ITO, CHENNAI V. Alamelu Suresh, CHENNAI

ITA 410/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86381 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR NISCHAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.410/MDS/2013 ( / ASSESSMENT YEAR : 2008-2009) THE INCOME TAX OFFICER, MEDIA WARD I, CHENNAI 600 034. ( %& /APPELLANT) VS SMT. ALAMELU SURESH, PROP: SKY COMMERCIALS, B-2, FIRST FLOOR, VIJAY APARTMENT, 28, VIJAYARAGHAVA ROAD, T. NAGAR, CHENNAI 600 017. [PAN: ABGPA 3076P] ( !'%& /RESPONDENT) / APPELLANT BY : DR. NISCHAL, JCIT. / RESPONDENT BY : SHRI. R. VIJAYARAGHAVAN, ADVOCATE /DATE OF HEARING : 26.03.2015 ! /DATE OF PRONOUNCEMENT : 26.03.2015 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, CHENNAI, D ATED 15.11.2012. I.T.A.NO.410/MDS/2013 :- 2 -: 2. THE REVENUES GRIEVANCE IN THIS CASE IS WITH REGARD TO INVOKING PROVISIONS OF SEC. 40(A) (IA) OF THE INCOME TAX ACT . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS THE SOLE PROPREIT RIX OF M/S. SKY COMMUNICATION, AN ADVERTISING AGENCY. SHE HAS DEBI TED G1,55,38,639/- TOWARDS TELECAST FEE EXPENSES. ON V ERIFICATION OF THE SAME, IT WAS NOTICED BY THE ASSESSING OFFICER THAT G1,21,74,316/- WAS PAID TO ELECTRONIC MEDIA AND THE BALANCE G33,64,324 /- IS MADE TO VARIOUS OTHER ADVERTISING AGENCIES. THE ASSESSING OFFICER HAS OPINED THAT SINCE THE BALANCE OF G33,64,324/- IS MADE TO A DVERTISING AGENCIES THE SAME SHOULD BE SUBJECT TO PROVISIONS OF SECTION 194C AND THE CONSEQUENT DISALLOWANCE U/S. 40(A) (IA). HOWEVER, THE ASSESSEE HAS STATED VIDE HER LETTER DATED 24.12.2010 THAT THESE MONIES WERE PAID TO MARKETING AGENCY M/S. VISION TIME INDIA LTD (VTIL) AND OTHERS, AND IN TURN PURCHASED SLOT TIMES FROM SUN TV AND OTHERS. THUS THE CONTENTION OF THE ASSESSEE THAT VTIL REPRESENTS SUN TV AS AN AGENT AND THUS PAYMENTS TO VTIL ARE SAME AS PAYMENT S TO THE MEDIA AND DOES NOT GET COVERED U/S. 194C. THE ASSESSEE H AS ALSO RELIED ON THE RATIO LAID DOWN IN THE CASE OF SANDS ADVERTISING COMMUNICATION PVT. LTD 37 SOT 179 (BANG) . SIMILARLY, THE ASSESSING OFFICER HAS ALSO FOUND THAT THE PUBLICITY FEES AND THE BROADCASTING FEES WERE NOT PAID TO PRINT MEDIA AND THE FM RADIO BUT TO OTHERS AND T HUS, THEY WERE ALSO TO BE BROUGHT TO SECTION 194C. ACCORDINGLY, THE AS SESSING OFFICER HAS I.T.A.NO.410/MDS/2013 :- 3 -: APPLIED THE GUILLOTINE OF SECTION 40(A) (IA). THE D ETAILS OF SUCH PAYMENTS ARE LISTED BELOW: SL.NO NAME OF PARTIES TELECAST FEE EXPENSES 1 SOCIAL MEDIA 2,49,079 2 SIEGU SOLUTIONS LTD 84,660 3 SAREGAMA 3,42,390 4 PYRAMID SAIMIRA 4,07,505 5 NEW AGE ENTERTAINMENT PVT. LTD 57,895 6 ADLABS FILMS LTD 47,278 7 BALAJI TELEFILMS 2,19,238 8 CENTURY COMMUNICATIONS 8,28,090 9 VISION TIME INDIA LTD 8,88,189 10 RAM VIDEO BAAZAR 2,40,000 TOTAL 33,64,324 SL.NO PARTIES TO WHOM TDS TO BE DEDUCTED AMOUNT PUBLICATION FEE: G 1 SIEGU SOLUTIONS LTD 1,59,375 BROADCAST FEE 1 ENTERTAINMENT NETWORK INDIA LTD 1,68,110 2 ADLABS FILMS LTD 2,57,796 3 