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Income Tax Appellate Tribunal, MUMBAI BENCHES “J”, MUMBAI
Before: SHRI G.S. PANNU (AM) & SHRI RAM LAL NEGI (JM)
O R D E R PER RAM LAL NEGI, JM These are the appeal and cross objection filed by the revenue and the assessee respectively against orders dated 06/04/2015 passed by the Ld. CIT (Appeals)-59, Mumbai, for the assessment year 2012-13, whereby the Ld.
CO 49/MUM/2017 Assessment Year: 2012-13 CIT(A) has partly allowed the appeal filed by the assessee against order passed u/s 201/201(1A) of the Income Tax Act, 1961(for short ‘the Act’)
Brief facts of the case are that the assessee engaged in the business of providing media services filed e-TDS statement for all the four quarters for the financial year relevant to the assessment year under consideration as per section 200(3) of the Act. The AO passed order u/s 201(1) and 201(1)(A) of the Act raising demand of Rs. 4,59,58,112/-. In the first appeal the Ld. CIT(A) granted partial relief to the assessee by following the decision dated 29.10.2014 passed by the ITAT Mumbai in assessee’s own cases & 4992/ Mum/2013 for the assessment years 2010-11 & 2011-12 respectively. Against the said order the revenue is in appeal before the Tribunal.
The revenue has challenged the impugned order on the following effective grounds:
i) “On the facts and circumstances of the case and in law, the Learned CIT (A) has erred in deleting the additions made u/s. 201 (1)/201(1A) by holding that the payments made by the assessee for hoarding/display rights fall within the purview of section 194C and not section 194I, without considering the entire set of facts in totality read with the amended definition of rent u/s. 194I. ii) The Ld. CIT (A) has erred in law and on facts by treating that the payment made as advertisement on hoardings fall within the purview of section 194C and is not in the nature of rent within the meaning of section 194I of the I.T. Act, without appreciating the fact that the definition of rent u/s. 194I has been amended w.e.f. 13/07/2006 and as applicable in the case of the assessee which says that any person responsible for making any payment under CO 49/MUM/2017 Assessment Year: 2012-13 any other agreement or arrangement for the use of (either separately of together any) a) land or b) building …… h) fittings … whether or not any or all of the above are owned by the payee.
2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary at the time of the hearing of the case or thereafter.
3. The order of the CIT (A) being erroneous be set aside and Ld. A.O’s order be restored.”
Before us, the Ld. departmental representative (DR) heavily relying on the findings of the AO submitted that the Ld. CIT(A) has wrongly deleted the additions made by the AO u/s 201/201(1A) of the Act. As per the amended definition of rent under section 194I of the Act, payment made by the assessee for hoarding/display rights fall within the preview of section 194I of the Act. The Ld. CIT(A) has wrongly held that payments made as advertisement on hoardings fall within the preview of section 194C. The Ld. DR further submitted that the impugned order is liable to be set aside.
On the other hand, the Ld. Counsel for the assessee submitted that the Ld. CIT (A) has rightly decided the issue in favour of the assessee following the order dated 29.10.2014 passed by the ITAT, Mumbai in assessee’s own cases & 4992/Mum/2013(supra). Therefore, there is no merit in the appeal of the revenue. In support of the cross objection filed by the assessee, the Ld. Counsel submitted that the Ld. CIT (A) has wrongly confirmed the interest levied u/s 201 (1A) of the Act as the same is not chargeable in case the deductees or the payees have paid the advanced tax. The Ld. Counsel further submitted that the Ld. CIT (A) has erred in not computing the interest us/ 201 (1A) of the Act only till the date of actual payment of the taxes by the payees or deductees.
