TaxTMI 
TaxTMI 
2013 (12) TMI 124
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....ising services in the name and style of Rave Advertising & Marketing and during the year the gross sales were Rs. 56,65,131/-. It was further noticed that assessee has shown an amount of Rs. 49,36,182.81 as purchases from Ram Advertising Service. The assessee was asked to show the details of tax deducted at source in respect of these payments and in response to which it was stated that no tax has been deducted. Thereafter, the Assessing Officer asked a further query that why such payment should not be disallowed u/s 40(a)(ia) of the Act. The assessees vide its reply dated 5.11.2008 stated as under:- "Since print/electronic media purchases are exempt form TDS in accordance with circular No. 715 dated 8.8.1995, no amount of TDS was deducted." Assessee further submitted, "it is pertinent to mention here that Ram Advertising Service in our case is not working as an advertising agency for us rather they are working as Media Buying Agency (AOR) for us and as per the Rules of Advertising Agencies Association of India, they are responsible for raising media bills on us and collection of media dues from us and for payment to media." 4. The Assessing Officer wa....
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....taken that the provisions of section 194C are not applicable because the assessee's turn over does not exceed Rs. 40 lakhs was rejected because according to Assessing Officer the gross receipts were more than Rs. 40 lakhs. We are not dealing with this issue in details because this argument was not pressed before us. 6. Aggrieved by this order, the assessee filed an appeal before the CIT(A). It was mainly stated that receipts of Rave Advertising & Marketing which is proprietary concern showing receipts in the shape of commission were Rs. 7,45,732/-, therefore, because of the provisions of sub-section (2) of section 194C, assessee was not covered by the provisions of section 44AB and, therefore, the provision regarding deduction of tax was not applicable. The Ld. CIT(A) did not accept this contention and dismissed the appeal of the assessee. 7. Before us, the Ld. Counsel for the assessee submitted that assessee was in the business of advertising and marketing and was collecting assignments from various clients which were processed by the assessee and then issued / booked to the print or the electronic media. However, the assessee was not accredited agent. An accredited agent is....
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....nclude a contractor who 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.' 10. The above clearly shows that....
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....t source would apply when a client makes payment to an advertising agency and not when advertising agency makes payment to the media, which includes both print and electronic media. The deduction is required to be made at the rate of 1 per cent. It was further clarified that when an advertising agency makes payments to their models, artists, photographers, etc., the tax shall be deducted at the rate of 5 per cent as applicable to fees for professional and technical services under section 194J of the Act." 13. The careful reading of the same would clearly show that provisions of TDS would apply when a client makes payment to an advertisement agency. It has also been clarified that when an advertisement agency makes payment to the media which include both Print and Electronic media then provisions of tax deductions are not applicable. Admittedly M/s Ram Advertising Service is not part of media. In fact M/s Ram Advertising Service has booked advertisements further with other media group. So, it becomes a case of one advertising agency getting work done from the other advertising agency i.e. a sub-contractor. It is possible that when an advertisement is booked, some part of the work....