ASST CIT (TDS) 2(2), MUMBAI V. PERCEPT LTD, MUMBAI

ITA 4446/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2990 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 26-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH BAREDR
• Section: 194C

Judgement Text

INCOME-TAX APPELLATE TRIBUNAL C BENC H MUMBAI , , BEFORE S/SH.JOGINDER SINGH,JUDICI AL MEMBER & RAJENDRA,ACCOUNTANT MEMBER ./I.T.A./4446/MUM/2014 , /ASSESSMENT YEAR: 2011-12 ACIT, (TDS) CIRCLE-2(2), ROOM NO.703 7 TH FLOOR, SMT. KG MITTAL AYURVEDIC HOSPITAL BLDG. CHARNI ROAD, MUMBAI-400 013. VS. M/S. PERCEPT LTD. PERCEPT HOUSE, 22 RAGHUVANSHI ESTATE 11/12, SENAPATI BAPAT MARG, LOWER PAREL MUMBAI-400 013. PAN:AACCP 5602 Q ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI GANESH BARE-DR ASSESSEE BY: ADJOURNMENT APPLICATION REJECTED / DATE OF HEARING: 24.05.2016 / DATE OF PRONOUNCEMENT: 29.06.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER OF THE CIT (A)-14,MUMBAI, DAT ED 22.04.2014, THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL.EFFECTIVE GROUND OF APPEAL IS ABOUT ALLOWING THE DEDUCTION UNDER SECTION 194C OF THE ACT.THE ASSESSEE COMPANY IS ENGAGED INTO THE BUSINESS OF OUTDOOR ADVERTISING LIKE BILL BOARDS ADVERTISING, H OARDING ETC. ALONGWITH MEDIA ADVERTISING AND COMMUNICATION. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING DEMAND OF RS.1,98,20,316/- RAISED U/S.201(1) AND INTEREST CHARGES OF RS.59,46,095/- RAISED U/S. U/S. 201(1A) OF THE ACT IN RESPECT AMOUNTS PAYABLE TOWARDS HOARDING CHARGES.IN HIS ORDER THE A O OBSERVED THAT THE ASSESSEE HAD DEBITED HOARDING CHARGES AT RS.24,77,53,957/- AND MADE TDS U/S.194C.HE HELD THAT THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX U/S.194-I(B) FOR ACQUIRI NG THE HOARDING/ DISPLAY RIGHT, THAT THE ASSESSEE MADE PAYMENT FOR THE RIGHT TO USE HOARDING SPACE AND SUCH PAYMENT WAS NOTHING BUT RENT PAID AS DEFINED U/S. 194-I OF THE ACT.HE TRE ATED THE ASSESSEE AS ASSESSEE IN DEFAULT AS PER THE PROVISIONS OF SECTION 201(1)OF THE ACT. 3 .IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FA A),IT WAS SUBMITTED THAT THE ASSESSEE HAD MADE PAYMENT OF HOARDING CHARGES OF RS.24,77,53,957 /- TO VARIOUS HOARDING VENDORS AND HAS DEDUCTED TDS U/S. 194C OF THE ACT,THAT ON RECEIPT O F THE ORDER FOR ADVERTISEMENT THROUGH HOARDINGS FROM THE CLIENT IT GAVE THE ENTIRE DESCRI PTION AND SPECIFICATIONS TO THE CLIENT AFTER HAVING DISCUSSIONS WITH THEM REGARDING PLACE, SIZE ETC., THAT WOULD BE BEST SUITED/CHOICE FOR 4446/MUM/2014 PERCEPT LTD. 2 EFFICIENT ADVERTISING OF THE CLIENTS PRODUCT THRO UGH HOARDING, THAT AS PER THE AGREED UNDERSTANDING ABOUT THE SPECIFICATIONS OF HOARDINGS WITH THE CLIENT THE ASSESSEE WOULD APPROACH THE HOARDING VENDOR OF THE DESIRED LOCATIO NS FOR SETTING UP AND PUTTING UP THE HOARDINGS FOR SPECIFIED PERIOD,THAT IT WAS THE HOAR DING VENDORS WHO WOULD ENTER INTO AN AGREEMENT WITH THE BUILDING OWNERS/SOCIETY FOR ACQU IRING EITHER ON OWNERSHIP BASIS OR ON LEASE THE SPACE ON TERRACE BUILDING WALL ETC. FOR P UTTING UP THE HOARDINGS, THAT THE HOARDING VENDORS WOULD THEN PUT UP THE HOARDINGS AS PER THE