TaxTMI 
TaxTMI 
2011 (10) TMI 341
X X X X Extracts X X X X
X X X X Extracts X X X X
....age erection charges under section 40(a)(ia) on the ground that the appellant had failed to deduct tax at source under section 194 C of the Act. 3. The short issue that really needs our adjudication is whether or not, on the facts and in the circumstances of this case, provisions of tax withholding requirements under section 194C can be pressed into service at all. It is on this short but contentious issue that the learned representatives have advanced their erudite arguments before us. 4. Briefly stated, the relevant material facts are as follows. The assessee before us is an individual. As the material before us unambiguously indicates, he is a highly accomplished management consultant, with unimpeachable academic credentials from Indian and foreign institutions, and professional experience in various parts of the world. He has written several books, and one of the activities he has carried out in the relevant previous years is conceptualizing and organizing various summits, seminars and conferences in field of management. This activity has revenues from two streams - one, from the participants, who pay participation fees; and - second, from the sponsors who use these events fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dual, since he is a sub-contractor and since his turnover exceeds specified amount, he is hit by the provisions regarding tax withholding requirements. The Assessing Officer noted that the assessee has made payments aggregating to Rs. 8,43,570, in respect of printing and stationery charges, and aggregating to Rs. 6,31,362, in respect of advertising charges, from which no taxes have been deducted at source. It was also noted that when assessee does not comply with the tax deduction at source requirements, the related expenditure is required to be disallowed, in terms of the provisions of Section 40(a)(ia) of the Act' in computation of income under the head 'profits and gains from business and profession'. Accordingly, the Assessing Officer disallowed Rs. 14,74,932 under section 40(a)(ia). Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Not only that the CIT(A) confirmed the stand of the Assessing Officer in principle, he also enhanced the disallowance by observing that while the assessee has claimed deduction in respect of auditorium hiring charges (Rs. 32,61,994) and in respect of program and stage erection charges (Rs. 8,15,243), the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o is carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the Government of a foreign State or a foreign enterprise or any association or body established outside India. Explanation II : For the purposes of this section, where any sum referred to in sub-section (1) or sub-section (2) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. Explanation III : For the purposes of this section, the expression "work" shall also include - (a) Advertising; (b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) Carriage of goods and passengers by any mode of transport other than by railways; (d) Catering. 7. A plain reading of the above provision indicates that in order to attract the applicability of Section 194C(2), the payment has to be made by a contractor to a sub-c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Stall space in pre function area. * Playing of commercials/ presentations during the breaks. * Any other way, as is mutually decided. On successful completion of the summit, you may please send a bill to us, towards co-sponsorship amount of Rs. 1.25 lakhs to enable us to do the further needful. Along with the bill, you may also arrange to have a few photographs of the bank's staff at the seminar session, sent for our records........ 8. The above arrangement does not, by any stretch of logic, amount to the assessee having undertaken to carry out the work of organizing the conference, i.e. India Retail Summit in this case. It is simply a case in which the assessee has received the money, from a commercial organization, in respect of that organization being associated with the said conference and, in the process, benefitting from such association. The assessee has not merely executed the work of organizing a conference at the instance of one or more sponsors, but, as learned counsel rightly emphasizes, conceptualizing a conference which has, at a stage posterior to such conceptualization and organization, found sponsorship from org....