Dentsu Advertising & Media Services India Pvt Ltd, Mumbai V. Pr. CIT, New Delhi

ITA 4888/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3149 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: TDS; Set aside
• Section: 143(3); 194C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DLEHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 4888/DEL/2019 ASSESSMENT YEAR: 2014-15 DENTSU ADVERTISING & MEDIA SERVICE VS. PR. CIT, DEL HI-3, INDIA PVT. LTD., B-601, 6 TH FLOOR, NEW DELHI POONAM CHAMBERS, DR. ANNIE BESANT ROAD, WORLI, MUMBAI. PAN : AAECD1294L (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SATISH AGGARWAL, CA RESPONDENT BY: MS. NIDHI SRIVASTAVA, CIT/DR DATE OF HEARING: 05/04/2021 DATE OF ORDER : 11/06/2021 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 29/3/2019 PASSED BY T HE LEARNED PR. COMMISSIONER OF INCOME TAX, DELHI (LD. PCIT), IN THE CASE OF M/S DENTSU MEDIA AND HOLDING INDIA PRIVATE LIMITED (TH E ASSESSEE), FOR THE ASSESSMENT YEAR 2014-15, UNDER SECTION 263 OF THE I NCOME TAX ACT, 1961 (FOR SHORT THE ACT), ASSESSEE PREFERRED THIS APPE AL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF PROVIDING DIGITAL AND MEDIA RELA TED ADVERTISEMENT TO 2 PLACE SERVICES AND THE NATURE AND SOURCE OF ITS INC OME REMAINED THE SAME FOR THE ASSESSMENT YEAR 2014-15 AS IN THE EARL IER YEARS. ASSESSEE FILED THE RETURN OF INCOME ON 29/11/2014 DECLARING AN INCOME OF RS. 1,07,36,842/-AND THE LEARNED ASSESSING OFFICER, WHI LE ACCEPTING THE SAME CONCLUDED THE ASSESSMENT BY ORDER DATED 19/20-12-20 16 PASSED UNDER SECTION 143(3) OF THE ACT, DETERMINED THE INCOME OF THE ASSESSEE AT RS. 1,07,36,842/-. 3. LD. PCIT, HOWEVER, NOTICED THAT THE ASSESSEE HAD MADE A PAYMENT OF RS. 2,70,85,560/-TO M/S ASSOCIATED BROADCASTING COMPANY LIMITED WITHOUT DEDUCTING TAX AT SOURCE (TDS)UNDER SECTION 194C OF THE ACT IN VIOLATION OF PROVISIONS UNDER SECTION 40(A)(I) OF T HE ACT, AND, THEREFORE, THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE ASSESSING OFFICER FAILED TO EXAMINE THE VITAL ASPECTS CONCERNING DEDUCTIBILITY OF TAX AT SOURCE UNDER SEC TION 194C OF THE ACT. ON THIS PREMISE, HE CANCELLED THE ORDER PASSED BY T HE LEARNED ASSESSING OFFICER AND DIRECTED THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER BY TAKING CARE OF THIS ASPECT. 4. AGGRIEVED BY SUCH AN ACTION OF THE LEARNED PCIT, ASSESSEE PREFERRED THIS APPEAL STATING THAT THE ORDER PASSED BY THE LEARNED PCIT IS ARBITRARY, BIASED AND BAD IN LAW AND ON FACTS OF TH E CASE. IT IS ARGUED BY THE LD. AR THAT M/S ASSOCIATED BROADCASTING COMPANY PVT. LTD IS AN ADVERTISING AGENCY AND IN TERMS OF CIRCULAR NO. 715 DATED 8/8/1995 THE ASSESSEE IS NOT REQUIRED TO MAKE ANY DEDUCTION OF T AX AT SOURCE AND ALSO THAT THE CIRCULAR NO. 715 OF CBDT DOES NOT PROVIDE THAT PAYMENT MADE TO AN ENTITY IN PRINTED/ELECTRONIC MEDIA SHOULD EXCLUS IVELY BE ENGAGED IN MEDIA BUSINESS ONLY. 3 5. PER CONTRA, IT IS THE CONTENTION OF THE LD. DR T HAT M/S ASSOCIATED BROADCASTING COMPANY PVT. LTD IS ALSO DOING THE NEW S AGENCY ACTIVITIES IN ADDITION TO THE BUSINESS OF TV9 HAVING NEWS CHANNEL S IN DIFFERENT LANGUAGES, IT IS ENGAGED IN COMMUNITY, PERSONAL AND SOCIAL SERVICES AS WELL AND, THEREFORE, THE BASIC NATURE OF ITS BUSINE SS IS THAT OF A SERVICE PROVIDER. HE FURTHER SUBMITTED THAT CBDT CIRCULAR N O. 715 HAS NO APPLICATION TO THE FACTS OF THE CASE BECAUSE THERE IS PRINCIPAL-AGENT RELATIONSHIP IN THIS TRANSACTION AS THE AMOUNT OF C HARGES ARE FIXED BY M/S ASSOCIATED BROADCASTING COMPANY PVT. LTD THAT CAN B E CHARGED BY THE ASSESSEE FROM THE ADVERTISER. ON THIS PREMISE IS HE JUSTIFIED THE ORDER PASSED BY THE LEARNED PCIT UNDER SECTION 263 OF THE ACT. 