CO 49/MUM/2017 Assessment Year: 2012-13
We have heard the rival submissions and also perused the documents. The only grievance of the revenue is that the Ld. CIT (A) has wrongly held that the payment made as advertisement on hoardings fall within the preview of section 194C and not in the nature of rent within the meaning of section 194I of the Act in view of the fact that the definition of rent u/s 194I has been amended w.e.f. 13.07.2006. We notice that the co-ordinate Bench of the Tribunal has decided the identical issue in favour of the assessee in assessee’s own cases & 4992/Mum/2013 for the A.Y. 2010-11 & 2011-12 respectively. The relevant portion of the order is reproduced hereunder:-
“5. We have considered the rival submissions and have carefully perused the offers of the authorities below. It is an undisputed fact that none of the hoarding sites are owned by the assessee nor taken on rent. The assessee has only the limited right to display its clients advertisement on that hoarding for a particular period of time. It would not be out of place to consider the following extract from the CBDT Circular No. 715 dated 08.08.1995:
‘Question 5: Whether a contract for putting up a hoarding would be covered under section 194C or 194-1 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 sub lets the same fully or in part for putting up a hoarding, he would be liable to TDS under section 194-I and not under section 194C of the Act.’
6. Being an advertising/media agency, the assessee does not put up a hoarding or takes any space on rent. It only pays to the hoarding contractors for allowing the assessee to display its client’s advertisement on their hoarding. It is also an undisputed fact that the assessee has booked hoarding sites through hoarding contractors on behalf of its clients for display of their advertisement. Thus, the prime responsibility of payment of rent of the sites is of the hoarding contractor and not of the CO 49/MUM/2017 Assessment Year: 2012-13
assessee. The CBDT in its Circular No. 714 dated 03.08.1995 has clarified that the tax will be deducted at source u/s 194J from payments made for professional services. Thus, when an advertising agency makes the payments for professional service to a film artist such as an Actor, Cameraman or a Director, etc., tax will be deducted @ 5%.
Considering all the facts in totality, we find that the assessee has entered into a contract with other parties for display of advertisement of its client and the transaction is purely in the nature of contract for the work of advertising as defined in clause VA of Explanation to section 194C of the Act. We decline to interfere with the findings of the ld. CIT (A) and the appeals filed by the Revenue are accordingly dismissed.”
7. The facts and the issue involved in the present case are identical to the facts and the issue involved in the assessee’s own cases & 4992/Mum/2013 for the A.Y. 2010-11 & 2011-12 respectively. Since, the identical issue has already been decided by the coordinate Bench in favour of the assessee in the aforesaid cases and the Ld. CIT(A) has decided the issue involved in the said case by following the decision of the Tribunal, we do not find any infirmity in the impugned order. We, accordingly uphold the order passed by the Ld. CIT(A) and dismiss both the grounds of appeal of the revenue.
CO No. 49/MUM/2017 (Assessment Year: 2012-13)
The assessee has filed the cross objection on the following grounds:
1. “On the facts and circumstances of the case and in law, the ld. Assessing Officer (‘AO’) has erred and the ld. Commissioner of Income Tax (Appeals) (‘CIT(A)’) has further erred in levying interest u/s 201 (1A) of the Income-tax Act, 1961 (‘Act’) without appreciating the fact that interest u/s 201 (1A) of the Act is not chargeable if the deductees or payees have paid advance tax for the impugned year.
CO 49/MUM/2017 Assessment Year: 2012-13
2. On the facts and circumstances of the case and in law, the ld. AO has erred and the ld. CIT (A) has further erred in not computing the interest u/s 201(1A) of the Act only till the date of actual payment of taxes by the payees or deductees. The Respondent prays that the Department’s appeal be dismissed and the order of the AO be quashed. The Respondent craves leave to add, amend, delete, rectify, substitute and modify any of the aforesaid cross objections or add new cross objections at any time before or at the time of hearing the appeal.” 8. Since, we have dismissed both the grounds of appeal file by the revenue and upheld the order passed by the Ld. CIT(A), the cross objection filed by the assessee has become infructuous. Hence, the cross objection is dismissed as infructuous.
In the result, appeal filed by the revenue and cross objection filed by the assessee for assessment years 2012-13 are dismissed.
Order pronounced in the open court on 24th May, 2017.