SPECIFICATIONS GIVEN BY THE ASSESSEE FOR THE CLIENT AND WOULD CHARGE THE ASSESSEE FOR HOARDI NG/PUBLICITY, THAT THE ASSESSEE WOULD THEN BILLS THE CLIENT FOR ADVERTISING THROUGH HOARDINGS, THAT THE ASSESSEE HAD PAID THE HOARDING CHARGES TO THE HOARDING VENDORS FOR THE CONTRACT OF SETTING AND DISPLAYING THE HOARDING OF THE CLIENTS GIVEN TO THEM FOR PARTICULAR PERIOD OF TIME , THAT THE ASSESSEE WAS NOT ENGAGED INTO ACQUIRING OF THE HOARDING SPACE FROM THE VENDORS/BU ILDING OWNERS AND SUB-LETTING THE SAME.IT RELIED UPON THE CASE OF ROSHAN PUBLICITY PRIVATE LT D.(4 SOT 105). THE FAA AFTER PERUSING THE ORDER OF THE AO,THE SUBM ISSION OF THE ASSESSEE AND THE CIRCULAR OF CBDT HELD THAT THE CIRCULAR EXPLICITLY CLARIFIED THAT IF THERE WAS A SUBLETTING OF HOARDING THE TDS WAS TO BE DEDUCTED U/S. 194-I,THAT THERE WA S NO EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAD INDULGED IN SUBLETTING OF THE HOARDING RIGHTS ACQUIRED BY IT,THAT THE PAYMENTS MADE BY THE ASSESSEE TO OTHER PARTIES FOR DISPLAY O F ADVERTISEMENTS OF ITS CLIENTS WERE NOT IN THE NATURE OF RENT, THAT PAYMENTS WERE TOWARDS A WO RK CONTRACT,THAT TAX WAS LIABLE TO BE DEDUCTED U/S.194C OF THE ACT,THAT THE ASSESSEE COUL D NOT BE HELD TO BE ASSESSEE IN DEFAULT. THE FAA RELIED UPON THE CASES OF ROSHAN PUBLICITY P VT. LTD. (SUPRA),AND M/S. OGILVI & MATHER PVT.LTD.(ITA/5202/DEL/2004 FOR AY.2002-03 DT D. 23.09.2005)AND ALLOWED THE APPEAL OF THE ASSESSEE. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE (DR)SUPPO RTED THE ORDER OF THE AO. THE AUTHORISED REPRESENTATIVE(AR) RELIED UPON THE ORDER OF THE FAA AND STATED THAT IT WAS NOT A CASE OF SUB LETTING. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD DEBITED HOARDING CHARGES OF RS.24.77 C RORES AND HAD DEDUCTED THE TAX AT SOURCE U/S.194C OF THE ACT,THAT THE AO WAS OF THE OPINION THAT THE ASSESSEE SHOULD HAVE DEDUCTED TAX U/S. 194-I(B) OF THE ACT,THAT THE FAA HELD THAT PRO VISIONS OF SECTION 194 WERE APPLICABLE . WE FIND THAT THE FAA HAS GIVEN A CATEGORICAL FINDING O F FACT THAT AS PER THE CIRCULAR ISSUED BY THE CBDT (CIR NO.715 DT.8.8.95) TDS HAD TO BE MADE AS PER PROVISIONS OF SECTION 194-I IF THERE WAS SUBLETTING, THAT IN THE CASE UNDER APPEAL THERE WAS NO SUB LETTING. THEREFORE, WE 4446/MUM/2014 PERCEPT LTD. 3 AGREE WITH THE FAA THAT PAYMENT MADE BY THE ASSESSE E FOR DISPLAY OF ADVERTISEMENT OF ITS CLIENTS WAS NOT IN THE NATURE OF RENT AND THAT THE ASSESSEE HAD TO DEDUCT TAX AS PER PROVISIONS OF THE SECTION 194C OF THE ACT.WE FIND THAT IN THE CASES OF ROSHAN PUBLICITY PVT. LTD. (SUPRA) AND OGILVI AND MATHER PVT. LTD. (SUPRA) THE ISSUE H AS BEEN DISCUSSED AND IT HAS BEEN HELD THAT PAYMENTS MADE TOWARDS HOLDING CONTRACTS WAS SUBJECT TO TAX AS PER PROVISIONS OF SECTION 194C OF THE ACT. RESPECTFULLY FOLLOWING THE ABOVE O RDERS, WE HOLD THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY .THEREFORE,UPHOLDING HER ORDER WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE,2016. 29 , 2016 SD/- SD/- /JOGINDER SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 29.06.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.