not justified as it is barred by limitation as it has been passed after more than four years, having relied upon the judgment of Hon'ble Delhi High Court in the case of NHK Japan Broadcasting Corporation vs. DCIT, 101 TTJ 292 (Delhi) in which time limit of four years was held to be reasonable for initiating action under section 201(1) of the Act. 9. Being aggrieved with the order of the ld. CIT(A), the Revenue has preferred appeals before the Tribunal. Besides placing heavy reliance upon the order of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the submission that the Board has clarified question No.18 raised with regard to the nature of sponsorship of debates, seminars and other functions held in colleges, schools and associations with a view to earn publicity through display of banners, etc put up by the organizers, that the agreement for sponsorship is in essence, an agreement for carrying out a work of advertisement. The ld. D.R. further submitted that sponsorship on debates, seminars and other functions with a view to earn publicity through display of banners though does not find place within the definition of advertisement given in the Act or in Circular No.714, but provisions of section 194C of the Act shall apply in view of the Circular No.715 of CBDT. Therefore the definition given in Circular No.714 is an inclusive definition and other activities of publicity falls within the definition of advertisement. 12. Similarly through question No.5 of Circular No.715, the Board has also clarified that contract for putting up a hoarding is in the nature of advertising contract and provisions of section 194C of the Act would be applicable. In response to the finding of the ld. CIT(A) that the assessee cannot be held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of ICICI Bank Ltd. and Another vs. Municipal Corporation of Greater Bombay and Others, 2005(006) SCC-0404- SC with the submission that the nature of allowance can be decided on the basis of fact of each case. In that case putting up illuminated board was not considered for advertisement by the Apex Court and the matter was remanded back to the Corporation to re-adjudicate the issue in the light of their observation in the judgment. Similar is the position in the instant case where an agreement was entered into with M/s Sahara Airlines Ltd. to display logo with colour scheme on both sides of the aircraft. 14. The ld. counsel for the assessee, Shri. Perci Pardiwala further placed reliance upon the judgment of the Hon'ble Apex Court in the case of Hindustan Coca Cola Breweries P. Ltd. vs. CIT (supra) and Hon'ble Allahabad High Court in the case of Jagran Prakashan Ltd. vs. DCIT( TDS) (2012) 345 ITR 288 (All) with the submission that once the payee has already paid taxes due on the payment received by it from the assessee, tax could not be recovered once again from the deductor-assessee and the assessee cannot be held to be an assessee in default. Undisputedly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention that action under section 201(1) of the Act cannot be initiated after four years from the end of the relevant financial year. 16. Having heard the rival submissions and from a careful perusal of record and the judgments referred to by the parties, we find that the sole controversy raised in these appeals revolves around the nature of payment and the impact of non-deduction of tax thereon. According to the assessee the payment made by the appellant 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. But the Revenue has treated this payment to be an expenditure of payment for doing job of advertisement for the appellantcompany by printing of logo, colour scheme, etc on boarding card, tickets, baggage tags of the appellant-company. Therefore, question raised before us is with regard to the exact nature of work done by M/s Sahara Airlines Ltd. in order to decide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the publicity is, mainly, directly linked with the tickets issued by you and / or passengers to be carried by in your aircrafts, we shall pay you ₹ 1075/- per passenger on long sector and ₹ 400/- per passenger on short sector carried by (6) you. It is also further agreed that to popularize our schemes and business activities and for that purposes to increase exposure to the general public, you will allow on trunk routes a minimum discount of ₹ 500/- to passenger on every trip till such time arrangements as above remain in force. (7) That the above arrangements shall remain in force for a period of one year with effect from 1st April, 1995, or renewed further. (8) You will allow at all reasonable time our representatives to verify that you are complying with the above arrangements, on board of the Aircraft as well as station offices and accounts department(s). You shall allow our representatives complimentary tickets free of charge to enable them to make such verification(s). Please return a copy of this letter duly signed by you as a token of your acceptance of the above arrangement and all terms and conditions together with a certified copy of resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t TDS, as the appellant is only required to deduct TDS under section 194C of the Act when it enter into a contract for advertisement. While dwelling on this argument, we have carefully examined the meanings of the words publicity and advertisement as both the words overlap each other. 18. In the case of Google Online India P. Ltd. reported in 280 ITR 211, the Authority for Advance Rulings has defined the word advertisement used in section 65(2) of the Finance Act, 1994 by holding 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. 19. In the Chambers Dictionary, the word advertisement was defined as commercial publicity, promotion, marketing, jingle, display, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicating ATM Centres cannot have commercial interest but would only tell about the location of the ATM Centres to the existing account holders only. Whether signboards of ATM Centre tantamount to be an advertisement or not would depend upon the facts of each case, depending on the number of ATM Centres established by a particular bank in a particular locality or place or even city, to have the flavor of commercial or business interest of the service provider. Their Lordships accordingly restored the matter to Corporation to re-adjudicate the issue in the light of the guidelines laid down in the judgment after setting aside the judgment of the Hon'ble High Court. 