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Dy. Commissioner of Income-Tax, TDS-1 (1) , Mumbai Versus Group M. Media India Pvt Ltd and Vica-Versa

2015 (10) TMI 247 - ITAT MUMBAI

TDS liability on advertisement - falls within the purview of section 194C and not section 194I? - Held that:- t it is an undisputed fact that assessee has entered into a contract with M/s Portland India Outdoor Advertising Pvt Ltd and Poster Publicity Division of Media-edge (CIA India Pvt Limited) (payee firms) for display of advertisement of its clients. These payee firms in turn obtained display services for displaying advertisement on hoardings sites etc., taken from the hoarding contractors/ .....

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grounds raised by the revenue are dismissed in both the years. - Decided in favour of assessee. - ITA No. 7055, 7056/Mum/2012, Cross Objection 17, 18/Mum/2014 - Dated:- 4-9-2015 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For The Appellant Shri B D Naik For The Respondent None PER AMIT SHUKLA, JM: The aforesaid appeals have been filed by the revenue and Cross Objections by the assessee against separate impugned orders of even date, 27.08.2012, passed by CIT(A)-1 .....

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07.2006 as per section 194I and by holding that the payments made by the assessee for advertisement falls within the purview of section 194C and not section 194I. (ii) The Ld. CIT(A) has erred in law and on facts by deleting the additions made u/s 201(1) and section 201(1A) by relying upon CBDT circular No. 715 dated 08.08.1995 and Circular No. 714 dated 03.08.1995 and without considering the entire set of facts in totality read with the amended definition of rent u/s 194I. (iii) The Ld. CIT(A) .....

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e for making any payment under any other agreement or arrangement for the use of (either separately of together any) a) land or b) building … h) fittings … whether or not any or all of the above are owned by the payee. (iv) The Ld. CIT(A) has erred in law and on facts by in deleting the interest u/s 201(1A) on the issue of payments of payments made by the assessee for the purpose of display of advertisement of the assessee s clients, as this short deduction has been deleted by him .....

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e assessee nor any adjournment letter has been received despite service of notice, hence we proceed to decide the appeals and COs on its merits after hearing the Ld. DR. 3. The brief facts are that, assessee-company is engaged in the business of Media planning and other incidental activities in connection with the business of advertising and marketing. A survey u/s 133A was conducted in the case of the assessee on 08.07.2011, wherein it was noticed that assessee has shown expenditure on advertis .....

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a Pvt Limited) ( Poster ). On such payment, assessee has deducted TDS @ 2% u/s 194C. 4. On the other hand, the Assessing Officer s contention is that the payee firms were found to have sublet the hoardings site to the assessee, therefore, assessee was required to deduct TDS @ 10% as rent u/s 194I. In response to the show cause notice, the assessee filed very detail explanation vide reply dated 12.11.2011, wherein it was stated that the assessee for the business of advertising entered into contra .....

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d advertising . Secondly, the payment made to the two payee firms are for advertising and not for any lease or sub-lease of space. Lastly, there is no nexus between the assessee and the owners of the hoardings or space, therefore, there is no question of deducting TDS u/s 194I. In support, the reliance was placed on the following two decisions (i) Ogivly & Matha in the ITA No. 5202/Del/2004, ITAT Delhi (ii) Roshan Publicity in ITA No. 1277/Mum/2011, ITAT, Mumbai However, the Assessing Office .....

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h have been incorporated from pages 8 to 21 of the appellate order. The Ld. CIT(A) after considering the entire submission as well as the reasoning of the Assessing Officer, agreed with the contention raised by the assessee that payment made by the assessee to various parties for the purpose of advertisement did not fall in the category of rent and, therefore, assessee was not required to deduct tax u/s 194I. While coming to his conclusion, he referred to CBDT Circular No. 715 dated 08.08.1995, .....

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ion below section 194C, hence it is purely works contract and not a rent. The relevant observation and finding of the CIT(A) in this regard is as under 3.13. The above clarifications of the Board regarding the provisions of sections 194C, 194J and 194-I of the Act make it amply clear that the case of the appellant straightaway falls in section 194C of the Act. The appellant has entered into a contract with other parties for display of advertisements of its clients and the transaction is purely i .....

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taken any space on hire so as to be able to sublet the same to the appellant. 3.14 To elaborate this aspect further, there could be a situation where an assessee takes a hoarding on hire from a hoarding owner for a particular period to display the advertisements of its clients and for this particular period, the assessee has the complete control and right on the hoarding for the purpose of the display the advertisements of its clients. Also, there is no stipulation in the contract as to which a .....

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he appellant the situation is completely different. The appellant has not at all taken on hire the hoarding site from the parties concerned in terms of above stipulations. It has only obtained the display right of its advertisements in respect of certain hoarding sites for a particular period through other parties who may or may not be the hoarding owners. The appellant is also not involved in putting up its advertisements on the said hoarding sites. It is only providing the necessary design and .....

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was the taxability of lease "rentals vi respect of a portion of the building in the hands of the owner of the building for fixing the hoarding of the advertiser. In that case it was held that the lease rentals shall be assessed as 'Income from house property'. Firstly there was no issue of tax deduction at source in that case and secondly the facts are different from the facts in the case of the appellant in the sense that the appellant has not taken on lease any portion of a build .....

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nd Roshan Publicity Pvt. Ltd (both supra), the ITAT, Delhi and Mumbai have respectively decided exactly the same issue and have held that the work of advertisement which includes various services will fall under the category of 'work contract' and hence the tax will be deductible under section 194C of the Act in respect of the payments made by the advertiser to the parties concerned. In this regard, the appellant has relied upon various other case laws where it has been held that if ther .....

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#39;ble Madras High Court, ITAT, Delhi and ITAT, Mumbai respectively have held that for the payment to be categorized as rent, exclusive possession and control of the space/transmission lines/equipment etc is necessary and the agreement under which the payment is made should be akin to lease, sublease or tenancy to fall within the ambit of section 194-1 of the Act. None of these conditions prevail in the case of the appellant. Thus it is abundantly clear that the payments made by the appellant t .....

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