2015 (10) TMI 1388 - AT - Income Tax

Revision u/s 263 - as per CIT(A) order passed by AO is erroneous and prejudicial to the interest of revenue to the extent of non disallowance of subscription charges paid to the TV channels for non deduction of TDS under the provisions of section 40(a)(ia) - Held that - Revisional powers invoked by learned Commissioner appears to be corrected because the AO has not examined the applicability of the provisions of Section 194C to be read with Section 40(a)(ia). The assessment order being silent on this aspect; hence, under the powers prescribed to learned Commissioner the matter can be examined by him. But the second aspect is whether the learned Commissioner has examined all those aspects before directing the AO to disallow the claim. In other words, learned Commissioner is expected to investigate all relevant facts and only thereupon must direct the AO to do the needful required under the circumstances. We have noted that the aspects as discussed hereinabove were not examined by the learned Commissioner based upon certain fundamental evidences such as nature of payment and the contract between the parties. Matter remanded to the Commissioner for passing a fresh order - We direct that the assessee should file requisite information and the agreements before learned Commissioner and fully co-operate in the proceedings. Side by side learned Commissioner is also expected to pass a detailed order considering the relevant provisions of the IT Act in the light of the evidences on record. Since, the matter is restored back for afresh adjudication - Decided in favour of assessee for statistical purpose

Summary

Issues:
1. Whether the order passed by the Commissioner under Section 263 of the IT Act, directing disallowance of subscription charges for non-deduction of TDS, was erroneous and prejudicial to the interest of revenue.
2. Whether the AO failed to consider the applicability of Section 194C and Circular 715 dated 08/08/1995 in the assessment order.
3. Whether the directions given by the Commissioner were justified and based on a thorough examination of all relevant facts.
4. Whether the Assessee's appeal challenging the Commissioner's order is valid.

Issue 1:
The appeal was filed challenging the order of the Commissioner under Section 263 of the IT Act, which directed the disallowance of subscription charges for non-deduction of TDS. The appellant argued that as an advertising agent, they were not obligated to deduct TDS from payments to media, citing Circular No.715 dated 08/08/1995. The Commissioner found the assessment erroneous as TDS was not deducted on subscription charges to TV channels. The Tribunal noted that the Commissioner's directions were based on the provisions of Section 40(a)(ia) and the applicability of Section 194C, ultimately allowing the Assessee's appeal for statistical purposes only.

Issue 2:
The AO's assessment order under Section 143(3) r.w.s 147 of the IT Act was found erroneous and prejudicial to revenue due to non-deduction of TDS on subscription charges paid to TV channels by the Assessee, a cable network operator. The Commissioner directed the AO to disallow the amount under Section 40(a)(ia) after considering Circular 715 dated 08/08/1995. The Tribunal observed that the AO overlooked the applicability of Section 194C and the terms of the circular, leading to an erroneous assessment order.

Issue 3:
The Tribunal analyzed whether the Commissioner's directions were justified and based on a thorough examination of all relevant facts. It was found that the Commissioner's directions lacked consideration of certain fundamental aspects, such as the nature of payments and agreements with TV networks. The Tribunal emphasized the need for a detailed examination of the provisions of the IT Act in light of the evidence on record. The Tribunal directed the Assessee to provide necessary information and cooperate, while instructing the Commissioner to pass a detailed order after further investigation.

Issue 4:
The Assessee challenged the Commissioner's order, arguing that the directions were absolute and deprived them of the opportunity to present relevant agreements. The Tribunal allowed the filing of additional evidence to demonstrate the absence of a liability to deduct tax at source. The Tribunal noted that the matter required further investigation and directed the Assessee to provide essential information and agreements to the Commissioner for a fresh adjudication. The Assessee's appeal was allowed for statistical purposes only, indicating a need for a more thorough examination of the case.

This detailed analysis of the judgment highlights the key issues raised in the appeal and the Tribunal's assessment of each issue, ensuring a comprehensive understanding of the legal complexities involved.