ITO, CHENNAI vs. ALAMELU SURESH, CHENNAI

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. 3. 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.

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.

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. 7. 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

Sd/- Sd/- (च�ला नागे�� �साद ) (चं� पूजार� ) (CHALLA NAGENDRA PRASAD) (CHANDRA POOJARI) �या�यक सद�य/ JUDICIAL MEMBER लेखा सद�य/ ACCOUNTANT MEMBER चे�नई/Chennai. �दनांक/Dated:26.03.2015. KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2.��यथ�/ Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.

I.T.A.No.410/Mds/2013 :- 6 -: