TMI Blog2020 (7) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... e herein being a payer cannot be treated as an assessee in default and consequently, no disallowance u/s.40(a)(ia) of the Act could be made in the hands of the assessee herein. - Decided in favour of assessee. TDS u/s 194C - Disallowance u/s.40(a)(ia) - advertisement expenses incurred without deduction of tax at source - HELD THAT:- There is absolutely no dispute that the said payment was made towards advertisement charges to Harsha Agencies which is a franchisee of The Hindu . On bare reading of provisions of Section 194C of the Act, we find that any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract shall deduct tax at source thereon. Explanation to Section 194C of the Act defines the term work to include advertising . Hence, the very fact that assessee had given the advertisement material to M/s. Harsha Agencies, constitutes a contract entered into by assessee and Harsha Agencies - all the ingredients of Section 194C of the Act get squarely attracted in the instant case - assessee is indeed liable for deduction of tax at source on the said payment -AO is justified in making disallowance u/s.40(a)(ia) - Decided agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder by the ld. Commissioner of Income Tax (Appeals)-13, Mumbai in appeal No. CIT(A)-13/Addl.CIT-7(2)(2)/90/2015-16 dated 05/12/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) by the ld. Addl. Commissioner of Income Tax, Range-6(3), Mumbai (hereinafter referred to as ld. AO). 2. The first issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the disallowance made u/s.40(a)(ia) of the Act in the sum of ₹ 19,05,112/- on account of exhibition expenses paid to Idea House Pvt. Ltd. without deduction of tax at source. 3. We have heard rival submissions and perused the materials available on record. We find from the facts placed on record by the assessee that assessee had made payment to Idea House Pvt. Ltd total sum of ₹ 20,65,675/- which included supply of temporary furniture etc., to the tune of ₹ 19,05,112/- and for agency fees of ₹ 1,60,563/-. The said furnitures were erected in the stall taken in the exhibition hall on hire for advertising products of the assessee company. We find that the assessee was engaged in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Madras High Court had already upheld the constitutional validity of the provisions of Section 40(a)(ia) of the Act. Hence, questioning the legislative wisdom of the Parliament cannot be entertained by the Tribunal. We have also gone through the said decision of the Hon ble Jurisdictional High Court in the case of Kotak Securities Ltd., relied upon by the ld. AR. We find that in that case, the assessment involved was A.Y.2005-06 which was the first year of introduction of provisions of Section 40(a)(ia) of the Act in the statute book and since both the revenue as well as the assessee were under the bonafide belief from the years 1995-2004 that the transaction charges paid by the assessee to stock exchange for trading were not liable for TDS, the benefit of doubt and the bonafide belief of the assessee was given weightage and accordingly, the Hon ble Bombay High Court held that for the A.Y.2005-06, being the first year of introduction of provisions of Section 40(a)(ia) of the Act, no disallowance could be made u/s.40(a)(ia) of the Act. We hold that the judgment rendered by the Hon ble Jurisdictional High Court had to be viewed from the context and the surrounding circumstances in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to be decided in this appeal is with regard to the action of the ld. CIT(A) in confirming the disallowance made by the ld. AO u/s.40(a)(ia) of the Act in the sum of ₹ 56,997/- on account of advertisement expenses incurred without deduction of tax at source. 4.1. We have heard rival submissions and perused the material available on record. We find that assessee had submitted that the payment is made to The Hindu newspaper for advertising for hiring staff. It was submitted that this payment was in the nature of one time payment and no contract exist with the newspaper and accordingly, the provisions of Section 194C of the Act would not be applicable. The assessee enclosed entire details of incurrence of this expenditure before the ld. AO. The ld. AO and the ld. CIT(A) observed that payment was not made by the assessee directly to The Hindu , but instead it was made to Harsha Agencies which is a franchisee of The Hindu and accordingly, assessee was liable to deduct tax at source u/s.194C of the Act thereon. 4.2. We find that there is absolutely no dispute that the said payment was made towards advertisement charges to Harsha Agencies which is a franchisee of The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of second proviso to Section 40(a)(ia) r.w.s. 201(1) of the Act. The assessee also placed reliance on the decision of the Hon ble Supreme Court in the case of Hindustan Coca-Cola Beverages Pvt. Ltd., reported in 293 ITR 226 to support its contentions in this regard. We find that the ld. CIT(A) had not discussed on this particular submission of the assessee at all and had not given any finding in its appellate order regarding the same. We find that this is a statutory benefit provided to the assessee which should not be taken away. However, even before us, we find that the ld.AR exceot making oral statement that the payees have included the said receipts in their income tax returns, had not produced any documentary evidence before us. However, in order to avoid double taxation, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the ld. AO for the limited purpose of verification of the income tax returns for the Asst Year 2010-11 of the respective payees in the light of the second proviso of Section 40(a) (ia) r.w.s. 201(1) of the Act. We have already held that second proviso has already been held to be retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X
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