USHA MEDIA FORTUNE CREATIONS 1,50,000 TOTAL 7,35,281 HOWEVER, THE ARGUMENTS AND RATIO RELIED UPON ARE NO T ACCEPTED BY THE ASSESSING OFFICER. MEANWHILE THE ASSESSEE HAS FILE D PETITION U/S. 144A SEEKING DIRECTIONS FROM THE ADDL. CIT, MEDIA RANGE. THE ADDL. CIT HAS ALSO COME TO A CONCLUSION THAT THE PAYMENTS MAD E TO AGENCIES SHOULD HAVE BEEN SUBJECTED TO TDS. THUS, BOTH PAYM ENTS MADE TO THE MEDIA CONCERNED AMOUNTING TO G33,64,324/- AND T HE PAYMENTS MADE FOR PUBLICITY FEES AND BROADCASTING FEES AT G7 ,35,281/- I.T.A.NO.410/MDS/2013 :- 4 -: AMOUNTING TO G40,99,605/- HAVE BEEN ALLOWED U/S. 40 (A) (IA) FOR FAILURE TO EFFECT THE PROVISIONS U/S. 194C OF THE A CT. AGGRIEVED BY THIS ACTION OF THE ASSESSING OFFICER, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). TH E COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT AGREED WITH THE VIE W OF THE ASSESSING OFFICER. AGAINST WHICH, THE REVENUE IS IN APPEAL. 3. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASS ESSEE ITSELF FILED AUDIT REPORT U/S.44 AB OF THE INCOME TAX ACT AND IT WAS NOT TAKEN ON APPEAL BEFORE THE LOWER APPELLATE AUTHORITY AND THAT THE ASSESSEE IS ONLY DERIVING INCOME AS A COMMISSION AGENT SO AT TH IS STAGE THE ASSESSEES CONTENTION CANNOT BE CONSIDERED. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ONLY A COMMISSION AGENT AND IT WAS INADVERTENTLY FILED REPORT U/S. 44 AB THOUGH, IT WAS NOT APPLICA BLE TO THE ASSESSEE. ACCORDING, TO THE LD. COUNSEL FOR THE ASSESSEE, THE ASSESSING OFFICER CANNOT TAKE ADVANTAGE OF ASSESSEES IGNORANCE SO AS TO APPLY PROVISIONS OF SEC. 40 (A) (IA). 5. WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE FILED AUDIT REPORT U/S. 44AB OF THE ACT AND THE ASSESSING OFFICER AFTER GOING THROUGH IT OBSERV ED THAT THE ASSESSEE IS LIABLE TO DEDUCT TDS U/S.194C OF THE INCOME TAX ACT AND THE ASSESSEE HAS FAILED TO DO SO. THUS, HE INVOKED PRO VISIONS OF SEC. I.T.A.NO.410/MDS/2013 :- 5 -: 40(A)(IA) OF THE ACT. BEFORE US, THE ASSESSEE FILE D PROFIT AND LOSS ACCOUNT WHEREIN ASSESSEE HAS SHOWN ONLY COMMISSION RECEIVED FROM BUSINESS. IN THESE CIRCUMSTANCES, WE ARE NOT IN A POSITION TO COMMENT ON THE NATURE OF ACTIVITIES CARRIED ON BY THE ASSES SEE WITHOUT EXAMINING BOOKS OF ACCOUNTS OF THE ASSESSEE. HENCE , IN OUR OPINION, IT IS APPROPRIATE TO REMIT THE ENTIRE MATTER BACK TO T HE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION DE NOVO . 6. WITH THESE OBSERVATIONS, WE ARE REMITTING THE ENTIRE ISSUE IN DISPUTE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSES SEE SHALL DECIDE THE MATTER AFRESH. 7. IN THE RESULT, THE APPEAL BY THE REVENUE IN I TA NO.410/ MDS/2013 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON THURSDAY, THE 26TH OF MARCH, 2015 AT CHENNAI SD/- SD/- ( ! ) (CHALLA NAGENDRA PRASAD) ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER '# /CHENNAI. $% /DATED:26.03.2015. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF. I.T.A.NO.410/MDS/2013 :- 6 -: