TaxTMI 
TaxTMI 
2015 (9) TMI 1000
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.... under section 201(1)/201(1A) of the Income Tax Act, 1961 ( in short 'the Act'). 3. In brief, the relevant facts are that the assessee is a company incorporated under the provisions of Companies Act,1956 and is, interalia, engaged in the business of advertising and marketing communication services. In the impugned proceedings, the Assessing Officer examined the tax deducted at source by the assessee in respect of payment made to 'Creative Consultants'. The assessee had deducted tax at source in terms of the provisions of section 194J of the Act considering that the payment made to the Creative Consultants was in the nature of professional fee paid. As per the Assessing Officer the terms of the employment of the consultant showed that it was a case of employer-employee relationship and, therefore, the payments made by the assessee were liable to be subjected to tax deduction at source in terms of section 192 of the Act. For this reason, the Assessing Officer held that assessee was in default within the meaning of section 201(1) of the Act for having short deducted the tax at source and accordingly a demand of Rs. 28,00,792/- was raised in terms of section 201(1) of the Act and in....
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....itions of appointment of Creative Consultants by the assessee does establish that it is a case where assessee has hired the services of independent professionals in connection with its activity of rendering advertising/marketing communication services to its clients. Notably the consultants hired by the assessee have charged service tax from the assessee and they are not entitled to any benefits of employment which are normally associated with an employeremployee relationship, namely Provident fund, gratuity, leave encashment, etc. So however, the case set up by the Assessing Officer is that the terms of employment involve rendering of services for fixed period; utilizing the infrastructure facilities and consumables provided by the assessee company in rendering services; restriction on the consultants to work out of the premises of the assessee, etc. On this aspect, Ld. Representative for the assessee has explained that having regard to the nature of business of the assessee, it was functionally and otherwise found desirable that such consultants work out of the premises of the assessee for reasons of confidentiality, etc. It has been pointed out that the consultants are not prohi....
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.... tax. We accordingly set aside the findings of the Ld. CIT(A) and direct the A.O to accept the assessee's contention" 6.2 In conclusion, we therefore, uphold the plea of the assessee and set aside the order of CIT(A) and direct the Assessing Officer to treat the payments made to the Creative Consultants as liable for deduction of tax at source under section 194J of the Act and not under section 192 of the Act. As a consequence, the demand raised on account of shortfall of deduction of tax at source under section 201(1) of the Act and interest under section 201(1A) of the Act qua the aforesaid issue is hereby set aside. 6.3 In the above manner, the appeal of the assessee in ITA No.6800/Mum/2012 for A.Y 2010-11 stands allowed. 7. In the Cross appeal of the Revenue for A.Y 2010-11, vide ITA No.7380/Mum/2012, the only issue raised is with regard to the deduction of tax at source on the payments of hoarding charges made to various parties. The stand of the Assessing Officer is that the payment of hoarding charges is to be understood as 'rent' and, therefore, was liable for deduction of tax at source under section 194I of the Act, whereas the claim of the assessee has been that ....
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....ver, where the agreement is not predominantly for the use of land or building, but for something else, then payment under that agreement will not constitute rent even if that "something else" involves the use of land or building as an integral part of or incidental to the predominant objective of the agreement. Let us consider the facts of the case before us in the light of this basic concept of rent." 9.2. In the case of Japan Airlines (supra), it has been held that the services provided by the airport authority for landing and parking of its aircraft did not amount to lease of the property and, therefore, the payments are not in the nature of rent as envisaged under section 194I of the Act. The Tribunal while dealing with the definition of rent has observed as under: "9.6 In view of this definition, there has to be either lease, sub-lease, tenancy agreement or arrangement for governing the use of any land. Such land to be specific portion of land and lease etc. of such land has to regulate the manner of use of such land or building and its tenure as well as manner of payment in lieu thereof. After taking into consideration the definition of rent, it apparently appears....