TaxTMI 
TaxTMI 
TaxTMI 
2020 (11) TMI 401
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are not attracted on this payment. (b) That in this connection the learned CIT(A) has not considered the fact that no disallowance is warranted as no amount (out of Rs. 6.8 crores) is payable as at the close of the financial year. 2. (a) That the learned CIT(A) has misinterpreted the provisions of section 40(a)(ia) of the Act inasmuch as no disallowance is warranted under the said section as BCCL has included the said amount in its return of income for the relevant assessment year, and paid income tax on such income. (b) That the learned CIT(A) has not given credence to the certificate obtained by the appellant from BCCL in this regard stating that BCCL has included the said amount in its return of income. (c) That in this connection the learned CIT(A) has erred in law by not considering the second proviso to section 40(a)(ia) of the Act having retrospective application. The said amendment should be read as clarifacatory and curative in nature and hence to be given retrospective effect. 3. That the appellant craves leave to add, amend and/or alter the grounds at a later stage. 3. The Brief facts of the case are that the assessee is engaged in the business of printing an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imes of India(Kannada Edition)and relied on circular no 5 of 2016 dated 29-02-2016 of CBDT, were no tax need to be deducted on the payment made to a newspaper company by the agent for procuring and canvassing advertisements. Further relied on the second proviso to Section 40(a)(ia) of the Act. Where the payee, BCCL has included the said amount in their Income Tax Returns for the relevant assessment year and paid the taxes evident by certificate in Form26A.The learned Authorized Representative supported his arguments with circulars, written submissions, Paper Book and judicial decisions and prayed for allowing the appeal. Contra, the learned Departmental Representative supported the orders of learned CIT(A) and filed written submissions. 5. We heard the rival contentions and perused the material on record. The sole matrix of the disputed issue as envisaged by the learned Authorized Representative that the assessee company has entered into an Agreement with BCCL for selling and utilizing the advertisement space on a principal to principal basis in publication of Times of India (kannada edition) owned by BCCL.The assessee has paid Rs. 6.80crores to BCCL towards purchase of saleable a....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., outside the purview of TDS under section 194H. The Department, on the other hand, has taken the stand in some cases that since the advertising agencies act on behalf of the media companies for procuring advertisements, the margin retained by the former amounts to constructive payment of commission and, accordingly, TDS under section 194H is attracted. 4. The issue has been examined by the Allahabad High Court in the case of Jagran Prakashan Ltd and Delhi High Court in the matter of Living Media Limited and it was held in both the cases that the relationship between the media company and the advertising agency is that of a 'principal to principal' and, therefore, not liable for TDS under section 194H. The SLPs filed by the Department in the matter of Living Media Ltd. and Jagran Prakashan Ltd have been dismissed by the Supreme Court vide order dated 11.12.2009 and order dated 05.05.2014, respectively. Though these decisions are in respect of print media, the ratio is also applicable to electronic media/ television advertising as the broad nature of the activities involved is similar. 5. In view of the above, it is hereby clarified that no TDS is attracted on payments made by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is a 'contract for work'." 14. Thus, if the order passed by the Commissioner of Income Tax as well as the order passed by the Income Tax Appellant Tribunal are read in conjunction in the light of the Circular No. 13 of 2006 issued by the Central Board of Direct Taxes, it is axiomatic that provisions of Section 194C would apply to a contract for work and not to a contract for sale. The contention of the learned counsel for the Revenue that the Tribunal ought to have restricted its scrutiny with regard to the validity of the order of remand passed by the Commissioner of Income Tax, appears to be attractive at first blush, however, in peculiar facts of the case, we are not inclined to accept the aforesaid submissions as both the authorities on the basis of the materials available on record has recorded the finding in favour of the assessee that the contract in question is a contract for sale and is not a contract for work. Therefore, such an exercise in the fact of the case would be an exercise in futility. 15. In view of the preceding analysis, we are inclined to answer the additional substantial question of law framed by us today in the affirmative. Learned senior counsel for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....& Co., for procurement of advertisement agency. Though most of the advertisements belong to respondent-assessee-company's own business, payments are made in the capacity of an advertisement agency to M/s.Bennet, Coleman & Co., Therefore, circular No.715 dated 8/8/1995 as well as circular No.5 of 2016 dated 29/2/2016 are squarely applicable. The circular No.5 of 2016 reads as under: "Sub: Tax Deduction at Source (TDS) on payments by television channels and publishing houses to advertisement companies for procuring or canvassing for advertisements. 1. The issue of applicability of TDS provisions on payments made by television channels or media houses publishing newspapers or magazines to advertising agencies for procuring and canvassing for advertisements has been examined by the Board in view of representations received in this regard. 2. It is noted that there are two types of payments involved in the advertising business: (i) Payment by client to the advertising agency, and (ii) Payment by advertising agency to the television channel/newspaper company The applicability of TDS on these payments has already been dealt with in Circular No. 715 dated 8.8.1995, where it has been ....