TDS on advertisement charges depends on statutory thresholds and recipient tax compliance before default treatment applies.

Advertisement charges paid to multiple recipients were examined for TDS under section 194C, with the Tribunal noting that the statutory obligation arises only when the prescribed single-payment and annual aggregate thresholds are met in relation to one recipient. On the material available, certain payments did not cross the threshold, so TDS liability was not established on that basis alone. The payer could, however, be treated as an assessee in default under section 201 only if the recipient-compliance safeguard in the proviso to section 201(1) was not satisfied. The matter was remitted to verify whether the recipients had discharged tax liability, while interest under section 201A(1) remained chargeable.

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Issues: Whether the advertisement charges paid by the assessee attracted deduction of tax at source under section 194C, and whether the assessee could be treated as an assessee in default under section 201.

Analysis: The payment details showed that the advertising charges were made to multiple recipients and, in some cases, the yearly payment to a single recipient was below the statutory aggregate limit. The twin conditions under section 194C had to be satisfied for the TDS obligation to arise, namely a qualifying single payment and the prescribed annual aggregate payment to one recipient. On the material available, the Tribunal found that the threshold was not met in respect of certain payments. However, no proof had been furnished to establish compliance with the proviso to section 201(1), which protects the payer from being treated as an assessee in default if the recipient has discharged tax liability.

Conclusion: The issue of TDS liability under section 194C was not finally concluded against the assessee, and the matter was remitted to the Assessing Officer to verify compliance with the proviso to section 201(1). If the recipients had paid tax as required, the assessee could not be treated as an assessee in default. Interest was held chargeable under section 201A(1).

Final Conclusion: The appeal succeeded to the extent of a remand for verification of the recipients' tax compliance, while the consequential interest liability remained unaffected.

Ratio Decidendi: Where the payment to a single recipient does not satisfy the statutory threshold under section 194C, TDS cannot be fastened merely on the basis of advertisement expenditure, and the payer can be treated as in default under section 201 only subject to the recipient-compliance safeguard in the proviso to section 201(1).

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