2010 (10) TMI 904 - AT - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of provisions of section 194-I and section 194C of the Income-tax Act, 1961 in the context of non-deduction of TDS on payments made for the right to advertise by exhibiting hoardings & kiosks on land belonging to Ahmedabad Urban Development Authority (AUDA).

Issue 1: Applicability of section 194-I for TDS on payments to AUDA:
The appeal by the assessee challenged the order of CIT(A) confirming the Assessing Officer's decision to consider the assessee in default for non-deduction of TDS under section 194-I on payments made to AUDA. The assessee argued that the license agreement with AUDA did not involve the use of land or building, thus section 194-I should not apply. However, the CIT(A) upheld the Assessing Officer's decision based on Circular No. 715 dated 8-8-1995, stating that the assessee had made payments to AUDA for using their place for advertisement boards, thereby attracting TDS liability under section 194-I.

Issue 2: Applicability of section 194C for advertisement agreements:
The assessee contended that section 194C, not section 194-I, should apply as there was no agreement for the use of land or building with AUDA, but only display rights were granted. The assessee relied on a decision regarding the commercial exploitation of display rights. The Tribunal found that the charges paid were for commercial exploitation of display rights, not for the use of land or building, thus holding that section 194C was more appropriate. The Tribunal concluded that the payments made by the assessee to AUDA fell under section 194C for advertisement agreements, requiring TDS to be made accordingly.

Conclusion:
The Tribunal partially allowed the appeal of the assessee, ruling that the provisions of section 194C were applicable in the case of advertisement agreements with AUDA for displaying hoardings, and TDS should have been deducted accordingly. The judgment clarified the distinction between sections 194-I and 194C based on the nature of the payments made for commercial exploitation of display rights.