TMI Blog2015 (2) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the examination of such details as are required are not available before us. In view of the above, in the interest of equity and justice, we deem it necessary to restore this issue to the file of the Assessing Officer to decide thereon - Decided in favour of assessee for statistical purposes - I.T.A. Nos. 1193 & 1194/Bang/2013 - - - Dated:- 6-2-2015 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER Appellant By : Shri Rajan Vora, C.A. Respondent By : Shri C.H. Sundar Rao, C.I.T (D.R) O R D E R Per Shri Jason P. Boaz : These appeals by the assessee are directed against the common order of the CIT (Appeals), Hubli dt.9.1.2013 for Assessment Years 2008-09 and 2009-10. Since common issues are involved, these appeals were heard together and we deem it fit to dispose of these appeals by way of this order. 2. The facts of the case, briefly, are as under :- 2.1 The assessee company, is engaged in the business of printing and publication of newspaper called Vijay Karnataka . 2.2 For Assessment Year 2008-09, the assessee filed its return of income on 30.9.2008 declaring income of ₹ 20,32,10,289. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 and 2009-10 by way of a common order dt.9.1.2013. 4. Aggrieved by the orders of the CIT (Appeals), Hubli for Assessment Years 2008-09 and 2009-10 dt.9.1.2013, the assessee has preferred these two appeals before this Tribunal raising the following grounds for both assessment years involved :- Repr of grounds of appeal 2008-09. On the facts and circumstances of the case, Times VPL Limited respectfully submits that the learned CIT (Appeals) : 1. Erred in holding that the appellant is liable to deduct tax at source under the provisions of section 194C of the Act on expenditure aggregating ₹ 7,20,00,000 made towards cost of purchase of bulk advertisement space from Bennett, Coleman Company Ltd. and consequently upholding the disallowance made by the Assessing Officer under section 40(a)(ia) of the Act. 2. Erred in not appreciating the purpose and the intention of section 40(a)(ia) of the Act, which cannot be invoked, when the appellant relying on the CBDT Circular No.715 is under a bonafide belief that tax is not required to be deducted at source under Section 194C of the Act. 3. Was not justified in invoking the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the expenditure by invoking the provisions of section 40(a)(ia) of the Act; holding that the agreement with BCCL for purchasing the bulk space in the newspaper is for the purpose of advertising and is nothing but a contract which falls under the category of work which includes advertising as per clause (iii) to the Explanation to section 194C of the Act. In coming to this finding, the Assessing Officer derived support form the decision of the Hon'ble Apex Court in the case of ACC Ltd. V CIT (201 ITR 435) and the decision of the Hon'ble Madras High Court in the case of CIT V Poompuhar Shipping Corporation (Madras) (2006) 282 ITR 3. The Assessing Officer also placed reliance on the CBDT Circular No.715 dt.8.8.1995. On appeal, the learned CIT (Appeals) upheld this finding of the Assessing Officer for both Assessment Years 2008-09 and 2009-10. 5.3 Before us, the learned Authorised Representative of the assessee made elaborate oral and written submissions and also submitted a paper book containing several judicial pronouncements in this regard. In these appeals, the submissions of the assessee are in respect of the following issues :- (i) That the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the Act provides that tax is to be deducted at source against payments made to contractors / sub-contractors, for carrying on any work (including the supply of labour for carrying out any work) by a contractor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Further, this is not a case of payment made by an advertising agency to the print media. There is a transfer of advertisement space from BCCL to the assessee, who in turn sells it to other parties. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voked only to disallow expenditure which remains payable / outstanding as on the date of the Balance Sheet i.e. as on 31st March and it cannot be invoked to disallow the expenditure which has been actually paid within the concerned previous years. The assessee further contends that since BCCL has already offered for tax the payments made to it by the assessee on sale of advertisement space, consequently the assessee cannot be held as an assessee in default and therefore the question of disallowing the payments of ₹ 7,20,00,000 each under Section 40(a)(ia) of the Act for both assessment years 2008-09 and 2009-10, does not arise. 7.4 We have heard both the learned Authorised Representative and the learned Departmental Representative on this alternate ground raised by the assessee. As pointed out by the learned Departmental Representative, the issues raised in the alternative grounds, has been raised for the first time before us and was never raised before the authorities below. The details as to whether the payee, BCCL, has actually offered as income and paid taxes on the amounts ofRs.7,20,00,000 each for the relevant Assessment Years 2008-09 2009-10 and whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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