21. From a careful perusal of the aforesaid judgments and the interpretation given in various dictionaries, we are of the opinion that 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. In the instant case, if the agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipients have paid tax on income embedded in these payments, and in the light of Hon ble Supreme Court s decision in the case of Hindustan Coca Cola Beverages Pvt Ltd Vs CIT ( supra), the taxes cannot once again be recovered from the tax deductor. Hon b le jurisdictional High Court, in the case of Jagran Prakashan Ltd Vs DCIT [ (2012) 21 taxmann.com 489 All ] also has, inter alia, observed as follows: ..it is clear that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. In the present case, the Income tax authorities had not adverted to the Explanation to Section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to deduct the tax at source as an assessee in default, condition precedent is that assessee has also failed to pay tax directly. The fact that assessee has failed to pay tax directly is thus, foundational and jurisdictional fact and only after finding that assessee has failed to pay tax directly, deductor can be deemed to be an assessee in default in respect of such tax .. 7. It is thus clear that the onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are set out in Section 201(1) which seeks to make good any loss to revenue on account of lapse by the assessee tax deductor. However, the question of making good the loss of revenue arises only when there is indeed a loss of revenue and the loss of revenue can be there only when recipient of income has not paid tax. Therefore, recovery provisions under section 201(1) can be invoked only when loss to revenue is established, and that can only be established when it is demonstrated that the recipient of income has not paid due taxes thereon. 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. On the other hand, once assessee furnishes the requisite basic information, the Assessing Officer can very well ascertain the related facts about payment of taxes on income of the recipient directly from the recipients of income. It is not the re venue s ca se be f ore u s t hat, on the facts of this case, such an exercise by the Assessing Officer is not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms indicated above after affording opportunity of being heard to the assessee. 24. With regard to ITA Nos.488 and 489/LKW/2009 pertaining to assessment years 2003-04 and 2004-05, it was urged on behalf of the assessee that these appeals were dismissed by the ld. CIT(A) for the reason that proceedings under section 201(1) of the Act were initiated after four years, following the judgment of the Hon'ble Delhi High Court in the case of NHK Japan Broadcasting Corporation vs. DCIT (supra) and the Himachal Pradesh High Court in the case of CIT vs. Satluj Jal Vidyut Nigam Ltd. (supra) and the Revenue has not challenged this finding of the ld. CIT(A) by raising any ground in these appeals. The Revenue has assailed the order of the ld. CIT(A) on merit whereas the ld. CIT(A) has not given any finding on merit in these two appeals. Since the Revenue has not assailed the order of the ld. CIT(A) dismissing the appeals on the point of limitation, the order of the ld. CIT(A) attained finality. Therefore, the order of the ld. CIT(A) deserves to be confirmed. Accordingly we confirm the order of the ld. CIT(A) in this regard and dismiss the appeals of the Revenue. The grounds raised on meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of these facts where no tax liability has ever arisen against the recipient on account of its business loss, interest under section 201(1A) of the Act cannot be levied against the payer i.e. the assessee/appellant. 28. Having heard the rival submissions and from a careful perusal of the relevant provisions and the judgments referred to by the parties, we find that it has been categorically held by the Apex Court and the jurisdictional High Court through their judgments in the cases of Hindustan Coca Cola Breweries P. Ltd. vs. CIT (supra) and Jagran Prakashan Ltd. vs. DCIT( TDS) (supra) respectively that the deductor cannot be treated as an assessee in default till it is found that the recipient has also failed to pay such tax liability. Therefore, before invoking the provisions of section 201(1) of the Act, the onus is on the Assessing Officer to demonstrate that the condition of nonpayment of tax by the recipient is satisfied. If the recipient has paid taxes, the payer though would not be held to be an assessee in default for the purpose of section 201(1) of the Act, but interest liability under section 201(1A) of the Act can be fastened upon it and accordingly it can be com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration is about the nature of interest charged under the Income tax Act, i.e., whether interest is penal or compensatory in nature?. This question came to the consideration of Hon'ble Supreme Court in the context of interest chargeable under sec. 215/139(8) that were in force at the relevant point of time in the Act, which are akin to interest chargeable u/s 234B/234A under the present provisions. The Hon'ble Supreme Court considered the nature of levy of interest u/s 215/139(8) in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961/27 Taxman 275(SC) and observed as under:- it is not correct to refer to the levy of such interest as a penalty. The expression penal interest has acquired usage, but is, in fact, an inaccurate description of the levy. Having regard to the reason for the levy and the circumstances in which it is imposed, it is clear that interest is levied by way of compensation and not by way of penalty. The income-tax Act makes a clear distinction between the levy of a penalty and other levies under that statute. Interest is levied under Sub Section (8) of Section 139 and under Section 215 because, by reason of the omission or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the assessee. It may be relevant to point out that the matter was taken up in appeal before the Supreme Court and by its decision dated 17.09.2008 in CIT v. Prannov Roy /Civil 'Appeal No. 448/2003L the Supreme Court noted that**: the High Court, while accepting