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. ITS NOT IN DISPUTE THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING DIGITAL AND MEDIA RELATED ADVERTISEMENT PLACE SERVICES. IT IS ALSO NOT IN DISPUTE THAT M/S ASSOCI ATED BROADCASTING COMPANY PVT. LTD TO WHOM THE AMOUNTS WERE PAID BY T HE ASSESSEE, WAS ALSO IN THE BUSINESS OF ADVERTISING AGENCY. HOWEVER , AS COULD BE SEEN FROM THE ORDER OF THE LD. PCIT THE OBJECTION TAKEN BY HIM IS THAT APART FROM DOING THE ADVERTISING AGENCY BUSINESS, M/S ASS OCIATED BROADCASTING COMPANY PRIVATE LIMITED IS ALSO CONDUCTING NEWS AGE NCY ACTIVITIES IN ADDITION TO DOING BUSINESS AS TV 9 HAVING NEWS CHAN NELS IN DIFFERENT LANGUAGES. LD. CIT OBSERVED THAT M/S ASSOCIATED BRO ADCASTING COMPANY PVT. LTD IS ENGAGED IN COMMUNITY, PERSONAL AND SOCI AL SERVICES AS WELL AND, THEREFORE, THE BASIC NATURE OF ITS BUSINESS IS THAT OF A SERVICE PROVIDER. 4 7. IN SPITE OF ALL THESE AVERMENTS MADE BY THE LD. PCIT, THE FACT REMAINS THAT M/S ASSOCIATED BROADCASTING COMPANY PV T. LTD IS ALSO AN ADVERTISING AGENCY AND IN THAT CAPACITY IT RECEIVED AMOUNTS FROM THE ASSESSEE. IT COULD BE SEEN FROM THE CLARIFICATIONS ISSUED ON VARIOUS PROVISIONS RELATING TO TAX DEDUCTION AT SOURCE REGA RDING CHANGES INTRODUCED THROUGH FINANCE ACT, 1995 ISSUED BY THE INCOME TAX DEPARTMENT, IT IS CLEARLY STATED THAT THE AMENDED P ROVISIONS OF TAX DEDUCTION AT SOURCE WOULD APPLY WHEN A CLIENT MAKES PAYMENT TO AN ADVERTISING AGENCY AND NOT WHEN ADVERTISING AGENCY MAKES PAYMENT TO THE MEDIA. IN CIRCULAR NO. 5/2016 DATED 29/2/2016 I T IS CLARIFIED THAT UNDER CIRCULAR NO. 715 DATED 8/8/1995 TDS UNDER SEC TION 194C WILL BE APPLICABLE TO THE PAYMENT MADE BY CLIENT TO THE ADV ERTISING AGENCY; THAT WHILE REFERRING TO THE DECISION OF THE HONBLE DELH I HIGH COURT IN THE CASE OF LIVING MEDIA LIMITED AND ALSO THE DECISION OF HO NBLE ALLAHABAD HIGH COURT IN THE CASE OF JAGRAN PRAKASHAN LTD IT WAS CL ARIFIED THAT NO TDS IS ATTRACTED ON PAYMENTS MADE TO THE ADVERTISING AGENC Y FOR BOOKING OR PROCURING OF OUR CANVASSING FOR ADVERTISEMENTS. 8. IT IS FURTHER SUBMITTED FOR THE SUBSEQUENT ASSES SMENT YEARS OF 2015-16, 2016-17 AND 2017-18 NO ADDITION WAS MADE O N THIS SCORE. HAVING GONE THROUGH THE CONTENTS OF THE CIRCULAR NO . 715 DATED 8/8/1995, 5 OF 2016 DATED 29/2/2016 AND ALSO TAKING INTO CONSIDERATION THE FACT OF THE REVENUE ACCEPTING THE PLEA OF THE A SSESSEE FOR THE SUBSEQUENT ASSESSMENT YEARS, WE ARE THE CONSIDERED OPINION THAT THE REASONS GIVEN BY THE LD. CIT TO SET ASIDE THE ASSES SMENT ORDER AND TO REVISE THE SAME UNDER SECTION 263 OF THE ACT DO NOT HOLD MUCH WATER AND 5 THEREFORE, THE IMPUGNED ORDER CANNOT BE SUSTAINED. WE ACCORDINGLY QUASH THE SAME. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 11/06/2021 SD/- SD- (O.P. KANT) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11/06/2021 AKS