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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI CHALLA NAGENDRA PRASAD
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER
This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-VI, Chennai, dated 15.11.2012.
I.T.A.No.410/Mds/2013 :- 2 -: 2. The Revenue’s grievance in this case is with regard to invoking provisions of Sec. 40(a) (ia) of the Income Tax Act. The brief facts of the case are that the assessee is the sole propreitrix of M/s. Sky Communication, an advertising agency. She has debited �1,55,38,639/- towards telecast fee expenses. On verification of the same, it was noticed by the Assessing Officer that �1,21,74,316/- was paid to electronic media and the balance �33,64,324/- is made to various other advertising agencies. The Assessing Officer has opined that since the balance of �33,64,324/- is made to advertising agencies the same should be subject to provisions of Section 194C and the consequent disallowance u/s. 40(a) (ia). However, the assessee has stated vide her letter dated 24.12.2010 that these monies were paid to marketing agency M/s. Vision Time India Ltd (VTIL) and others, and in turn purchased slot times from “Sun TV and others”. Thus the contention of the assessee that ‘’VTIL’’ represents ‘’Sun TV’’ as an agent and thus payments to VTIL are same as payments to the media and does not get covered u/s. 194C. The assessee has also relied on the ratio laid down in the case of Sands advertising Communication Pvt. Ltd 37 SOT 179 (Bang). Similarly, the Assessing Officer has also found that the publicity fees and the broadcasting fees were not paid to print media and the FM radio but to others and thus, they were also to be brought to Section 194C. Accordingly, the Assessing Officer has I.T.A.No.410/Mds/2013 :- 3 -: applied the guillotine of Section 40(a) (ia). The details of such payments are listed below:
Sl.No Name of Parties Telecast fee expenses 1 Social Media 2,49,079 2 Siegu Solutions Ltd 84,660 3 SAREGAMA 3,42,390 4 Pyramid Saimira 4,07,505 5 New Age Entertainment Pvt. Ltd 57,895 6 Adlabs Films Ltd 47,278 7 Balaji Telefilms 2,19,238 8 Century Communications 8,28,090 9 Vision Time India Ltd 8,88,189 10 Ram Video Baazar 2,40,000 Total 33,64,324
Sl.No Parties to whom TDS to be Amount deducted Publication Fee: � 1 Siegu Solutions Ltd 1,59,375 Broadcast Fee 1 Entertainment Network India 1,68,110 Ltd 2 Adlabs Films Ltd 2,57,796 3 Usha Media Fortune Creations 1,50,000 Total 7,35,281 However, the arguments and ratio relied upon are not accepted by the Assessing Officer. Meanwhile the assessee has filed petition u/s. 144A seeking directions from the Addl. CIT, Media Range. The Addl. CIT has also come to a conclusion that the payments made to agencies should have been subjected to TDS. Thus, both payments made to the media concerned amounting to �33,64,324/- and the payments made for publicity fees and broadcasting fees at �7,35,281/- I.T.A.No.410/Mds/2013 :- 4 -: amounting to �40,99,605/- have been allowed u/s. 40(a) (ia) for failure to effect the provisions u/s. 194C of the Act. Aggrieved by this action of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) has not agreed with the view of the Assessing Officer. Against which, the Revenue is in appeal.
The Departmental Representative submitted that assessee itself filed audit report u/s.44 AB of the Income Tax Act and it was not taken on appeal before the lower appellate authority and that the assessee is only deriving income as a commission agent so at this stage the assessee’s contention cannot be considered.
On the other hand, the ld. Counsel for the assessee submitted that the assessee is only a commission agent and it was inadvertently filed report u/s. 44 AB though, it was not applicable to the assessee.
According, to the ld. Counsel for the assessee, the Assessing Officer cannot take advantage of assessee’s ignorance so as to apply provisions of Sec. 40 (a) (ia). 5. We have heard both sides and perused the material on record.
In this case, the assessee filed audit report u/s. 44AB of the Act and the Assessing Officer after going through it observed that the assessee is liable to deduct TDS U/s.194C of the Income Tax Act and the assessee has failed to do so. Thus, he invoked provisions of Sec.
I.T.A.No.410/Mds/2013 :- 5 -: 40(a)(ia) of the Act. Before us, the assessee filed Profit and Loss account wherein assessee has shown only commission received from business. In these circumstances, we are not in a position to comment on the nature of activities carried on by the assessee without examining books of accounts of the assessee. Hence, in our opinion, it is appropriate to remit the entire matter back to the file of the Assessing Officer for fresh consideration de novo.
With these observations, we are remitting the entire issue in dispute to the file of the Assessing Officer. The Assessing Officer after giving adequate opportunity of hearing to the assessee shall decide the matter afresh.
In the result, the appeal by the Revenue in ITA No.410/
Mds/2013 is partly allowed for statistical purposes.
Order pronounced in the open court at the time of hearing on Thursday, the 26th of March, 2015 at Chennai