the writ petition and setting aside the interest charged under section 234A of the Act, has come to the conclusion that interest is not a penalty and that the interest is levied by way of compensation to compensate the revenue in order to avoid it from being deprived of the payment of tax on the due date. Having heard counsel on both the sides we entirely agree with the finding recorded by the High Court as also the interpretation of Section 234A of the Act as it stood at the relevant time. 12. Coming back to the present appeals, we are of the view that Section 234A, Section 234B and Section 234C are of the same class. On going through these provisions, it is clear that interest' is sought to be charged on account of the fact that the Government is deprived of its revenue. Under Section 234A, interest is charged if tax whichever to be paid at the time of filing of the return is not paid at that point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Mrs. Sheela Jaisingh v. Asstt. CIT [2007]13 SOT 617and the Visakhapatnam bench of the Tribunal in the case of Sudha Agro Oil Chemical Industries Ltd v. ACIT [ITA No.288/Vizag/2007, dated 29-3-2010]. 21. Now we shall turn to the facts of the instant cases before us, wherein interest u/s 201(1A) was levied upon the assessees. It may be noted that interest u/s 201(1A) is levied if there is any failure on the part of any assessee to deduct tax at source (TDS)/remit the same at the right point of time on the income paid by him. The TDS amount to be so deducted/remitted belongs to the revenue/Government. Hence, interest u/s 201(1A) is charged; since the assessee is considered to be enjoying the TDS amount, which belongs to the Government, till the time he deducts and remits the same to the account of the Government. It is pertinent to note that the Tax so deducted at source is given credit in the account of deductee- assessee. If the assessment of the deductee assessee results in refund of TDS amount, the Government shall refund the amount along with interest u/s 244A of the Act. The reason for paying interest u/s 244A is that the Government is considered to have enjoyed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer. If it is established that the recipient had filed all its returns for these years declaring loss in all the impugned assessment years, interest under section 201(1A) of the Act cannot be charged against the assessee. It may be that against loss declared by the recipient in its return, ultimately the assessment was completed at a positive income but in that situation also, that demand is on account of difference between the returned income and assessed income and not because of non deduction of TDS by the assessee and hence it will not alter the situation particularly if that assessee has challenged the addition in his hands in appeal. Accordingly the order of the ld. CIT(A) on this issue is set aside and the matter is restored to the file of the Assessing Officer for verification and adjudication of the issue in terms indicated above after affording an opportunity of being heard to the assessee. If it is found that in the return of income filed for these years by the deductee, it has included the impugned amount in its receipts and there is loss as per return, no demand can be raised u/s 201 (1A) on the present assessee. 32. In the other bunch of appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t/deductee M/s Sahara Airlines Ltd. had filed all its returns for these years declaring loss in all the impugned assessment years and there was no loss to the Revenue, we have taken a view having relied upon various judicial pronouncements that 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) of the Act. Now the question arises; whether in that situation, can the penalty u/s 271C be fastened against the assessee ? In this regard we have examined the totality of the facts of the case and we find that there was serious dispute with regard to the nature of payments made by the assessee to M/s Sahara Airlines Ltd. The assessee claimed the payment to be the payment for publicity and the Revenue contended it to be the payment for advertisement. We have also concluded in the foregoing paras that the difference between the publicity and advertisement is very thin as defined in various dictionaries. In that situation, it may be the possibility that the assessee might be under the impression that he was making payment for public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor India P. Ltd. Vs Commissioner of Income-tax [2002] 253 ITR 745 (Del), their Lordships of Hon'ble Delhi High Court have held that 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 271C of the Act. Thereafter, the Assessing Officer dealing with the matter has to consider the explanation offered by the assessee and ascertain as to whether the failure was on account of reasonable cause. It was also held that non consideration of the plea raised by the assessee about existence of reasonable cause vitiated the order. The relevant observations of Hon'ble Delhi High Court are extracted here as under:- Section 273B starts with a non obstante clause and provides that notwithstanding anything contained in several provisions enumerated therein including section 271C, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions, if he proves that there was reasonable cause for the said failure. A clause begi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llow. 40. Having carefully examined the facts of the case in the light of the aforesaid judicial pronouncements, we are of the view that the assessee/appellant 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 of the Act. It is also an undisputed fact that 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. It was emphatically argued that recipient / deductee suffered huge losses, therefore, they had filed all its returns for these years declaring loss in all the impugned assessment years and no tax liability has ever fastened on them on account of these payments and there was no revenue loss on non deduction of TDS. If all these facts are clubbed together, it can safely be held that 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. Though in foregoing appeals we have restored the matter to the file of the Assessing Officer for verification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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