The DCIT(OSD), Circle-8, Ahmedabad V. M/s. Vibrant Advertising Pvt.Ltd., Ahmedabad

ITA 2583/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94824 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 09-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 2583/AHD/2012 / ASSESSMENT YEAR: 2005-06 DCIT (OSD), CIRCLE-8, AHMEDABAD .. APPELLANT VS M/S. VIBRANT ADVERTISING PVT LTD 708, AKSHAT TOWER, B/H. PACKWAN DINING HALL, S.G. HIGH WAY, AHMEDABAD .. RESPONDENT PAN : AAACV 7737 Q REVENUE BY : MS. S ANYOGITA NAGPAL , SR - DR ASSESSEE(S) BY : NONE / DATE OF HEARING 02/12/2015 /DATE OF PRONOUNCEMENT 08/12/2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XIV, AHMED ABAD DATED 30.08.2012 FOR ASSESSMENT YEAR 2005-06, ON TH E FOLLOWING GROUNDS:- 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ITA NO. 2583/AHD /2012 DCIT VS. VIBRANT ADVERTISING PVT LTD AY 2005-06 - 2 - ADDITION OF RS.9,66,024/- MADE ON ACCOUNT OF NON- DEDUCTING OF TDS, ON PAYMENT TO NON-MEDIA ENTITY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABA D MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E AN ADVERTISING AGENCY - IS ENGAGED IN THE BUSINESS OF ADVERTISING AND MARKETING, EXCLUSIVELY IN THE PRINT MEDIA. THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.10,12,290/- ON ACCO UNT OF NON-DEDUCTION OF TDS ON PAYMENT TO NON-MEDIA ENTITY . 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHEREIN THE CIT(A) RESTRICTED THE DISALLOWANCE TO R S.46,266/-. BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION O F RS.9,66,024/- MADE ON ACCOUNT OF NON-DEDUCTION OF T DS ON PAYMENT TO NON-MEDIA ENTITY; ACCORDINGLY, THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. ON THE OTHER HAND, NONE APPEARED ON BEH ALF OF THE ASSESSEE; SO THE MATTER IS BEING DECIDED ON THE BAS IS OF ITA NO. 2583/AHD /2012 DCIT VS. VIBRANT ADVERTISING PVT LTD AY 2005-06 - 3 - ARGUMENTS OF DEPARTMENTAL REPRESENTATIVE AND MATERI AL AVAILABLE ON RECORD. 2.2. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT AT AP PELLATE STAGE, THE ASSESSEE HAS POINTED OUT THAT IT IS MERE LY AN AGENT BETWEEN THE CUSTOMERS WHO WANT TO GIVE ADVERTISEMEN T AND THE PRINT/ELECTRONIC MEDIA. THE PAYMENT WHICH THE CLIEN T MAKES TO THE ASSESSEE IS RECEIVED AFTER DEDUCTION OF TAX FRO M THE CLIENT AS THERE IS AN INCOME ELEMENT IN THE SAME. BETWEEN THE NEWSPAPER AND THE ASSESSEE-COMPANY, THERE IS ONE MO RE MEDIATOR NAMELY; RADIANT MEDIA CONVERGENCE PVT. LTD . THE ASSESSEE MAKES THE PAYMENT TO RADIANT MEDIA CONVERG ENCE PVT LTD. WHO MAKES THE PAYMENT TO THE NEWSPAPER OR THE MEDIA COMPANY. THE RADIANT MEDIA CONVERGENCE PVT. L TD. NORMALLY RECEIVES DISCOUNT FROM THE MEDIA/NEWSPAPER OUT OF WHICH IT PASSES 14% DISCOUNT TO THE ASSESSEE-COMPAN Y. THE BILL WHICH IS RAISED BY THE ASSESSEE-COMPANY TO THE CLIENT IS SAME WHICH IS RAISED BY THE NEWSPAPER TO THE RADIAN T MEDIA AND TO THE ASSESSEE. IT IS ONLY THE DISCOUNT WHICH IS SUBSEQUENTLY ADJUSTED WHICH GIVES THE PROFIT TO THE ASSESSEE COMPANY AS WELL AS THE RADIANT MEDIA. ITA NO. 2583/AHD /2012 DCIT VS. VIBRANT ADVERTISING PVT LTD AY 2005-06 - 4 - 2.3 IN VIEW OF THESE FACTS, THE CIT(A) OBSERVED THA T THE PAYMENT ON ACCOUNT OF ADVERTISEMENT