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2016 (7) TMI 105

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..... fore set aside the impugned order of the ld. CIT(A) giving relief to the assessee on this issue and restore the matter to the file of the AO for the limited purpose of deciding the same in the light of second proviso to section 40(a)(ia) which is applicable retrospectively - Decided in favour of revenue for statistical purposes. TDS u/s 194H or 195J - payments made by the assessee to various parties towards collection of advertisement - Held that:- At the time of hearing, the ld. DR has taken us through the relevant portion of the orders of the AO and the ld. CIT(A) to show that going by the services rendered by the concerned parties, the nature of payment is commission only as covered by section 194H and not professional charges covered by section 194J and the ld. Counsel for the assessee has not been able to controvert this position. He however has raised an alternative contention by relying on the second proviso to section 40(a)(ia) as done in respect of issue involved in ground no.1 with a request to restore the matter to the file of the AO for the limited purpose of deciding the same afresh in the light of the said proviso. We, therefore set aside the impugned order of the .....

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..... etween the Contractor and person as specified in (a) to (k) shall deduct tax at source at the time of credit of such sum to the account of the Contractor or at the time of payment whichever is earlier . So, under the existing provision of Section 194C of the I.T. Act, deduction of tax at source is required to be made from the payment of any s um to resident Contractor/Sub-contractor for 'carrying out any work' at the time of payment or credit of such sum to the account of such person. It is embedded in the provision of Secton194C that 'any' person responsible for paying 'any' sum to any resident contractor /Subcontractor for 'carrying out any work ..... ' The expression 'Contract for carrying out any work' implies that the Contractor/Sub-contractor should have carried out such activities. Here 'any' is a word which excludes the limitation and qualification and can mean 'all' 'each' and 'every' as well as 'carrying on' implies as repetition of 'work' So the provision relating to deduction of tax at source from payment made to contractors and sub-contractors are wide enough .....

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..... to be used in such advertising. As per CBDT's Circular No.715 dated 08-08-1995, there is also a provision of deduction of tax at source when a client makes payment to an advertising agency. Only the Advertising Agencies, who makes direct payment to the print/electronic media, are exempted for deduction of tax at source. It is also pointed out when an advertisement agency makes payment to their models, artist, photographs, etc., the tax is also to be deductible at the prescribed rate as per provision of law, as well as, there is no such provision of enrouting by other agencies in the said Circular. So, there is no provision in the Circular No.715 that any client enrouting through advertising agency to publish any advertisement in the print/electronic media would be exempted from deducting tax at source. The assessee in her submission had also admitted that she is an unaccredited agent. She had made with contract with the advertising agencies for performance of work against the payment made to the advertising agency and the work may be related to the publication of any advertisement in print/electronic media or to the souvenir or any payment to any other advertising activit .....

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..... assessee and the material available on record, the ld. CIT(A) deleted the said disallowance for the following reasons given in paragraph 8 of his impugned order. 8. I have carefully considered the assessment order and the submissions of the appellant. I am of the considered view that the facts of the present case are identical to the facts of Premlata Maheswari. I find that on these facts, the case is directly covered by the above said decisions of the Hon ble ITAT Bench, Bangalore, in the case of M/s. Sands Advertising Communication Pvt. Ltd. cited supra and ITAT bench, Kolkata, in the case of Premlata Maheswari Vs. ITO, Ward-32(2), Kolkata, cited supra. In the present appeal also, the assessee devised and defined the advertisement materials which were channelized through Campaign Advertising Services Pvt. Ltd. and other 5 (five) Accredited Advertising Agencies (AAA) and then to the Print Media. Therefore, respectfully following the aforesaid orders of the Hon'ble I.T.A.T., in the cases cited supra, it is held that the assessee's case does not fall within the ambit of Sec. 194C of the I.T. Act, 1961. Hence, it is held that the provisions of Sec. 40(a)(ia) are not att .....

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..... mbit of Work . This, in the context of the case on hand, is the work which the media does for a client for a certain consideration. In the case on hand, the media is BCCL which does the advertisement for the assessee or its clients. Therefore, we find that there is no merit in the assessee's contention that BCCL is not doing any Work for the assessee. The payments made for booking of the advertisement space is essentially for advertisement purposes and not for the space as such. The client does not pay to take ownership of the space but for advertisement of his product / service. At the time of booking the advertisement space, BCCL is not concerned about whom the advertisement is intended for. It s only requirement is that the advertisement should comply with the laws in force at that time. Therefore, it follows that the payment made by the assessee to BCCL is for advertisement, which is unambiguously included in the provisions of section 194C of the Act. 6.3 The assessee has placed reliance on CBDT s Circular No.714 dt.3.8.1995 to contend that the transaction in question would not fall under advertising within the meaning of section 194C of the Act. Section 194C of .....

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..... in activity of advertising in the print media. It s sister concern was in similar business, but was an accredited agency. The assessee extend into an agreement with the sister concern under which all advertisements created / developed by the assessee for its clients were to be released to the print media through the sister concern, for which certain consideration was to be paid to it. The Assessing Officer was of the view that the provisions of section 194C of the Act was applicable, while the contention of the assessee was that the sister concern was only a routing agency and not a sub-contractor. It was held by the co-ordinate bench of the Tribunal that the provisions of section 194C of the Act is applicable only when payment is to be made to an advertising agency and not when payment is made by an advertisement agency to the print media as clarified in CBDT Circular NO.715 of 1995 and therefore it was held that no TDS was required to be made in that case. In the case on hand, however, the assessee is not a routing agency. It makes outright purchase of advertising space and exercises exclusive control over the space. It has the right to sell the space or retain it with itself. F .....

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..... o.1 of the Revenue s appeal is treated as allowed for statistical purposes. 8. In ground no.2, the Revenue has challenged the action of the ld. CIT(A) in deleting the disallowance of ₹ 4,41,418/- made by the AO under section 40(a)(ia) on account of payments made by the assessee to various parties towards collection of advertisement. 9. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the payments in question made by the assessee to various parties against the collection of advertisement were treated by the AO as in the nature of professional charges covered by section 194H and the same were disallowed under section 40(a)(ia) as there was failure on the part of the assessee to deduct tax at source. On appeal, the ld. CIT(A) accepted the stand of the assessee that the payments in question were in the nature of professional charges as covered by section 194J and since all such payments individually were less than ₹ 20,000/-, he held that the assessee was not required to deduct tax at source and the question of disallowance under section 40(a)(ia) would not arise. At the time of hearing, the .....

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