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2015 (9) TMI 125 - ITAT BANGALORE

2015 (9) TMI 125 - ITAT BANGALORE - TMI - TDS liability u/s 194C - expression “work” includes advertisement and the assessee has debited the expenditure under the head ‘advertisement’ as held by AO - plea of the assessee that it was payment made to the principal from time to time and M/s. Hero Honda Motors is not an advertising agency and hence it cannot said to have been payment made to any advertising agency - Held that:- Claim of the assessee that M/s. Hero Honda Motors having engaged a contr .....

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2015 (7) TMI 576 - DELHI HIGH COURT] and also on the plain reading of the provisions of sec.194C of the Act, thus the provisions of sec.194C are not applicable in the instant case and consequently, the AO was not justified in making addition by applying the provisions of sec. 40(a)(ia) of the Act. In the result, the addition made by the AO is hereby deleted. - Decided in favour of assessee.

Not accounting amount received from HDFC bank - assessee stated that he has received only commi .....

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and 194C of the Act. Since no explanation was filed even before the CIT(A), the CIT(A) affirmed the action of the AO. Even before the Tribunal, assessee could not furnish proper explanation to highlight that it has not received any commission and whatever was offered to tax was only the amount received from HDFC referable to taxes u/s 194A and 194C of the Act. In fact, the total sum referred by the AO works out to ₹ 46,518/- whereas the assessee offered to tax commission amount of ₹ .....

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SHRI D.MANMOHAN, J. For The Appellant : Smt.Sheetal, Advocate. For The Respondent : Shri P.K.Srihari, Addl.CIT(DR) ORDER Per D.MANMOHAN, VP: These two appeals are filed at the instance of the assessee-firm and they are directed against the orders passed by the CIT(A), Hubli. Since major issue is common in both the appeals, they are disposed of together for the sake of convenience. 2. In respect of the assessment year 2008-09, the AO made an addition of ₹ 4,82,318/- by applying the provisi .....

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s their products and the total expenditure apportioned to several dealers. The assessee-company intimated to assessee-firm, by way of debit note that a sum of ₹ 4,82,318/- was payable to M/s. Hero Honda Motors Ltd. Before the AO, it was contended that as per the provisions of sec.194C of the Act, payment made to any contractor for work done, which includes advertisement, is subject to deduction of tax at source whereas there was no payment to any contractor since the work was not carried o .....

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4C of the Act. The plea of the assessee was that it was payment made to the principal from time to time and M/s. Hero Honda Motors is not an advertising agency and hence it cannot said to have been payment made to any advertising agency, was rejected by the AO. 4. Aggrieved, assessee contended before the CIT(A) that the AO was not justified in invoking the provisions of sec. 40(a)(ia) of the Act since it was only payment made to a principal and cannot be treated as advertisement expenditure incu .....

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y of the certificate issued by M/s. Hero Honda Motors to submit that the assessee has not advertised; it was only responsible to the company to pay their share for promotion of their products. The ld. CIT(A) was of the opinion that even the certificate issued by M/s. Hero Honda Motors will not be of any help in view of the fact that it was classified as advertisement expenditure. He, therefore, concluded that the AO was justified in disallowing the same u/s 40(a)(ia). Further aggrieved, assessee .....

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materials purchased and labour charges, it cannot now be treated as revenue expenditure. He, accordingly, disallowed the claim of deduction of the said expenditure. 6. On an appeal filed by the assessee, ld. CIT(A) observed that the assessee having debited profit & loss account under the head building maintenance and having regard to the observations of the AO, the expenditure has to be treated as capital in nature. He, however, directed the AO to allow depreciation as per law and compute t .....

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ct payment to any advertising agency and it was only reimbursement to M/s. Hero Honda Motors which is the principal company engaged in manufacture of motor cycles and it is not undertaking advertisement contracts and as such provisions of sec.194C would not get attracted in the instant case. The learned counsel for the assessee also adverted attention of the bench to pages 23 and 24 of the paper book, which is the letter dated 31/10/2011 addressed to the AO, to submit that as per the provisions .....

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arious payments made by it to third parties and the payments made by the assessee being only reimbursement of expenses incurred by the payee, no tax is deductible by the assessee. (Income Tax Appeal No.627/2012 and 507/2013 dated 15/07/2015). It was, therefore, strongly submitted that tax authorities erred in treating reimbursement made by the assessee to the principal as a payment towards work contract. On the other hand, learned Departmental Representative relied upon the orders passed by the .....

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. Hero Honda Motors having engaged a contractor for advertisement of motorcycle and on payments made to such contractor, tax was deducted at source under the provisions of sec.194C of the Act. This contention of the assessee was not disputed by the learned Departmental Representative. It is also not in dispute that the assessee made reimbursement of its share to the principal company and it had not directly entered into advertisement contract with any the advertising agency. Under these circumst .....

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ilding maintenance ought to have been treated as revenue in nature. Though the learned counsel for the assessee submitted that majority of the expenditure was revenue in nature, for the maintenance of the building, some portion of the expenditure was capital in nature, which was already capitalized no proof of bifurcation of such expenditure was not placed before the bench. Both the AO as well as the CIT(A) observed that the expenditure was in the nature of capital since it was towards purchase .....

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general in nature and do not require specific consideration. Ground No.8 is only consequential in nature. 12. Vide ground Nos.2 and 3, assessee contends that the amount reimbursed to M/s. Hero Honda Motors towards advertisement expenditure should not have been added by the AO by invoking the provisions of sec.194C read with sec. 40(a)(ia) of the Act. During the course of hearing, it was noticed that out of total expenditure of ₹ 2,74,854/- only a sum of ₹ 2,31,817/- was reimbursed t .....

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reimbursement to M/s. Hero Honda Motors, is ₹ 43,037/- and the assessee has not furnished any details as to whether this payment was made to one party or to several parties. Since even at the second appellate stage, assessee has not furnished any details an adverse view needs to be taken in the matter by holding that the impugned expenditure of ₹ 43,037/-is in excess of the limit specified u/s 194C(5) of the Act and therefore the assessee is liable to deduct tax at source and for no .....

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. Ground Nos.4 and 5 are referable to addition of ₹ 46,518/-made by the AO. In this regard, the AO observed as under: 6. Not accounting amount received HDFC bank : During the course of assessment proceedings, it was found that as per Individual Statement for TDS, the assessee has received an amount of ₹ 33,185/-u/s194A of the Income Tax Act 1961 and ₹ 13,333/-u/s194C of the Income Tax Act 1961 from HDFC Bank. However, on perusal of the account, it was found that the same were n .....

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d ₹ 33,185/- u/s 194A of the Income Tax Act 1961 and ₹ 13,333/-u/s194C of the Income-tax Act 1961 and the same has not been accounted in the books of account. As the assessee has already gave effect to all the expenditure affecting the profit and loss account, the entire amount of ₹ 46,518/- is treated as income of the assessee and brought to tax accordingly. 14. Aggrieved, assessee contended before the CIT(A) that the amount was duly credited to the bank interest and commissio .....

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ed to the commission of ₹ 45,348/-received from the bank and credited to the profit and loss account which is different from the amounts referable to 194A and 194C of the Act. Since no explanation was filed even before the CIT(A), the CIT(A) affirmed the action of the AO. Even before the Tribunal, assessee could not furnish proper explanation to highlight that it has not received any commission and whatever was offered to tax was only the amount received from HDFC referable to taxes u/s 19 .....

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