WHICH HAS BEEN RECEIVED BY THE ASSESSEE FROM THE CLIENT I.E. THE PERSON WHO IS GIVING ADVERTISEMENT IN THE NEWSPAPER/MEDIA IS SUBJECTED T O TDS AND IS RECEIVED AFTER DEDUCTION OF TAX FROM THE SAM E. OUT OF THE PAYMENT SO RECEIVED, THE ASSESSEE PASS ON THE PAYME NT TO RADIANT MEDIA WHICH HAS RAISED A BILL OF SAME AMOUN T WHICH WAS RAISED BY THE ASSESSEE TO THE CLIENT AFTER ADJU STING THE DISCOUNT. FURTHER, RADIANT MEDIA AGAIN PAYS THE AMO UNT TO THE PRESS OR THE MEDIA, WHO HAS PUBLISHED THE ADVERTISE MENT, AFTER ADJUSTING THE DISCOUNT. THE APPELLANT HAS GIVEN DET AILS OF ALL THE BILLS WHICH HAS BEEN RAISED BY RADIANT TO THE A SSESSEE- COMPANY AND THE DETAILS AT PAYMENT MADE BY THE ASSE SSEE TO THE RADIANT MEDIA AND FURTHER PAYMENT MADE BY THE R ADIANT TO THE PRESS/MEDIA. IT IS SEEN THAT THE DIFFERENCE IS ONLY IN THE AMOUNT OF DISCOUNT WHICH IS RETAINED AT EACH LEVEL. THE ASSESSEE-COMPANY RETAINS THE DISCOUNT OF 14% AND TH E RADIANT MEDIA RETAINS THE DISCOUNT OF 1% OF THE TOTAL BILL RAISED TO THE CLIENT. THEREFORE, THERE IS AN ELEMENT OF PROFIT O NLY IN THE PAYMENT WHICH IS 1% OF THE TOTAL BILL RAISED TO THE CLIENT. SINCE THE ORIGINAL AMOUNT HAS ALREADY BEEN SUBJECTED TO D EDUCTION OF TAX, THE PROFIT ELEMENT IN THAT AMOUNT HAS ALREADY BEEN TAXED. ITA NO. 2583/AHD /2012 DCIT VS. VIBRANT ADVERTISING PVT LTD AY 2005-06 - 5 - 2.4 IN THE PAYMENT WHICH THE ASSESSEE IS MAKING TO RADIANT MEDIA, THE PROFIT ELEMENT IS ONLY IN 1% OF THE PAYM ENT AND IF AT ALL THE TAX IS TO BE DEDUCTED IT SHOULD BE DEDUCTED ON THAT AMOUNT. THE ASSESSEE HAS GIVEN THE DETAILS OF ALL T HE BILLS FILED BEFORE THE CIT(A) WHICH SHOW THAT OUT OF THE PAYMEN T OF RS.8,64,572/- PAID BY THE ASSESSEE TO THE RADIANT M EDIA, THE RADIANT MEDIA EARNED PROFIT OF RS.46,266/-. THEREFO RE THE ASSESSEE SHOULD HAVE DEDUCTED TAX ON THE AMOUNT WHI CH HAS THE ELEMENT OF INCOME, WHICH WORKED OUT TO RS.46,26 6/-. THE ASSESSING OFFICER ACTION IN TREATING THE WHOLE AMOU NT WHICH WAS PAID BY THE ASSESSEE TO RADIANT MEDIA WAS NOT J USTIFIED AS IT HAS ALREADY BEEN SUBJECTED TO DEDUCTION OF TAX A T FIRST LEVEL BY THE CLIENT AND NOW IT IS IN THE FORM OF REIMBURS EMENT OF PAYMENT TO RADIANT MEDIA. THE PAYMENT IN WHICH THER E IS AN INCOME ELEMENT ONLY IN THE COMMISSION OF 1% WHICH I S PART OF THE PAYMENT MADE BY THE ASSESSEE TO THE RADIANT MED IA. ACCORDINGLY, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS RIGHTLY RESTRICTED BY THE CIT(A) TO RS.46,266/- . THEREFORE, THE CIT(A) WAS JUSTIFIED IN DELETING THE AMOUNT OF RS.9,66,024/- MADE ON ACCOUNT OF NON-DEDUCTION OF T DS ON ITA NO. 2583/AHD /2012 DCIT VS. VIBRANT ADVERTISING PVT LTD AY 2005-06 - 6 - PAYMENT TO NON-MEDIA ENTITY. THIS REASONED FINDINGS OF THE CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. SAME IS UPHELD. 3. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 8TH OF DECEMBER, 2 015 AT AHMEDABAD. SD/- SD/- ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 08/12/2015 *BT / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT. 3. && ' / CONCERNED CIT 4. ' ( ) / THE CIT(A), 5. ()* $++ , , / DR, ITAT, AHMEDABAD 6. *, / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) ! , / ITAT, AHMEDABAD