TaxTMI 
TaxTMI 
2011 (3) TMI 1135
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....ITA No.842/Kol/2010 for the assessment year 2006-07 reads as under:- "That on the facts and circumstances of the case, the Ld. CIT(A) had erred by deleting the addition made on account of expenditure corresponding to advertisement amounting to Rs.27,23,788/- without considering the existing provision of Sub-section (2) of Section 194C and u/s. 40a(ia) of the I.T. Act, 1961, since the assessee being an individual whose disclosed turnover exceeds the monetary limits specified under clause (a) or clause (b) of Section 44AB during the financial year under consideration." 3. The brief facts leading to the above issue are that the assessee filed her return of income for assessment year 2006-07 on 30.10.2006. This return was processed u/s. 143(3) of the Act. Subsequently, Assessing Officer noticed that the assessee has not deducted any TDS on the payment of advertisement expenses and commission & brokerage as required u/s. 194C & 194H of the Act respectively and accordingly, he initiated proceedings u/s. 147 read with Section 148 of the Act. The assessee replied to notice u/s. 148 vide letter dated 18.03.2009 stating to consider the original return filed as in response to notice u/s....
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....nbsp;(a) the Central Government or any State Government ; or (b) any local authority ; or (c) any corporation established by or under a Central, State or Provincial Act ; or (d) any company, or (e) any co-operative society ; or (f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both ; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India ; or (h) any trust ; or (i) any University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956), or (j) any firm, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or dra....
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....e (b) or Section 44AB during the financial year or immediately preceding financial year in which such sum is credited or paid to the account of the Contractor. This amendment takes effect from 1st day of June, 2007 and is applicable for and from assessment year 2008-09. In Section 194C(1) with effect from 01.06.2007, by the Finance Act, 2007, clause as inserted, reads as under :- "(k) any individual or a Hindu Undivided Family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of Section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to - (i) one per cent in case of advertising, (ii) in any other case two per cent, of such sum as income-tax on income comprised therein : Provided that no individual or a Hindu Undivided Famil....
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....purposes merit exclusion. 54.5 Accordingly, the Finance Act, 2007, has substituted the said sub-section (1) to include in its ambit such individual or a Hindu undivided whose total sales, gross receipts or turnover from the business or profession carried on exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding financial year in which sum is credited or paid to the account of the contractor. This amendment shall not apply in respect of payments made to a contractor by any individual or a member of a Hindu undivided family exclusively for their personal purposes. 54.6 Applicability - This amendment will take effect from the 1st day of June, 2007." 8. In view of the above clear provisions of Section 194(1) as existing in assessment years 2006-07 & 2007-08, i.e. relevant assessment years in the present appeals, it is clear that the assessee is under no obligation to deduct TDS on the expenditure of advertisement, as the assessee being an individual, and the claim of the assessee is as per provisions of law. Once the assessee is not liable to deduct TDS under the provision of Section 194C(1), the prov....
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....ion that the assessee is subject to TDS in view of provisions of Section 194H, and once it is an admitted position that assessee has not deducted TDS on the above brokerage and commission payments, Assessing Officer has rightly disallowed the expenditure. Accordingly, we are of the view that the CIT(A) has erred in deleting the disallowance and set aside the order of CIT(A). Accordingly, this issue of the revenue's appeal is allowed. ITA No. 843/Kol/2010 14. The next issue in this appeal of the revenue is against the order of CIT(A) in deleting the addition made on account of over statement of purchases filed before the VAT Authority. For this revenue has raised ground No.2 as under :- "That on the facts and circumstances of the case, the Ld. CIT(A) had erred by deleting the addition made on account of Overstatement of purchase without considering the purchase amount of Rs.35,23,193/- disclosed before the VAT Authority." 15. The brief facts leading to the above issue are that the assessee disclosed total purchases in respect of M/s. Keya Seth Ayrvedic Solution (Cosmetic Division) at Rs.40,10,635/- which includes raw material purchases of Rs.37,28,213/- and packing mater....