St. Jude Medical India Private Limited, Hyderabad V. Dy. Commissioner of income Tax, Circle-3(2), Hyderabad

ITA 145/HYD/2014

• Counselvise Citation: 14522514 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VENKATA REDDY
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 194C

Judgement Text

ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.145/HYD/2014 (ASSESSMENT YEAR: 2009-10) ST. JUDE MEDICAL INDIA PRIVATE LIMITED HYDERABAD PAN: AAICS 9821 J VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI R. VIJAYARAGHAVAN FOR REVENUE : SHRI T. VENKATA REDDY, CIT (DR) DATE OF HEARING : 0 7 .09 .2015 DATE O F PRONOUNCEMENT : 18 .09. 2015 O R D E R PER SMT.P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR A.Y 2009-10. IN THIS APPEAL, ASSESSEE IS AGGRIEVED BY THE FINAL ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S. 144C OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, WHICH IS ENGAGED IN THE BUSINESS OF TRADING OF MEDI CAL DEVICES, FILED ITS RETURN OF INCOME FOR A.Y 2009-10 ON 29.09 .2009 DECLARING A LOSS OF RS.6,80,33,234. DURING THE ASSE SSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT THE ASSESSEE HAS ENTERED INTO INTERNATIONAL TRANSACTION S WITH ITS AE FOR PURCHASE OF CARDIO VASCULAR DEVICES FOR SALE OF THE SAME IN INDIA TO NON-RELATED PARTIES MAINLY THROUGH DISTRIB UTORS AND ALSO THROUGH DIRECT SALES TO HOSPITALS. AO, THEREFORE, R EFERRED THE ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 2 OF 10 MATTER TO THE TPO FOR DETERMINATION OF THE ALP U/S 92CA OF THE I.T. ACT. THE TPO OBSERVED THE FOLLOWING FINANCIAL RESULTS AS REPORTED BY THE ASSESSEE FOR FINANCIAL YEAR 2008-09 : ITEM AMOUNT (IN RS.) OPERATING REVENUE 788551816 OPERATING COST 868833170 OPERATING PROFIT - 80281354 OP/OR - 10.18% OP/OC - 9.24% 3. HE FURTHER OBSERVED THE FOLLOWING INTERNATIONAL TRANSACTIONS: RS.55,77,18,979 PURCHASE OF MEDICAL DEVICES RS.1,39,61,075 PURCHASE OF PROGRAMMERS FOR OWN USE RS.1,50,809 PURCHASE OF MARKETING MATERIAL RS.4,17,060 SALE OF MEDICAL DEVICES THEREFORE, THE TPO PROCEEDED TO CONSIDER THE FAR AN ALYSIS DONE BY THE ASSESSEE. HE OBSERVED THAT IN ITS T.P. STUDY , THE ASSESSEE HAS ADOPTED RESALE PRICE METHOD FOR DETERMINATION OF THE ALP AND HAS ADOPTED 4 COMPANIES AS COMPARABLE COMPANIES . THE TPO, HOWEVER, HELD THAT THE RESALE PRICE METHOD CAN BE USED ONLY IN A SITUATION WHERE THE PRODUCTS ARE CLOSELY COMPARABLE. HE, THEREFORE, ISSUED A SHOW CAUSE NOTICE DATED 2.1 1.2012 TO THE ASSESSEE ASKING FOR ITS EXPLANATION AS TO WHY TNNM METHOD MAY NOT BE SELECTED AS THE MOST APPROPRIATE METHOD IN P LACE OF RPM. ASSESSEE FILED ITS REPLY DATED 20.11.2012 STATING T HAT (I) THE ASSESSEE IS ENGAGED IN RESALE OF MEDICAL DEVICES PU RCHASED FROM ITS