DCIT (TDS) 2(1), MUMBAI vs. OGILVY & MATHER P LTD, MUMBAI

आदेश / O R D E R PER R.C.SHARMA (A.M):

M/s. Ogilvy & Mather Pvt. Ltd., 4. Facts in brief are that the assessee is engaged in the business of advertising and marketing consultancy services . A Survey was conducted u/s.133A of the Act on 8tfl July, 2011 at the assessee's premise. During the survey, statement of Mr. Yogesh Joshi, General Manager, Finance of the assessee company was recorded. The AO held that the payment for hoarding charges were rent requiring deduction of TDS u/s.1941 of the Act.

M/s. Ogilvy & Mather Pvt. Ltd., “7. In the Cross appeal of the Revenue for A.Y 2010-11, vide the only issue raised is with regard to the deduction of tax at source on the payments of hoarding charges made to various parties. The stand of the Assessing Officer is that the payment of hoarding charges is to be understood as 'rent' and, therefore, was liable for deduction of tax at source under section 194I of the Act, whereas the claim of the assessee has been that such payments are liable for deduction of tax at source in terms of section 194C of the Act. 7.1 On this aspect, it was a common point between the parties that similar issue came up before Delhi Bench of the Tribunal for A.Y 2002- 03 in assessee's own case and vide ITA No.5202/Del/2004 and CO No.104/Del/2005 dated 23/09/2005, the Tribunal upheld the stand of the assessee. 7.2 We have carefully perused the decision of the Tribunal dated 23/9/2005(supra) and find that after considering the nature of work and services rendered by the assessee against the impugned payment of hoarding charges, the Tribunal came to conclude that such payments were liable for deduction of tax at source in terms of section 194C of the Act and not under section 194-I of the Act as contended by the Revenue. The following discussion in the order of the Tribunal dated 23/5/2005(supra), is worthy of notice:- "9. We have carefully considered the entire material on record and find that the Ld. CIT(A) very carefully considered the relevant case law and the circular of the Board. He has undertaken a proper analysis and examination of the nature of work done by the assessee. The ld. CIT(A) has also taken into account the aspect that the work of advertisement includes various services and thus the payment was made by the assessee for composite services and not for hiring any premises or land or building. In the case of National Panasonic India Pvt. Ltd., Delhi Bench "D" of ITAT (supra) has observed as under: "6. We have carefully considered the rival contentions and the material on record. Section, 194-I of the Act mandates a person, other than an individual or a Hindu undivided family (HUF), paying rent to a resident to deduct tax at source at the time of credit or payment, whichever is earlier. Clause (i) of the Explanation to section 194-I gives the meaning of "rent"to be a payment under any lease, sub-lease, tenancy or any other building (including factory building), together with furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payee. Thus "rent" for the purpose of section 194I, is essentially a payment for the use of any land or building. In other words, the agreement or arrangement which gives rise to the payment of rent, must necessarily be an agreement or M/s. Ogilvy & Mather Pvt. Ltd., arrangement predominantly for the use of land or building. However, where the agreement is not predominantly for the use of land or building, but for something else, then payment under that agreement will not constitute rent even if that "something else" involves the use of land or building as an integral part of or incidental to the predominant objective of the agreement. Let us consider the facts of the case before us in the light of this basic concept of rent." 9.2. In the case of Japan Airlines (supra), it has been held that the services provided by the airport authority for landing and parking of its aircraft did not amount to lease of the property and, therefore, the payments are not in the nature of rent as envisaged under section 194I of the Act. The Tribunal while dealing with the definition of rent has observed as under: "9.6 In view of this definition, there has to be either lease, sub-lease, tenancy agreement or arrangement for governing the use of any land. Such land to be specific portion of land and lease etc. of such land has to regulate the manner of use of such land or building and its tenure as well as manner of payment in lieu thereof. After taking into consideration the definition of rent, it apparently appears to be a composite concept. In Black's Law Dictionary, the term 'rent' means- 'consideration paid for use or occupation of property'. In a broader sense, it is the compensation or fee paid, usually periodically for the use of any rented property, land, building, equipment etc. 9.3 On going through the question no.2 to 5 of circular no.715 dated 8.8.1995, it is clear that the Board has clarified the issue by giving the following answer to the question: Question5: Whether a contract for putting up a hoarding would be covered under section 194C or 194I of the Act. Answer: The contract for putting up a hoarding is in the nature of advertising contract and provisions of section 194C would be applicable. It may, however, be clarified that if a person has taken a particular space on rent and thereafter sublets the same fully or in part for putting up a hoarding, he would be liable to TDS under section 194I and not under section 194C of the Act. 9.4 From the above, it is clear that the Assessing Officer was not justified in applying the provisions of section 194I in the case of the assessee. On the other hand, the Ld. CIT(A) has adopted a very correct interpretation of the relevant provisions of section 194I and 194C and has applied such construction after property appreciating the facts and circumstances relating to this matter including the relevant aspects of the work done by the persons to whom the payments were made by the assessee. We, therefore, do not find any scope to interfere in the