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Facts
The assessee, engaged in real estate, faced a demand for non-deduction of TDS on land purchase of Rs. 12.94 Crores and short-deduction of TDS on advertisement payments of Rs. 43.01 Lacs for AY 2015-16, based on an ex-parte order after a survey under Section 133A(2A). The assessee contended that the land was agricultural for the first issue, and applied Section 194C instead of Section 194J for the second issue.
Held
For the land purchase issue, the Tribunal upheld the CIT(A)'s decision, confirming that TDS under Section 194-IA is applicable on urban land transactions exceeding Rs. 50 Lacs, even if used for agriculture. Regarding advertisement payments, the Tribunal, relying on a prior Delhi Tribunal decision, ruled that payments to advertising agencies are covered under Section 194C, thus directing the AO to delete the demand for short-deduction related to this issue.
Key Issues
1. Whether TDS under Section 194-IA is applicable on the purchase of urban agricultural land exceeding Rs. 50 Lacs. 2. Whether TDS on payments for business promotion/advertisement should be deducted under Section 194C or Section 194J.
Sections Cited
201(1), 201(1A), 133A(2A), 194-IA, 194C, 194J, 44AA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रण वष� / Assessment Year: 2015-16) M/s WWICS Estates Private Limited DCIT / ACIT TDS बनाम/ Vs. A-12, Industrial Area, Phase-6 Sector 17 Mohali. Chandigarh �थायीलेखासं./जीआइआरसं./PAN/TAN No. AAACW-3524-A / PTLW-10174-D (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ�कीओरसे/ Appellant by : Shri Tejmohan Singh (Advocate) – Ld. AR ��थ�कीओरसे/Respondent by : Dr. Ranjit Kaur (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 15-07-2025 घोषणाकीतारीख /Date of Pronouncement : 23-07-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2015- 16 arises out of the order of learned Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 03-10-2022 in the matter of an order passed by Ld. AO u/s 201(1) & (IA) on 23-03-2022 raising certain demand against the assessee. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
The assessee is stated to be engaged in real estate and was subjected to survey u/s 133A(2A) based on which impugned order was passed on 23-03-2022 which is an ex-parte order since the assessee failed to make any effective representation therein. The subject matter of appeal before us is - (i) Non-deduction of TDS on purchase of land for Rs.12.94 Crores; (ii) Short-deduction of TDS on payments of Rs.43.01 Lacs.
TDS on purchase of land for Rs.12.94 Crores 3.1 The assessee, during the course of real estate business, purchased certain land during the year. The Ld. AO held that the assessee was liable to deduct TDS u/s 194-IA whereas the assessee claimed that the lands were agricultural land and therefore, TDS provisions would not be applicable. The Ld. CIT(A) rejected the said contention and held that as per the provisions of Sec.194-IA, TDS would be attracted where the consideration was above Rs.50 Lacs. The urban land, even if used for agriculture, was not excluded from the said provisions. The Ld. AO was accordingly directed to verify the amount paid over Rs.50 Lacs and modify the demand accordingly. Aggrieved, the assessee is in further appeal before us. 3.2 We are of the considered opinion that this issue has been clinched in correct perspective by Ld. CIT(A). The urban lands are not excluded from the purview of Sec.194-IA. Therefore, the adjudication of Ld, CIT(A) could not be faulted with.
Short Deduction of TDS on payment of Rs.43.01 Lacs 4.1 The assessee made payment for business promotion and advertisement and deducted TDS of 2% u/s 194C whereas Ld. AO opined that the payment would attract higher rate of 10% u/s 194J. In other words, the demand was raised for short-deduction of tax at source. The Ld. CIT(A) confirmed the demand against which the assessee is in further appeal before us. 4.2 We find that this issue is covered in assessee’s favor by the decision of Delhi Tribunal in the case of Perfect Probuild Pvt. Ltd. (ITA No.1034/Del/2018 dated 05-08-2021) wherein the bench held as under: - 11. Now coming to the advertisement expenses, a reading of section 194C with Explanation (iv) thereof makes it clear that any person responsible for paying any sum to any resident for carrying out the work of advertising, broadcasting and telecasting shall deduct an amount equivalent to 1% where the payment is being made to an individual and at 2% in other cases. Learned Assessing Officer was of the view that the provisions of section 194J are applicable because there is no contract between the assessee and the advertising agency in this case and therefore, such payments have to be treated as payments by way of fee for professional services. 12. It could be seen that the word “advertising” has been clarified by CBDT in Circular No. 714 dated 03/08/1995 while stating that according to the amended provisions, tax has to be deducted @ 1% in case of advertising and at 2% in other cases. It is further stated in Circular No. 714 that fee for professional or technical services to be formed u/s. 194J would mean the services rendered by a person in the course of carrying on legal, medical, engineering or the profession of accountancy or technical consultancy or interior decoration or advertising or such activity as is notified by the Board for the purpose of section 44AA or section 194J. This circular makes it clear that the tax will be deducted at source u/s. 194J from the payments made for professional services, when advertising agency makes payment for professional services to a film artist such as an actor, a cameraman, a director etc., in which case the tax will be deducted at 5%. 13. Further Circular No. 4 clarifies the distinction between the payments by a person to the advertising agency and the payments made by advertising agency to the television channel or newspaper company etc. A reading of Circular No. 714 and 4 makes it amply clear that when a person makes a payment to advertising agency, such payments are covered by section 194C whereas if the advertising agency makes any payment to a film artist such as an actor, a cameraman, a director etc., it would be covered by section 194J. This distinction is based on the fact that when the advertising agency makes such payments to a film artist, the intellectual property in the contents will be acquired by the advertising agency and the services secured are only broadcast and telecast and nothing more.
Further, a contract need not always be in writing and could be implied also. In the circumstances, we find that the payment made by the assessee for advertisement in connection with their business falls within the ambit of section 194C and not section 194J. Ground Nos. 2 & 4 are, accordingly, allowed. Learned Assessing Officer is directed to delete the addition.
Facts being identical in this appeal, we direct Ld. AO to delete the demand to that extent. 5. The appeal stands partly allowed. Order pronounced on 23-07-2025.