ASST CIT (TDS) 2(2), MUMBAI vs. PERCEPT LTD, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order of the CIT (A)-14,Mumbai, dated 22.04.2014, the Assessing officer (AO) has filed the present appeal.Effective ground of appeal is about allowing the deduction under section 194C of the Act.The assessee company is engaged into the business of outdoor advertising like bill boards advertising, hoarding etc. alongwith media advertising and communication. 2.Effective ground of appeal is about deleting demand of Rs.1,98,20,316/- raised u/s.201(1) and interest charges of Rs.59,46,095/- raised u/s. u/s. 201(1A) of the Act in respect amounts payable towards hoarding charges.In his order the AO observed that the assessee had debited hoarding charges at Rs.24,77,53,957/- and made TDS u/s.194C.He held that the assessee ought to have deducted tax u/s.194-I(b) for acquiring the hoarding/ display right, that the assessee made payment for the right to use hoarding space and such payment was nothing but “rent” paid as defined u/s. 194-I of the Act.He treated the assessee as “assessee in default” as per the provisions of section 201(1)of the Act.

3.In appeal before the First Appellate Authority (FAA),it was submitted that the assessee had made payment of hoarding charges of Rs.24,77,53,957/- to various hoarding vendors and has deducted TDS u/s. 194C of the Act,that on receipt of the order for advertisement through hoardings from the client it gave the entire description and specifications to the client after having discussions with them regarding place, size etc., that would be best suited/choice for 4446/Mum/2014 Percept Ltd. efficient advertising of the client’s product through hoarding, that as per the agreed understanding about the specifications of hoardings with the client the assessee would approach the hoarding vendor of the desired locations for setting up and putting up the hoardings for specified period,that it was the hoarding vendors who would enter into an agreement with the building owners/society for acquiring either on ownership basis or on lease the space on terrace building wall etc. for putting up the hoardings, that the hoarding vendors would then put up the hoardings as per the specifications given by the assessee for the client and would charge the assessee for hoarding/publicity, that the assessee would then bills the client for advertising through hoardings,that the assessee had paid the hoarding charges to the hoarding vendors for the contract of setting and displaying the hoarding of the clients given to them for particular period of time, that the assessee was not engaged into acquiring of the hoarding space from the vendors/building owners and sub-letting the same.It relied upon the case of Roshan Publicity Private Ltd.(4 SOT 105). The FAA after perusing the order of the AO,the submission of the assessee and the Circular of CBDT held that the Circular explicitly clarified that if there was a subletting of hoarding the TDS was to be deducted u/s. 194-I,that there was no evidence on record to show that the assessee had indulged in subletting of the hoarding rights acquired by it,that the payments made by the assessee to other parties for display of advertisements of its clients were not in the nature of rent, that payments were towards a work contract,that tax was liable to be deducted u/s.194C of the Act,that the assessee could not be held to be ‘assessee in default.’ The FAA relied upon the cases of Roshan Publicity Pvt. Ltd. (supra),and M/s. Ogilvi & Mather Pvt.Ltd.(ITA/5202/Del/2004 for AY.2002-03 dtd. 23.09.2005)and allowed the appeal of the assessee.

4.Before us,the Departmental Representative (DR)supported the order of the AO. The Authorised Representative(AR) relied upon the order of the FAA and stated that it was not a case of sub letting. We have heard the rival submissions and perused the material before us.We find that the assessee had debited hoarding charges of Rs.24.77 crores and had deducted the tax at source u/s.194C of the Act,that the AO was of the opinion that the assessee should have deducted tax u/s. 194-I(b) of the Act,that the FAA held that provisions of section 194 were applicable . We find that the FAA has given a categorical finding of fact that as per the Circular issued by the CBDT (CIR No.715 dt.8.8.95) TDS had to be made as per provisions of section 194-I if there was subletting, that in the case under appeal there was no sub letting. Therefore, we 2

4446/Mum/2014 Percept Ltd. agree with the FAA that payment made by the assessee for display of advertisement of its clients was not in the nature of rent and that the assessee had to deduct tax as per provisions of the section 194C of the Act.We find that in the cases of Roshan Publicity Pvt. Ltd. (supra) and Ogilvi and Mather Pvt. Ltd. (supra) the issue has been discussed and it has been held that payments made towards holding contracts was subject to tax as per provisions of section 194C of the Act. Respectfully following the above orders, we hold that the order of the FAA does not suffer from any legal or factual infirmity.Therefore,upholding her order we decide effective ground of appeal against the AO.