Municipal Commissioner, Hyderabad V. Dy.CIT, Circle-15(1), Hyderabad

ITA 232/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82338 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Assessee Lawyers: S RAMA RAO
• Keywords: Additional evidence
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 230/HYD/2014 A.Y. 2006-07 ITA NO. 231/HYD/2014 A.Y. 2007-08 ITA NO. 232/HYD/2014 A.Y. 2008-09 ITA NO. 233/HYD/2014 A.Y. 2009-10 THE MUNICIPAL COMMISSIONER MAHABUBNAGAR MUNICIPALITY MAHABUBNAGAR PAN: AAALM1364M VS THE DEPUTY CIT CIRCLE-15(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: S RI S. RAMA RAO RESPONDENT BY: SRI B. RAMA KRISHNA DATE OF HEARING: 1 8 .0 9 .2014 DATE OF PRONOUNCEMENT: 18 .0 9 .2014 ORDER PER BENCH: ALL THE ABOVE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF CIT(A)-II, HYDERABAD DA TED 26.11.2013 FOR ASSESSMENT YEARS 2006-07 TO 2009-10. SINCE THE ISSUES INVOLVED ARE COMMON AND ALL THE FO UR APPEALS BELONG TO THE SAME ASSESSEE, THESE APPEALS ARE CLUBBED AND HEARD TOGETHER AND ARE BEING DISPOSED O F BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE COMMON GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ALL THE FOUR APPEALS ARE AS UNDER: 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT TAX IS TO BE DEDUCTED FROM THE PAYMENTS MADE TOWARDS ADVERTISEMENTS. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN DEMANDING TAX AND INTEREST U/S. 201(1) AND 201(1A) OF THE 2 ITA NO. 230/HYD/2014 & ORS. THE MUNICIPAL COMMISSIONER MAHABUBNAGAR MUNICIPALITY ======================= I.T. ACT IN RESPECT OF THE PAYMENTS MADE TO THE PROFESSIONALS. 3. SINCE THE FACTS IN ALL THE FOUR APPEALS ARE IDENTIC AL, WE ARE NARRATING THE FACTS AS IN ITA NO. 230/HYD/20 14. MAHABUBNAGAR MUNICIPALITY IS A LOCAL AUTHORITY OF GOVERNMENT OF ANDHRA PRADESH. THERE WAS A TDS SURVE Y U/S. 133A IN THE PREMISES OF THE ASSESSEE ON 16.02. 2009 TO VERIFY THE COMPLIANCE OF TDS PROVISIONS. DURING THE SURVEY IT WAS FOUND THAT THE ASSESSEE DID NOT DEDUC T TDS ON CONTRACT PAYMENT, RENT AND ON PROFESSIONAL CHARG ES. THEREAFTER, TDS ASSESSMENTS WERE COMPLETED ON 23.03.2011 FOR ALL THE FOUR A.YS. 2006-07, 2007-08, 2008- 09 & 2009-10. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED ADDITIONAL EVIDENCE UNDER RULE 4 6A OF INCOME-TAX RULES, 1962. THE CIT(A) SENT THIS INFOR MATION TO THE AO AND THE AO SUBMITTED HIS REMAND REPORT VI DE LETTER DATED 05.11.2013 AND A COPY OF THE REMAND RE PORT WAS SENT TO THE ASSESSEE FOR HIS COMMENTS VIDE LETT ER DATED 12.11.2013 WITH A REQUEST TO SUBMIT HIS COMME NTS / OBJECTIONS IF ANY BY 26.11.2013. OBJECTIONS WERE SUBMITTED BY THE ASSESSEE ON 26.11.2013. WITH REGA RD TO THE PAYMENTS MADE TOWARDS ADVERTISEMENT THE, YEAR-W ISE DETAILS ARE AS UNDER: SL. NO. NAME 2006- 07 2007- 08 2008- 09 2009- 10 1 USHODAVA ENTERPRISES 86872 32086 210627 139587 2 PRAJA SHAKTHI 44305 30000 14960 0 3 DECCAN ADVT 10000 14400 91000 66000 4 SIYASATH 16476 0 62640 