DCIT, CIR.1(1)(1),, AHMEDABAD vs. AAKRITI PROMOTION & MEDIA LTD., AHMEDABAD

The solitary ground of appeal of the revenue is against the decision of ld. CIT(A) in deleting the addition of Rs. 4,45,71,144/- made u/s. 40(a)(ia) of the act.

The fact in brief is that assessment in the case of the assessee was finalized u/s. 143(3) of the act on 28th Feb, 2014 by accepting the returned income. Subsequently, the Pr. CIT-1 has passed order u/s. 263 of the act on 26th Feb, 2016 and held that assessment order u/s. 143(3) passed by the assessing officer was erroneous and prejudicial to the interest of revenue as the assessee has not deducted tax u/s. 194C of the act on payment of Rs. 4,45,71,144/-. During the course of assessment proceedings in pursuance to order u/s. 263 of the act, the assessee submitted that payment of Rs. 3,06,16,619/- was made to print media on which section 194C was not applicable and Rs. 34,06,799/- was paid to advertisement agencies on which TDS u/s. 194C deducted and paid. Therefore, no disallowance is to be made u/s. 40(a)(ia) of the act. The assessee has also referred circular issued by the CBDT i.e. Circular No. 715 dated 8th August, 1995 and Circular No. 5/2002 dated 30th July, 2002 and contended that in these circulars, it is clearly explained that section 194C is not applicable in respect of payment made by advertisement agency directly to Media for advertisement expenses. The assessing officer has not accepted the submission of the assessee and disallowed total amount of Rs. 4,45,71,144/- u/s. 40(a)(ia) of the act.

Aggrieved assessee has filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee has submitted that total expenditure on print media made by the assessee as per its profit and loss account was only Rs. 3,40,22,3418/- including Rs. 34,06,799/- paid to other advertising agencies on which tax was deducted. The assessing officer has incorrectly disallowed Rs. 4,45,71,114/- instead of Rs. 3,04,71,144/-. The ld. CIT(A) has deleted Page No 3 DCIT vs. Aakriti Promotions & Media Ltd. the entire addition of Rs. 4,45,71,144/- after following the circular no. 715 dated 8th August, 1995 and Circular No. 5/2002 dated 30th July, 2002 that TDS is not deductible when an advertising agency makes payment to Media. The ld. CIT(A) has also placed reliance on the decision of Jurisdictional High Court in the case of CIT Vs. Honest Publicity (2013) 38 taxman.com 198(Guj).

We have heard the rival contentions and perused the material on record. In view of the categorical finding elaborated in the order of ld. CIT(A) on the basis of above cited board’s circulars holding that TDS provision would not apply when an advertising agency makes payment to media, we do not find any substance in the appeal of the Revenue, therefore, the same is dismissed.

In the result, the appeal of the revenue is dismissed.