TMI Blog2017 (10) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Vyas JJ. For the Appellant(s) : Mr. R.B. Mathur with Mr. Prateek Kedawat For the Respondent(s) : None ORDER 1. In both appeals common questions of law and facts are involved, hence, they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department. 3. This Court while admitting the matter framed the following question of law:- In DBITA No. 101/2015 Whether the Tribunal is justified in deleting disallowance of ₹ 1,31,97,053/- made by the Assessing Authority for non-deduction of tax at source for the amount of discount/commission to the advertising agency under Section 194H of the Income Tax Act, 1961. In DBITA No. 70/2015 Whether in the facts and circumstances of the case, the ITAT was justified in upholding the order of CIT(A) in deleting the addition of ₹ 15887514/- made by the Assessing Officer for non deduction of tax at source from payment made to advertising agencies and customers treating the same as commission u/s 194H of Income Tax Act. 4. Mr. Mathur contended that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e practice to avoid litigation of the Income tax provisions he has changed the nomenclature of the expenses and claimed to have been allowed alleged discount as against commission. Because on the payment of commission, TDS is required to be made as per rates prescribed under section 194H of I.T. Act and deposit the same into the Central Government account within prescribed time limit otherwise the same shall not be allowed as expenditures u/s 40(a)(ia) of the I.T. Act. Due to change of nomenclature, the nature of expenses can not be changed. Infact the discount claimed to have been given is commission TDS on payment of such commission (alleged discount) should have been made but the assessee has failed to deduct the TDS violated the provisions of section 194H thus the amount of ₹ 13197053/- is not allowed as expenditure in view of provisions of section 40(a)(ia) of the I.T. Act and added the same to the total income of assessee. 6. He contended that the CIT(A) while observing in para 4.1 has specifically given finding that the AO could have inquired in the agency and everything and he remanded back the matter to the AO. For ready reference the observations of CIT(A) ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. It is contended that the Tribunal has gone on entirely different basis therefore, the issue is required to be decided in favour of the department and the assessment made by the AO is required to be restored. 8.1. He has also strongly relied upon the decision of Kerala High Court in case of Commissioner of Income Tax vs. Director, Prasar Bharti reported in [2010] 325 ITR 205 (Ker.) wherein it has been held as under:- 2. Respondent is a fully owned Government of India undertaking engaged in telecast of news, various sports, entertainments, cinemas and other programmes. Advertisement income is a major source of revenue for all telecasting companies including the respondent. Advertisements are canvassed through agents appointed by the respondent under agreement with them. Advertising agencies recognised by the respondent are of two types, the unregistered agencies which are not entitled to any credit facility and the other type are registered agencies which are given accreditation and credit facility with Doordarshan. In other words, while the first category will be able to telecast advertisement programmes canvassed from customers only on advance payment, the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and of the commission to which the agency will be entitled by reason of such accreditation. (c) the remuneration of the agency for placing advertisements in the commercial service shall be in the form of standard agency commission of 15 (fifteen) per cent to be paid by the Doordarshan Commercial Service. From the above it is very clear that parties have understood their relationship as principal and agent and what is paid to the agent by Doordarshan is 15 per cent of advertisement charges collected and remitted to it by the agent which is in the form of commission payable to the agent by Doordarshan. Counsel for the respondent referred to one of the agreements where the commission is referred to as standard discount and contended that the arrangement between respondent and advertising agency is not agency but is a principal to principal arrangement of sharing advertisement charges. We are unable to accept this contention because advertisement contract entered into between the customer and the agency is for telecasting advertisement in Doordarshan channels. The agent canvasses advertisement on behalf of Doordarshan under agreement between them and the advertisement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery tickets respectively at a discounted price and they run the business at their risk. They will get the discount retained by the Government only if stamp paper or lottery ticket is sold and destruction of the stamp paper or lottery ticket before sale in their hands will be a complete loss to them. Therefore the transactions of purchase at discounted price and sale at face value were rightly treated as not agency transactions by the Courts. On the other hand, in this case, on facts and based on terms of agreements between parties, we find that the transaction is pure agency arrangement whereunder respondent allows the agents to canvass advertisement for them at tariff prescribed by the respondent on payment of commission of 15 per cent. We therefore allow the appeals reversing the orders of the Tribunal and restore the orders of assessment confirmed in first appeals. However it is for the respondent to invoke, if permissible, the indemnity clause and recover the levies from the agents. 9. We have heard counsel for the appellant. 10. We have gone through the order and proceedings of the matter. It is not in dispute that the amount which has been received by the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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