20000 5 AMODA PUBLICATION 23100 0 0 78878 6 TELUGU FRONT LINE 25000 0 0 0 3 ITA NO. 230/HYD/2014 & ORS. THE MUNICIPAL COMMISSIONER MAHABUBNAGAR MUNICIPALITY ======================= 7 MAHABOOMI 0 3000 18000 0 8 MUNISIF 0 38800 26000 0 9 MAHABUBNAGAR TIMES 0 6000 0 0 10 REHAMAN DECCAN 0 10580 0 0 11 VARTHA 0 4000 31500 29570 12 SAHARA INDIA 0 0 5000 0 13 RASTRIYA SAHARA 0 0 21000 0 14 BALDIA SAMACHAR 0 0 40000 0 15 AZIZ PUBLICATION 0 0 35760 0 16 MOSIN PUBLICATION 0 0 0 125000 17 SPR PUBLICATION 0 0 0 28000 18 AGA PUB 0 0 0 121016 19 KASTURI 0 0 0 10000 20 ADUT 0 0 0 20000 5. BEFORE THE CIT(A) T HE ASSESSEE SUBMITTED THAT THE PAYMENTS WERE MADE TO AGENTS WHO IN TURN MADE THE PAYMENT TO PUBLISHERS. IT WAS FURTHER SUBMITTED THAT SINCE THE PAYMENTS WERE MADE TO AGENTS THE PROVISIO NS OF SECTION 194C ARE NOT APPLICABLE AS THE PUBLISHERS INCLUDED THIS AMOUNT AS INCOME IN THEIR RESPECTIVE RETURNS. 6. THE CIT(A) OBSERVED THAT AS PER BOARD'S CIRCULAR NO. 7L5 DATED 08.08.1995 PAYMENTS MADE TO ADVERTISING AGENCIES ARE CLEARLY HELD LIABLE TO TDS. THE QUESTION NO. 1 OF THE SAID CIRCULAR DEALING WITH THE SUBJECT OF 'ADVERTISING' READS AS UNDER: 'QUESTION 1: WHAT WOULD BE THE SCOPE OF AN ADVERTISING CONTRACT FOR THE PURPOSE OF SECTION 194C OF THE ACT? ANSWER: THE TERM 'ADVERTISING' HAS NOT BEEN DEFINED IN THE ACT. DURING THE COURSE OF THE CONSIDERATION OF THE FINANCE BILL, 1995, THE FINANC E MINISTER CLARIFIED ON THE FLOOR OF THE HOUSE THAT T HE AMENDED PROVISIONS OF TAX DEDUCTION AT SOURCE WOULD APPLY WHEN A CLIENT MAKES PAYMENT TO AN ADVERTISING AGENCY AND NOT WHEN ADVERTISING AGENCY MAKES PAYMENT TO THE MEDIA, WHICH INCLUDES BOTH PRINT AND ELECTRONIC MEDIA. THE DEDUCTION IS REQUIRED TO BE MADE AT THE RATE OF 1 4 ITA NO. 230/HYD/2014 & ORS. THE MUNICIPAL COMMISSIONER MAHABUBNAGAR MUNICIPALITY ======================= PER CENT. IT WAS FURTHER CLARIFIED THAT WHEN AN ADVERTISING AGENCY MAKES PAYMENTS TO THEIR MODELS, ARTISTS, PHOTOGRAPHERS, ETC., THE TAX SHALL BE DEDUCTED AT THE RATE OF 5 PER CENT AS APPLICABLE TO FEES FOR PROFESSIONAL AND TECHNICAL SERVICES UNDER SECTION 194J OF THE ACT.' 7. IN VIEW OF THE ABOVE CIRCULAR , THE CIT(A) DIRECTED THE ASSESSING OFFICER TO COMPUTE THE TDS LIABILITY IF THE AMOUNT PAID EXCEEDS THE THRESHOLD LIMIT FOR THAT PARTICULAR ASSESSMENT YEAR. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LEARNED COUNSEL FOR THE ASSESSEE SRI S. RAMA RAO RELIED ON THE DECISION IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT (293 ITR 226) (SC) AND STATED THAT IN THE PRESENT APPEAL, WITH REGARD TO S OME PAYMENTS, THE PAYEE HAS DEDUCTED TAX AT SOURCE, WHI LE IN CASE OF CERTAIN PAYMENTS TDS PROVISIONS DO NOT APPL Y AS THE AMOUNT DOES NOT EXCEED RS. 20000. 9. WITH REGARD TO DEDUCTION OF TDS U/S. 194J TOWARDS PAYMENTS MADE TO PROFESSIONALS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND OF APPEAL WI TH RESPECT TO THE SAME IS NOT BEING PRESSED. HENCE, W E DISMISS GROUND NO. 3 IN ALL THE APPEALS. 10. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR VERIFICATION AS TO WHETHER TD S HAS BEEN PAID BY THE PAYEE AND ALSO TO IDENTIFY THE CAS ES FOR WHICH THE PROVISIONS OF TDS WILL NOT BE APPLICABLE AS THE PAYMENT DO NOT EXCEED RS. 20,000. 5 ITA NO. 230/HYD/2014 & ORS. THE MUNICIPAL COMMISSIONER MAHABUBNAGAR MUNICIPALITY ======================= 11. THE LEARNED DR DID NOT OBJECT TO THE ISSUE BEING SENT BACK TO THE ASSESSING OFFICER FOR THE PURPOSE OF VERIFICATION. 12. WE HAVE HEARD BOTH THE PARTIES. IN THE CASE OF HINDUSTAN COCO COLA BEVERAGES PVT. LTD. (SUPRA) AT PARA 10 IT HAS BEEN HELD AS FOLLOWS: 'BE THAT AS IT MAY, CIRCULAR NO. 275/201/95-IT(B) DATED JANUARY, 29, 1997, ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, IN OUR CONSIDERED OPINION, SHOULD PUT AN END TO THE CONTROVERSY. THE CIRCULAR DECLARES 'NO DEMAND VISUALIZED UNDER SECTION 201(1) OF THE INCOME-TAX ACT SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED THE OFFICER-IN - CHARGE OF TDS, THAT TAXES DUE HAVE BEEN PAID BY THE DEDUCTEE-ASSESSEE. HOWEVER, THIS WILL NOT ALTER THE LIABILITY TO CHARGE INTEREST UNDER SECTIO N 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXE S BY THE DEDUCTEE-ASSESSEE OR THE LIABILITY FOR PENALTY UNDER SECTION 271C OF THE INCOME-TAX ACT.' 13. HENCE, WE REMIT THE MATTER TO THE ASSESSING OFFICER TO VERIFY AS TO WHETHER THE PAYEE HAS DECLARED THE RESPECTIVE INCOME AND PAID TAX THEREON AND IF SO, T HE ASSESSEE SHALL NOT BE HELD AS 'THE ASSESSEE IN DEFA ULT' FOR THE PURPOSE OF INVOKING PROVISIONS OF SECTION 201 A ND 201A. FURTHER, FROM THE DETAILS AT PARA 6.3 PRODUC ED AT PAGE 6 OF THE CIT(A) ORDER, WE FIND FROM THE PAYMEN TS MADE TOWARDS ADVERTISEMENT THE FOLLOWING DO NOT EXC EED RS. 20,000. SL. NO. NAME 2006- 07 2007- 08 2008- 09 2009- 10 1 PRAJA SHAKTHI 14960 2 DECCAN ADVT 10000 14400 3 SIYASATH 16476 4 MAHABOOMI 3000 18000 5 MAHABUBNAGAR TIMES 6000 6 REHAMAN DECCAN 10580 7 VARTHA 4000 8 SAHARA INDIA 5000 9 KASTURI 10000 6 ITA NO. 230/HYD/2014 & ORS. THE MUNICIPAL COMMISSIONER MAHABUBNAGAR MUNICIPALITY ======================= 14. THE ASSESSING OFFICER IS DIRECTED (I) NOT TO APPLY THE PROVISIONS OF SECTION 194C TO THE ITEMS LISTED ABOV E WHERE PAYMENTS DO NOT EXCEED RS. 20,000 (II) VERIFY WHETH ER TAX HAS BEEN PAID BY THE PAYEE WITH RESPECT TO THE REMA INING PAYMENTS TOWARDS ADVERTISEMENT AND THEREAFTER DECID E THE ISSUE IN ACCORDANCE WITH LAW. 15. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER, 2014 SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 18 TH SEPTEMBER, 2014 TPRAO COPY TO: 1. THE MUNICIPAL COMMISSIO NER, MAHABUBNAGAR MUNICIPALITY, C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYA'S ELEGANCE, H. NO. 3-6-643, ST. NO. 9, HIMAYATNAGAR, HYDERABAD-500 029. 2. THE DEPUTY CIT, CIRCLE - 15(1), HYDERABAD. 3. THE CIT(A) - II, HYDERABAD. 4. THE CIT (TDS), HYDERABAD. 5 . THE DR, A - BENCH, ITAT, HYDERABAD.