ITO, Bangalore V. M/s Sands Advertising Communications Pvt. Ltd., Bangalore

ITA 312/BANG/2012

• Counselvise Citation: 31221114 RSA 2012
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 01-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA
• Assessee Lawyers: NAGIN KHINCHA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO. 312 /BANG/20 1 2 (ASSESSMENT YEAR : 2005-06) INCOME TAX OFFICER, WARD 12(2), BANGALORE. VS. M/S. SANDS ADVERTISING COMMUNICATIONS PVT LTD., NO.29, NANJAPPA ROAD, BEHIND VIJAYA BANK, K.H.ROAD, BANGALORE-560 027 PAN AACCS9684H APPELLANT RESPONDENT. APPELLANT BY : SHRI ETWA MUNDA. RESPONDENT BY : SHRI NAGIN KHINCHA. DATE OF HEARING : 30.10.2012. DATE OF PRONOUNCEMENT : 9.11.2012. O R D E R PER SHRI JASON P. BOAZ : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, BANGALORE DATED 7.12.2011 F OR ASSESSMENT YEAR 2005-06. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE COMPANY, IS AN ADVERTISING AGENCY IN THE BUSINESS OF CREATING AND DESIGNING ADVERTISEMENTS ON BEHALF OF CLIENTS FOR P UBLICATION IN THE MEDIA. AS IT WAS NOT AN ACCREDITED AGENCY, IT UTILIZED THE SERVICES OF I TS SISTER CONCERN M/S. TRISHUL COMMUNICATIONS, AN ACCREDITED AGENCY, FOR RELEASING THE ADVERTISEMENTS TO THE MEDIA. AN ACCREDITED AGENCY REGISTERED WITH THE INDIAN NEWSPA PER SOCIETY (INS) IS ENTITLED TO A HIGHER DISCOUNT AND CREDIT FACILITY FOR 60 DAYS FOR MAKING PAYMENTS. IN THE PERIOD 2 ITA NO. 312/BANG/12 RELEVANT TO ASSESSMENT YEAR 2005-06, IT WAS NOTICED THAT THE ASSESSEE HAD MADE PAYMENTS AMOUNTING TO RS.2,70,27,428 TO M/S. TRISHU L COMMUNICATIONS WITHOUT DEDUCTING TAX AT SOURCE THEREON. IT WAS SUBMITTED BY THE ASSE SSEE BEFORE THE ASSESSING OFFICER THAT TAX WAS DEDUCTED AT SOURCE BY THE CLIENTS WHEN THEY MAKE PAYMENT TO THE ASSESSEE AND AS THE ASSESSEE MERELY ROUTED THE ADVERTISEMENT S TO THE MEDIA THROUGH ITS SISTER CONCERN M/S. TRISHUL COMMUNICATIONS AND THAT THEREF ORE TAX WAS NOT TO BE DEDUCTED BY THE ASSESSEE ON PAYMENTS MADE TO M/S. TRISHUL COMMU NICATIONS. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEE'S SUBMISSIONS AND PROCE EDED TO DISALLOW THE ENTIRE PAYMENTS TO M/S. TRISHUL COMMUNICATIONS AMOUNTING TO RS.2,70 ,27,428 UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS ' THE ACT') WHILE COMPLETING THE ASSESSMENT BY ORDER UNDER SECTION 143(3) OF THE ACT DT.28.12.2007. 2.2 AGGRIEVED WITH THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2005-06, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS) WHO ALLOWED THE ASSESSEE'S APPEAL IN HIS ORDER DT.7.12.2011. 3. AGGRIEVED WITH THE ORDER OF THE LEARNED CI T(APPEALS) DT.7.12.2011 FOR ASSESSMENT YEAR 2005-06, REVENUE IS NOW IN APPEAL B EFORE US. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT (APPEALS) IN SO F AR AS IT RELATES TO THE FOLLOWING GROUNDS IS OPPOSED TO LAW AND FACTS OF TH E CASE. 2. THE LEARNED CIT (APPEALS) ERRED IN DELETING THE WHOLE OF THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF RS.2,70,27,428 BY RELYIN G ON THE EARLIER ORDERS OF THE ITAT WITHOUT APPRECIATING THAT THIS AMOUNT INCL UDES 3% COMMISSION PASSED ON TO M/S. TRISHUL COMMUNICATIONS ON WHICH AT LEAST THE ASSESSEE OUGHT TO HAVE MADE TDS AND TO THAT EXTENT DISALLOWANCE UNDER SECT ION 40(A)(IA) IS CALLED FOR. 3 ITA NO. 312/BANG/12 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (APPEALS) IN SO FA R AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING O FFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 4. THE GROUNDS RAISED AT S.NOS.1,3 AND 4 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 5.1 IN THE GROUND RAISED AT S. NO. 2 , REVENUE HAS CONTENDED THAT THE LEARNED CIT(APPEALS) HAD ERRED IN DELETING THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AMOUNTING TO RS.2,70,27,428 BY RELYING ON EARLIER O RDERS OF THE ITAT WITHOUT APPRECIATING THAT THIS AMOUNT INVOLVES 3% COMMISSIO N PASSED ON TO M/S. TRISHUL COMMUNICATIONS ON WHICH HE ASSESSEE OUGHT TO HAVE M ADE TDS AND TO THAT EXTENT DISALLOWANCE UNDER SECTION 40(A)(IA) IS CALLED FOR. THE LEARNED DEPARTMENTAL REPRESENTATIVE REITERATED THE SUBMISSIONS AS RAISED IN THE GROUNDS OF APPEAL. 5.2 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THE VERY SAME ISSUE HAS BEEN CONSIDERED IN THE ASSESSEE'S OWN CASE BY THE CO-ORD INATE BENCH OF THE BANGALORE TRIBUNAL IN THEIR COMMON ORDER IN ITA NOS.790 TO 795/BANG/20 09 DT.22.1.2010. IN THIS ORDER, THE TRIBUNAL HAS UPHELD THE ORDER OF THE LEARNED CIT(AP PEALS) HOLDING THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT ANY TAX AT SOURCE WHILE MAKING THE DISPUTED PAYMENTS. THIS ORDER WAS FOLLOWED BY AN ORDER OF ANOTHER CO-ORDINATE BEN CH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR A.Y. 2006-07 AND 2007-08 IN ITA NO.S.8 06 & 807/BANG/2010 DT.28.10.2010. 5.3 SINCE THIS ISSUE / MATTER STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE (CITED SUPRA), 4 ITA NO. 312/BANG/12 WE RESPECTFULLY FOLLOWING THE SAME DECISION IN THE ASSESSEE'S OWN CASE HELD THAT THERE IS NO REASON TO INTERFERE WITH THE FINDING OF THE LEAR NED CIT (APPEALS) ON THIS ISSUE. 6. IN THE RESULT, REVENUES APPEAL IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH NOV., 2012. SD/- SD/- (N.V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - C BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDE R SR. PRIVATE SECRETARY, ITAT, BANGALORE