AE; (II) THE COMPARABLE COMPANIES CHOSEN BY THE ASSESSEE ARE ALSO ENGAGED IN TRADING OF MEDICAL PRODUCTS SIMILAR TO THE TRADING ACTIVITY OF THE ASSESSEE; (III) THE RELIABLE DATA O N THE GROSS MARGIN OF THE COMPARABLE COMPANIES COULD BE FOUND; (IV) TH E TNNM IS GENERALLY APPROPRIATE FOR THE PURCHASE OF GOODS WHE RE RPM ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 3 OF 10 CANNOT ADEQUATELY BE APPLIED; AND (IV) AS PER THE O ECD GUIDELINES THE TRADITIONAL TRANSACTION METHODS ARE PREFERABLE TO TRANSACTIONAL PROFIT METHOD. ASSESSEE PLACED RELIAN CE ON VARIOUS DECISIONS OF THE ITAT IN SUPPORT OF ITS CONTENTION THAT THE RPM IS THE MOST APPROPRIATE METHOD IN THE CIRCUMSTANCES OF THE CASE. HOWEVER, TPO HELD THAT THE RPM METHOD IS APPLIED WH ERE AN ENTERPRISE PURCHASES A PROPERTY OR SERVICES FROM AN ASSOCIATED ENTERPRISE AND THEN RESELLS THE PROPERTY OR THE SER VICES TO AN UNRELATED ENTERPRISE AND FOR APPLICABILITY OF THIS METHOD, ONE SHOULD ASCERTAIN THE FUNCTIONS PERFORMED BY THE TES TED PARTY BEFORE IT RESOLD THE PROPERTY OR THE SERVICES AND A LSO THE COST INCURRED FOR PERFORMING THESE FUNCTIONS. HE FURTHER HELD THAT THE GROSS PROFIT MARGIN EARNED BY THE TESTED PARTY ONLY CAN BE COMPARED WITH THE GROSS MARGIN OF A COMPARABLE WHIC H HAS PERFORMED SIMILAR FUNCTIONS AND HAS CALCULATED THE GROSS MARGIN AFTER CONSIDERING THE COSTS OF THOSE FUNCTIONS. HE, THEREAFTER, REPRODUCED VARIOUS PARAMETERS TO BE LOOKED INTO FOR APPLICATION OF RPM METHOD. THEREAFTER, HE HELD THAT FOR ACHIEVI NG THE APPROPRIATE COMPARABLES IN THE LIGHT OF THE PARAMET ERS MENTIONED BY HIM, IT IS AMPLY CLEAR THAT COMPLETE I NFORMATION ABOUT THE BUSINESS PROFILE AND FINANCIAL DATA MUST BE AVAILABLE IN RESPECT OF ALL THE PARTIES WHICH ARE EXAMINED AS COMPARABLES AND SINCE THE SAME IS NOT TRUE IN THE INSTANT CASE, RESALE PRICE METHOD (RPM) OR OTHER METHODS LIKE CUP, CPM ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE . FURTHER, HE PLACED RELIANCE UPON THE ORDER OF THE TRIBUNAL IN T HE CASE OF M/S. SPACELABS HEALTHCARE SYSTEMS (P) LTD FOR A.Y 2008-0 9, WHEREIN THE SELECTION OF TNNM AS AGAINST RPM AS THE MOST A PPROPRIATE METHOD HAS BEEN UPHELD. THEREAFTER, THE TPO PROCEED ED TO DETERMINE THE ALP BY ADOPTING THE TNNM AS THE MOST ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 4 OF 10 APPROPRIATE METHOD AND SUGGESTED THE SHORTFALL OF RS.11,55,73,046 AS AN ADJUSTMENT U/S 92CA OF THE AC T. CONSEQUENT THERETO, THE AO PASSED A DRAFT ASSESSMEN T ORDER AGAINST WHICH ASSESSEE PREFERRED OBJECTIONS BEFORE THE DRP RAISING AN OBJECTION THAT THE RPM IS THE MOST APPRO PRIATE METHOD IN THE CIRCUMSTANCES OF THE CASE OF THE ASSE SSEE. DRP, HOWEVER, UPHELD THE FINDINGS OF THE TPO INCORPORATE D IN THE DRAFT ASSESSMENT ORDER. THEREAFTER, AO PASSED FINAL ASSES SMENT ORDER AGAINST WHICH ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI R. VIJAYARAGHAVAN SUBMITTED THAT IN THE CASE OF THE AS SESSEE WHERE THE ASSESSEE IS PURCHASING PRODUCTS FROM ITS AES AN D IS SELLING THE SAME TO NON RELATED PARTIES IN INDIA, THE MOST APPROPRIATE METHOD TO BE ADOPTED IS THE RESALE PRICE METHOD. HE SUBMITTED THAT THE ASSESSEE IN ITS TP STUDY HAS ADOPTED 4 COM PANIES AS COMPARABLE TO THE ASSESSEE, WHOSE AVERAGE GROSS MAR GIN WAS COMPUTED AT 26.49%, WHEREAS THE ASSESSEE HAS SHOWN GROSS MARGIN AT 26.64% OF THE SALES AND THEREFORE, THE MA RGIN OF THE ASSESSEE WAS TREATED BY THE ASSESSEE TO BE AT ALP. HE SUBMITTED THAT THOUGH THE ASSESSEE HAS MADE DETAILED SUBMISSI ONS BEFORE THE TPO AS TO WHY RPM, IS THE MOST APPROPRIATE METH OD, THE TPO EXCEPT REPRODUCING THE PARAMETERS TO BE TAKEN I NTO CONSIDERATION FOR APPLYING THE RPM, HAS NOT STATED AS TO HOW THE ASSESSEE DOES NOT MEET THOSE PARAMETERS FOR REJECTI ON OF THE RESALE PRICE METHOD. HE SUBMITTED THAT THE TPO HAS RELIED UPON THE DECISION OF THE DRP IN THE CASE OF M/S SPACELAB S HEALTHCARE SYSTEMS LTD TO HOLD THAT RPM IS NOT THE MOST APPROP RIATE METHOD WHICH HAS HOWEVER, BEEN SET ASIDE BY THE B BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. OSI SYSTEMS (P) L TD IN ITA ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 5 OF 10 NO.683/HYD/2014. A COPY OF THE SAME IS FILED BEFORE US. HE FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE FOR A .Y 2006-07, THE TPO HAD ACCEPTED THE RESALE PRICE METHOD TO B E THE MOST APPROPRIATE METHOD. IN EVIDENCE THEREOF, ASSESSEE F ILED A COPY OF THE ORDER OF THIS TRIBUNAL OF A BENCH IN ITA NO.1 626/HYD/2010. HE SUBMITTED THAT THE TPO, THEREFORE, MUST FOLLOW A UNIFORM AND CONSISTENT METHOD IN DETERMINATION OF THE ALP OF SI MILAR TRANSACTIONS. HE THEREFORE, PRAYED THAT THE ISSUE M AY BE REMANDED TO THE FILE OF THE TPO FOR RECONSIDERATION AND ADJUDICATION OF THE MOST APPROPRIATE METHOD TO BE A DOPTED BY THE TPO. 5. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T THE TPO HAS ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO S TATE AS TO WHY THE TNNM IS NOT THE MOST APPROPRIATE METHOD AND ONL Y AFTER CONSIDERING THE DETAILED SUBMISSIONS AND LEGAL POSI TION, HAS THE TPO REJECTED THE METHOD ADOPTED BY THE ASSESSEE AND HAS APPLIED THE TNNM AS THE MOST APPROPRIATE METHOD FOR DETERMINATION OF THE ARMS LENGTH PRICE. HE SUBMITT ED THAT THE ASSESSEE HAS NOT TAKEN ANY SPECIFIC PLEA BEFORE THE DRP THAT THE TPO HAS NOT GIVEN ANY DETAILED REASONING FOR REJECT ION OF RPM AS THE MOST APPROPRIATE METHOD. HE SUBMITTED THAT THE ASSESSEE IS ADVANCING NEW ARGUMENT BEFORE THIS TRIBUNAL. