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ITO, Ward-19 (1) , New Delhi Versus Ogaan Publication Pvt. Ltd.

2017 (12) TMI 668 - ITAT DELHI

TDS u/s 194H - failure to make TDS on the agency commission paid - Held that:- Transactions between the appellant and the Ad Agencies are based on principal to principal basis. Therefore, appellant was not under any obligation to deduct tax u/s 194H. - Decided against revenue - ITA No. 6719/DEL/2014 - Dated:- 11-12-2017 - SHRI P. K. BANSAL, VICE PRESIDENT AND SMT BEENA A. PILLAI, JUDICIAL MEMBER For The Assessee : None For The Revenue : Sh. P.Dam Kanunjana, Sr. DR ORDER PER P.K. BANSAL, VICE PRE .....

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circumstances of the case and in law, the Ld. CIT(A) has erred by ignoring the observation of the A.O. that assessee has raised bills in the name of advertising agencies for the cost of space and deducted agency commission towards commission to the advertising agencies which indicates that space was purchased from the assessed on basis of specifications by actual party and the agency acted as an agent for the assessee. 2. Non-appeared on behalf of the assessee, we therefore decided dispose of th .....

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). The finding of the CIT(A) which are reproduced as under : I have considered the findings of the A.O. as well as submissions of the A/R of the appellant. Ground no. 1 of appeal is general in nature.ground nos. 2, 3 & 4 of appeal are directed against disallowance of agency commission amounting to ₹ 1,88,89,718/- by invoking provisions of Sec 40(a)(ia) of the I.T. Act, 1961. The assessee company during the year was engaged in the business of publication of fashion magazines. The A.O. i .....

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AO observed that the assessee company raised bills in the name of advertising agencies indicating cost of the space and deducted the agency commission towards commission to the advertising agencies. This clearly indicates that the space was purchased from the assessee company on the basis of specifications by the actual party and the agency acted as an agent for the assessee company. There is no doubt that the same is being paid to the agencies for their services only and it cannot be termed as .....

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he customers in accordance with the tariff prescribed by the magazine. AO, therefore, held that there is a clear cut relationship of Principal and agent and tax is deductible u/s 194H. The agency discount which is in fact agency commission is to be paid after deduction of taxes. As the assessee company failed to make TDS on the agency commission paid hence amount of agency discount of ₹ 1,88,89,718/- is disallowed by the A.O. u/s 40(a)(ia) and added to the income of the assessee company. I .....

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e time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of [ten] per cent From the above provision it is clear that any person who is responsible for paying any income by way of commission or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or b .....

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appellant but by the agencies against sale of space by the appellant. Since, the assessee is not responsible for making any payments to the agencies, therefore, there is no liability for deduction of income tax on the assessee. In view of the above, the provisions of sec 194H does not apply in the instant issue in appeal. Identical additions were made by the A.O. in A.Y. 2006-07, A.Y. 2007-08 and A.Y. 2008- 09 by making disallowance u/s 40(a)(ia) of ₹ 1.20 crores, ₹ 1.70 crores and & .....

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held by Hon ble ITAT : The perusal of both the above mentioned transactions will reveal that assessee is giving discount with respect to volume as well as agency commission irrespective of the fact that whether the advertisement is booked by the advertiser itself or through advertising agency. The assessee did not collect gross amount and from gross amount itself straightway deduction has been granted to the person who has booked the advertisement on account of volume discount as well as agency .....

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