CIT vs. OGAAN PUBLICATION PVT LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 635/2012, C.M. APPL. 19048/2012 . CIT ..... Appellant . Through : Ms. Suruchi Aggarwal, Sr. Standing Counsel. . versus . OGAAN PUBLICATION PVT LTD ..... Respondent . Through : Nemo. . CORAM: . HON'BLE MR. JUSTICE S. RAVINDRA BHAT . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 09.11.2012 . . . The Revenue claims to be aggrieved by the order of the Income Tax Appellate Tribunal dated 30.03.2012 rejecting its appeal in ITA 5050/Del/2011. It contends and seeks to urge that the question of law arising in this case is whether the lower appellate authorities fell into error in holding that the amount of Rs.1,84,36,982/- paid by the assessee to advertisement agencies did not attract provisions of Section 194H. The brief facts are that the said amount (Rs.1.84 crores) was added back to the income under Section 40(a)(ia). The revenue held that the assessee was liable for deduction of tax on these payment under Section 190H and since there was a failure to deduct the tax, the amount was directed to be disallowed under Section 40(a)(ia). . The Appellate Commissioner deleted this direction by the AO noticing that in respect of previous assessment years 2006-07, 2007-08, the assessee?s contentions had been accepted. Apparently, the matter had travelled even upto the Tribunal in respect of those assessment years. In that order dated 31.05.2011, the Tribunal inter alia held as follows: . ?35. 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 commission. It may be seen that in the case of Moon River (M.G. Inds.) the advertisement has not been booked by advertising agency even then amount of Rs.11,250/- has been reduced on account of agency commission. Therefore, it will clearly demonstrate that assessee is concerned only with the amount to be realized finally which is the same in both type of transactions. Therefore, the nature of amount agency commission is only a discount though it has been described as ?agency commission.? Both the transactions are on principal to principal basis. The case law relied upon by the assessee before CT(A) and before us supports the case of the assessee. Therefore, we are of the opinion that ld. CIT(A) is right in holding that disallowance could not be made as assessee was not under an obligation to deduct tax u/s 194H. We decline to interfere. This ground of the revenue for both the years is dismissed.? . . . It is also noticed that the order of the Tribunal had been carried in appeal to this Court in ITA 182/2012 which was rejected. The Court held as follows: . ?4. Before us the copy of the agreement between the respondent-assessee and the advertising concerns has not been placed. It is not shown and stated how and on what basis it is stated that the finding recorded by the Tribunal that the transactions were between principal and principal is not correct and the contention that the transactions were between a principal and an agent is urged. The advertising concern had purchased the space in the publication and had sold the same to third parties. The factual finding recorded by the Tribunal is that amount treated and given nomenclature of commission was a discount and what was received by the assessee was the net amount. The description/deduction given in the bill was in fact and de facto not commission. In the case of Director Prasar Bharti (supra), the finding of the High Court was that the transactions were between a principal and an agent and the Court had referred to the agreement entered into by the Doordarshan and its agencies. The Kerala High Court in the said case, distinguished Ahmedabad Stamp Venders Association v. UOI (2002) 257 ITR 202 (Guj) and M.S. Hameed v. Director of State Lotteries (2001) 249 ITR 186 (Ker) on the ground that they related to discounted prices.? . . . This Court sees no reason to differ with the view taken in ITA 181/2012 and 182/2012 (CIT v. Ogaan Publication Pvt. Ltd., decided on 16.03.2012). . No question of law arises for consideration; the appeal and pending application are consequently dismissed. . . . . . S. RAVINDRA BHAT, J . . . . . . . R.V.EASWAR, J . NOVEMBER 09, 2012 . ?ajk? . . . $ 30 .