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSMENT YEAR BEFORE US IS A.Y 2009- ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 6 OF 10 10. THE ASSESSEE HAS BEEN PURCHASING MEDICAL DEVICE S FROM ITS AES EVEN IN THE EARLIER A.YS AS IS EVIDENT FROM THE ORDER OF THIS TRIBUNAL IN ITA NO.1626/HYD/2010 FOR A.Y 2006-07.ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL, WE FIND THAT THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTIONS FOR PURCHAS E OF MEDICAL EQUIPMENTS AND THERE WAS NO DISPUTE WITH REGARD TO THE METHOD ADOPTED BY THE ASSESSEE DURING ITS TP STUDY. SUCH B EING THE CASE, THERE IS NO REASON AS TO WHY THE ASSESSEE SHO ULD NOT BE ALLOWED TO ADOPT THE SAME METHOD EVEN DURING THE RE LEVANT A.Y. ON PERUSAL OF THE TPO ORDER, WE FIND THAT THE TPO H AS REPRODUCED THE PARAMETERS TO BE TAKEN INTO CONSIDER ATION FOR ADOPTING THE RPM FOR COMPARABILITY ANALYSIS, BUT EX CEPT STATING THAT THE RPM METHOD CAN BE ADOPTED ONLY WHERE THE P RODUCTS ARE CLOSELY COMPARABLE, HE HAS NOT GIVEN DETAILED R EASONING AS TO WHY THE SAID METHOD IS NOT APPLICABLE TO THE ASSESS EE. WE FIND THAT THE TPO HAS NOT BROUGHT ON RECORD ANY EVIDENCE AS TO HOW THE PRODUCTS SOLD BY THE COMPARABLE COMPANIES ARE N OT SIMILAR TO THE PRODUCTS SOLD BY THE ASSESSEE HEREIN. WHEN T HE TPO DESIRES TO REJECT THE METHOD CONSISTENTLY BEING FOL LOWED BY THE ASSESSEE AND DESIRES TO ADOPT A DIFFERENT METHOD, T HE TPO IS REQUIRED TO GIVE HIS REASONING WHICH IS ABSENT IN T HE CASE BEFORE US. THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE TPO FOR DETERMINATION OF THE MOST A PPROPRIATE METHOD FOR DETERMINATION OF THE ALP. FURTHER WE DIR ECT THAT IF THE TPO HOLDS THAT THE RPM IS TO BE ADOPTED AS THE MOST APPROPRIATE METHOD, THEN THE TPO SHALL ALSO TAKE INTO CONSIDERA TION THE COMPARABLE COMPANIES SELECTED BY THE ASSESSEE IN AD DITION TO THE COMPANIES SELECTED BY HIM FOR DETERMINATION OF THE ALP. 7. IN THE RESULT, GROUND NO.2 FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 7 OF 10 8. AS REGARDS GROUND NO.3, BRIEF FACTS ARE THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE ASSESSEE HAD INCURRED EXPENDITURE OF RS.52,10,000 U NDER THE HEAD MARKETING SPONSORSHIP. ON PERUSAL OF THE EXP ENDITURE INCURRED BY THE ASSESSEE, AO OBSERVED THAT THE EXPE NDITURE IS TOWARDS SPONSORSHIP FEE FOR SPONSORING VARIOUS EVEN TS, SEMINARS AND STALLS WHERE THE ASSESSEE ADVERTISES ABOUT ITSE LF. HE OBSERVED THAT SUCH EXPENSES ATTRACT THE PROVISIONS OF SECTION 194C AND THE ASSESSEE HAS TO MAKE TDS ON THESE EXPE NSES. HE RELIED UPON THE CBDT CIRCULAR NO.715, DATED 8.8.199 5 FOR APPLYING THE PROVISIONS OF SECTION 194C AND SINCE T HE ASSESSEE HAS FAILED TO MAKE TDS ON THESE EXPENSES, HE HELD T HAT IT ATTRACTS THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT. AGGRIEVED, ASSESSEE PREFERRED OBJECTIONS BEFORE THE DRP WHICH CONFIRMED THE DISALLOWANCES MADE U/S 40(A)(IA) OF T HE ACT, ASSESSEE IS IN FURTHER APPEAL BEFORE US. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT U/S 194C OF THE ACT, ONLY A WORKS CONTRACT ATTRACTS THE TDS PROVISIONS. HE SUBMITTED THAT IN THE CASE BEFORE US , THE ASSESSEE HAS CONTRIBUTED TOWARDS SPONSORSHIPS OF VARIOUS SEM INARS, ETC., AND THOUGH THE ASSESSEE ADVERTISES ABOUT ITSELF DUR ING THE SEMINARS, IT DOES NOT AMOUNT TO A WORKS CONTRACT. H E SUBMITTED THAT WHERE AN ASSESSEE ADVERTISES ITSELF IN A NEWSP APER OR IN MASS MEDIA AND MAKES PAYMENT TO THE ADVERTISING AGE NCY, ONLY THEN, WOULD IT FALL WITHIN THE DEFINITION OF WORK UNDER CLAUSE (IV) OF THE EXPLANATION TO SECTION 194C OF THE ACT. IN T HE CASE BEFORE US, HE SUBMITTED THAT THERE IS NO WORK INCLUDED IN CONTRIBUTION TOWARDS SPONSORSHIPS AND HENCE THE PRO VISIONS OF ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 8 OF 10 SECTION 194C ARE NOT ATTRACTED. HE SUBMITTED THAT N ONE OF THE AUTHORITIES BELOW HAVE GONE INTO THE EXACT NATURE O F THE CONTRIBUTIONS MADE BY THE ASSESSEE BEFORE HOLDING T HAT THE MEANING OF WORK INCLUDES ADVERTISEMENT UNDER CLAU SE (IV) OF THE EXPLANATION TO SECTION 194C OF THE ACT, HE PRAYED T HAT THE ISSUE MAY BE REMITTED BACK TO THE FILE OF THE AO FOR RECO NSIDERATION, EXAMINATION AND VERIFICATION OF THE FACTS BEFORE AP PLYING THE PROVISIONS OF SECTION 194C OF THE ACT. 10. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW AND SUBMITTED THAT THE CBDT CIRCU LAR NO.715 DATED 8.8.1995 FAIRLY APPLIES TO THE FACTS OF THE C ASE BEFORE US AND THEREFORE THE AO HAS RIGHTLY APPLIED THE PROVIS IONS OF SECTION 194C AND MADE THE CONSEQUENTIAL DISALLOWANCES U/S 4 0(A)(IA) OF THE ACT. 11. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEES CONTRIBUTION TO WARDS SPONSORSHIP ALSO INCLUDES ADVERTISEMENT AND THEREFO RE, THE AO AND THE DRP HAVE HELD THAT THE PROVISIONS OF SECTIO N 194C ARE APPLICABLE. THE REVENUE IS GUIDED BY THE CBDT CIRCU LAR NO.715, DATED 8.8.1995 FOR HOLDING SO. ON PERUSAL OF THE SA ID CIRCULAR, WE FIND THAT VIDE ABOVE CIRCULAR, CBDT HAS ISSUED CLAR IFICATIONS ON VARIOUS PROVISIONS RELATING TO TAX DEDUCTIONS AT SO URCE REGARDING CHANGES INTRODUCED THROUGH FINANCE ACT, 1995. IN TH E SAID CIRCULAR, Q.NO.1, 18 AND 19 ARE RELEVANT TO THE FAC TS OF THE CASE BEFORE US. THEREFORE, FOR THE SAKE OF READY REFEREN CE, THE SAID QUESTIONS AND ANSWERS ARE REPRODUCED HEREWITH: QUESTION 1 : WHAT WOULD BE THE SCOPE OF AN ADVERTI SING CONTRACT FOR THE PURPOSE OF SECTION 194C OF THE ACT? ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 9 OF 10 ANSWER : THE TERM ADVERTISING HAS NOT BEEN DEFINE D IN THE ACT. DURING THE COURSE OF THE CONSIDERATION OF THE FINANCE BILL , 1995, THE FINANCE MINISTER CLARIFIED ON THE FLOOR OF THE HOUSE THAT T HE AMENDED PROVISIONS OF TAX DEDUCTION AT SOURCE WOULD APPLY WHEN A CLIEN T MAKES PAYMENT TO AN ADVERTISING AGENCY AND NOT WHEN ADVERTISING AGEN CY MAKES PAYMENT TO THE MEDIA, WHICH INCLUDES BOTH PRINT AND ELECTRO NIC MEDIA. THE DEDUCTION IS REQUIRED TO BE MADE AT THE RATE OF 1 P ER CENT. IT WAS FURTHER CLARIFIED THAT WHEN AN ADVERTISING AGENCY MAKES PAY MENTS TO THEIR MODELS, ARTISTS, PHOTOGRAPHERS, ETC., THE TAX SHALL BE DEDUCTED AT THE RATE OF 5 PER CENT AS APPLICABLE TO FEES FOR PROFESSIONA L AND TECHNICAL SERVICES UNDER SECTION 194J OF THE ACT. QUESTION 18 : WHETHER DEDUCTION OF TAX IS REQUIRED TO BE MADE UNDER SECTION 194C FOR SPONSORSHIP OF DEBATES, SEMINARS A ND OTHER FUNCTIONS HELD IN COLLEGES, SCHOOLS AND ASSOCIATIONS WITH A V IEW TO EARN PUBLICITY THROUGH DISPLAY OF BANNERS, ETC., PUT UP BY THE ORG ANISERS ? ANSWER : THE AGREEMENT OF SPONSORSHIP IS, IN ESSENC E, AN AGREEMENT FOR CARRYING OUT A WORK OF ADVERTISEMENT. THEREFORE, PR OVISIONS OF SECTION 194C SHALL APPLY. QUESTION 19 : WHETHER DEDUCTION OF TAX IS REQUIRED TO BE MADE ON PAYMENTS FOR COST OF ADVERTISEMENT ISSUED IN THE SO UVENIRS BROUGHT OUT BY VARIOUS ORGANISATIONS ? ANSWER : YES . 12. THE LEARNED COUNSEL FOR THE ASSESSEE RELYING UP ON BOARD ANSWER TO Q. NO.1 TO LAY STRESS ON HIS ARGUMENT THA T ONLY IF A PAYMENT IS MADE TO AN ADVERTISING AGENCY, THE TDS P ROVISION OF SECTION 194C IS APPLICABLE. HOWEVER, WE FIND THAT T HE QUESTION NOS. 18 AND 19 AND ANSWERS TO THESE QUESTIONS ARE R ELEVANT TO THE CASE BEFORE US. IN THE CASE BEFORE US, AS STATE D IN THE EARLIER PARAGRAPHS OF THIS ORDER, WE FIND THAT THE ASSESSEE HAD ADVERTISED ITSELF BY DISPLAY OF BANNERS ETC., DURIN G THE SEMINARS ETC, SPONSORED BY IT. THEREFORE, THE PROVISION OF S ECTION 194C IS FAIRLY APPLICABLE TO THE CASE BEFORE US. IN VIEW OF THE SAME, WE UPHOLD THE FINDINGS OF BOTH THE AUTHORITIES BELOW O N THIS ISSUE. ITA NO.145 OF 2014 ST JUDE MEDICAL INDIA PVT LTD HY DERABAD PAGE 10 OF 10 IN VIEW OF THE SAME, THE ASSESSEES GROUND OF APPEA L ON THIS ISSUE I.E. GROUND NO.3 IS REJECTED. 13. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER, 2015. S D/ - S D/ - (RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 18 TH SEPTEMBER, 2015. VNODAN/SPS COPY TO: 1. ST. JUTE MEDICAL INDIA (P) LTD, NO.1-11-250/A, MATA RANI SENSATION, LANE BESIDES SYNDICATE BANK, BEGUMPET, HYDERABAD 500016 2. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(2), HYDERA BAD 3. DRP HYDERABAD 4. ADD. COMMISSIONER OF INCOME TAX (TRANSFER PRICING) HYDERABAD 500004 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER