The ITO, Ward-5(2), Baroda V. Shri Harish J.Shah,HUF, Baroda

ITA 2759/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60444 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL H TALATI
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO. 2759/AHD/2009 ASSESSMENT YEAR :2006-07 INCOME-TAX OFFICER, WARD-5(2), 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA V/S . M/S HARISH J. SHAH (HUF) C/O INTERNATIONAL PUBLICITY IBP HOUSE, KOTHI POLE, RAOPURA, BARODA. PAN NO. A A E H S 7490G (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI VINOD TANWANI, SR.D.R. /BY RESPONDENT SHRI SUNIL H. TALATI, A.R. /DATE OF HEARING 10.05.2012 /DATE OF PRONOUNCEMENT 25.05.2012 O R D E R PER : D.K.TYAGI, JUDICIAL MEMBER THIS IS A REVENUES APPEAL DIRECTED AGAINST THE OR DER OF LD. CIT (A)-V, BARODA, DATED 17.07.2009 FOR ASSESSMENT YEAR 2006-0 7. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEA L:- ITA NO. 2759/AHD/2009 A.Y.2006-07 PAGE 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT DISALLOWANCE U/S. 40(A)(IA) AMOUNTING TO RS. 16,06,694/-. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE TRANSACTION OF PAYMENT HAS BEEN BETWEEN TWO ADVERTISING AGENCIES ( AND NOT BETWEEN THE AGENCIES AND PRINT & ELECTRONIC MEDIA) WHICH IS COVERED U/S. 194C LEADING TO DEDUCTION OF TAX. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF ADVANCE MONEY RECEIVED TOWARDS SALE OF CAR WHICH WAS FORFEITED BY THE ASSESSEE AND TREATED AS INCOME OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA D CLAIMED ADVERTISEMENT EXPENSES OF RS. 55,92,456/- TO VARIOUS PARTIES INCL UDING MEDIA. THEREFORE, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS IN RESPECT OF THESE PAYMENTS. FROM THE DETAILS, FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT AS PER THE PROVISIONS OF SECTI ON 194C OF THE ACT, THE ASSESSEE FAILED TO DEDUCT TDS FROM THE AMOUNT SO PA ID/CREDITED OF RS. 15,32,829/- TO M/S. BARODA ADVERTISING AGENCY. THE ASSESSEE WAS SHOW CAUSED AS TO WHY THIS AMOUNT SHOULD NOT BE DISALLOW ED AND ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 40(A)(IA) OF T HE ACT. THE REPLY, SUBMITTED BY THE ASSESSEE, WAS NOT ACCEPTABLE TO TH E ASSESSING OFFICER. HE, THEREFORE, HELD THAT THE ASSESSEE WAS LIABLE TO DED UCT TDS FROM THE PAYMENT ITA NO. 2759/AHD/2009 A.Y.2006-07 PAGE 3 OF RS. 15,32,829/- UNDER SECTION 194C OF THE ACT AN D THEREFORE, DISALLOWED THESE EXPENSES OF RS. 15,32,829/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE INVOKING THE PROVISIONS OF SECTION 40(A)(I A) OF THE ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSE E FAILED TO DEDUCT TDS FROM THE INTEREST AMOUNT OF RS.1,05,224/- PAID TO F OUR PERSONS, NAMELY, 1. SMT. P.J.SHAH RS. 73565/-, MR. P.H.SHAH RS. 11031/- , 3. MR. K.H.SHAH RS. 11031/-, 4. MR. RAGNI MEHTA RS. 9297/- RESPECTIVELY . ACCORDING TO A.O., THE ASSESSEE VIOLATED THE TDS PROVISIONS AND THEREFORE, ADDED THE ENTIRE AMOUNT OF INTEREST OF RS. 1,05,224/- TO THE TOTAL INCOME O F THE ASSESSEE INVOKING PROVISIONS OF 40(A)(IA). THUS, THE ASSESSEE OFFICE R MADE TOTAL ADDITION OF RS. 16,38,053/- ON BOTH THESE COUNTS. IN APPEAL, LD. C IT(A) HAS DELETED THE ADDITION OF RS. 16,06,694/-. 4. AGGRIEVED BY THIS ORDER OF LD. CIT (A), NOW, THE REVENUE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING, LD. D.R. RELIED ON THE ORDER OF ASSESSING OFFICER WHILE LD. A.R. RELIED ON THE ORDER OF LD. C IT (A). 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORDS, WE FIND THAT IN RESPECT OF PAYMENT OF RS. 15,32,829/- TO M/S. BAROD A ADVERTISING AGENCY, THE FACTS OF THIS CASE ARE SIMILAR TO THE CASE OF ITO VS. M/S HONEST PUBLICITY IN ITA NO. 2758/AHD/200 , IN THAT CASE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE BY OBSERVING AS UNDER:- AFTER HEARING BOTH THE PARTIES AND PERUSING THE R ECORDS, WE FIND THAT AN ADDITION OF RS.29,78,272/- HAS BEEN MADE IN THIS CASE BY ASSESSING OFFICER AS THE ASSESSEE DID NOT DEDUCT TD S FROM THE ITA NO. 2759/AHD/2009 A.Y.2006-07 PAGE 4 PAYMENT MADE TO ADVERTISING AGENCIES. THE ASSESSEE S CONTENTION HAS CONSISTENTLY BEEN THAT HE WAS ENGAGED IN THE ADVERT ISING BUSINESS ACTING AS AN AGENT OF MEDIA AND IN SOME OF THE CASE S HE WAS ACTING AS SUB-AGENT ON COMMISSION BASIS ONLY OF THE ADVERTISI NG AGENCIES AND THEREFORE, HE WAS NOT REQUIRED TO DEDUCT TAX FROM T HE PAYMENT MADE TO DIFFERENT ADVERTISING AGENCIES. SINCE, THIS STAND OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY THE REVENUE AT THE TIME OF HEARING BEFORE US, WE ARE OF THE CONSIDERED OPINION THAT LD. CIT(A) HA S RIGHTLY DELETED THIS ADDITION BY HOLDING THAT THE PROVISIONS OF SECTION 194C OF THE ACT WERE NOT ATTRACTED ON THE PAYMENT SO MADE TO VARIOUS ADV ERTISING AGENCIES. THIS VIEW OF THE LD. CIT (A) IS IN CONFORMITY WITH THE CLARIFICATION ISSUED BY THE CBDT, NEW DELHI, VIDE CIRCULAR NO. 452, DATE D 17.03.1986 AND THE DECISION OF HONBLE ITAT BANGALORE BENCH IN THE CASE OF SANDS ADVERTISING COMMUNICATIONS (P) LTD. VS. DCIT (TDS) (2010) 37 SOT 179 (BANG.) . IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CON SIDERED OPINION THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT AP PLICABLE TO THE ASSESSEE AS THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX UNDER SECTION 194C ON PAYMENTS MADE TO ADVERTISING AGENCIES. THE REFORE, THE ORDER PASSED BY LD. CIT(A) DELETING THE ADDITION OF RS. 2 9,78,272/- DOES NOT REQUIRE ANY INTERFERENCE ON OUR PART AND THE SAME I S HEREBY UPHELD. 6. FOLLOWING THE SAME, THE ORDER PASSED BY LD. CIT( A) IS HEREBY UPHELD AND THE REVENUES APPEAL IS DISMISSED. ITA NO. 2759/AHD/2009 A.Y.2006-07 PAGE 5 7. AS REGARDS THE PAYMENT OF RS. 73565/- PAID TO SM T. P.J.SHAH, THE LD. CIT (A) HAS RIGHTLY GIVEN RELIEF TO THE ASSESSE E AS FORM NO. 15 WAS FURNISHED BY SMT. P.J.SHAH TO ASSESSEE AND THEREFOR E, NO TDS WAS TO BE DEDUCTED FROM THIS PAYMENT. THEREFORE, THE ORDER O F THE LD. CIT (A) IN THIS RESPECT, IS ALSO UPHELD. 8. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ; ITA NO. 2759/AHD/2009 A.Y.2006-07 PAGE 6 STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 17.05.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 18.05.2012 4) DATE OF CORRECTION XXXX 5) DATE OF FURTHER CORRECTION XXXX 6) DATE OF INITIAL SIGN BY MEMBERS 25.05.2012 7) ORDER UPLOADED ON 25.05.2012 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 25.05.2012