2017 (5) TMI 1568 - AT - Income Tax

TDS u/s 194I or 194C - payments made by the assessee for hoarding / display rights - Held that - As clarificatory circular issued by CBDT Circular No. 715 dated 08.08.1995 which clarifies that the nature of advertising contract is for contractual payments and the provisions of section 194C of the Act would be applicable is enough to explain that the assessee s payments made to various parties for the purpose of display of the advertisements of assessee s client do not fall in the category of rent and hence assessee was only required to deduct TDS u/s 194C. This has also support of order of ITAT Coordinate Bench of Mumbai in the case of ITO (TDS) Vs. Roshan Publicity (P) Ltd. 2005 (5) TMI 551 - ITAT MUMBAI wherein exactly identical view was taken. CIT(A) has rightly held that the assessee is liable to deduct TDS u/s 194C of the Act in respect of the payments in dispute. - Decided against revenue

Summary

Issues:
- Appeal against order of Commissioner of Income Tax (Appeals) regarding sections 201(1) & 201(1A) of the Income Tax Act, 1961.
- Determination of whether payments for hoarding/display rights fall under section 194C or section 194I.
- Dispute over tax deduction on payments made for advertising on hoarding.
- Assessment of tax liability and interest under sections 201(1) and 201(1A) by the Assessing Officer.
- Decision of the learned CIT(A) in deleting the demand raised under sections 201(1) and 201(1A) of the Act.
- Arguments presented by the revenue and the assessee regarding the order of the A.O. and the CIT(A).
- Interpretation of relevant legal provisions and precedents by the Tribunal.

Analysis:
1. The appeal pertains to the assessment year 2012-13, challenging the order of the Commissioner of Income Tax (Appeals) concerning sections 201(1) & 201(1A) of the Income Tax Act, 1961. The dispute revolves around whether the payments made for hoarding/display rights by the assessee should be categorized under section 194C or section 194I of the Act.

2. The Assessing Officer (A.O.) contended that the assessee had paid a substantial amount for advertising on hoarding during the financial year 2011-12, with tax deducted at source under section 194C. The A.O. argued that as the payee concerns had sublet the hoarding sites, tax should have been deducted at a higher rate under section 194I, resulting in a shortfall in tax deduction. Consequently, the A.O. held the assessee in default under section 201(1) and imposed interest under section 201(1A) of the Act.

3. The learned CIT(A), in line with precedent and the Tribunal's decision in a similar case, ruled that the payments for advertising and hoarding should be treated under section 194C, not section 194I. This decision led to the deletion of the demand raised by the A.O. under sections 201(1) and 201(1A) of the Act.

4. During the appeal, the revenue supported the A.O.'s order, while the assessee's counsel relied on the CIT(A)'s decision and previous Tribunal rulings. The Tribunal, considering the CBDT Circular and past judgments, upheld the CIT(A)'s decision, emphasizing that the nature of the advertising contract fell under contractual payments, warranting TDS under section 194C, not section 194I.

5. Given the similarity of facts with previous cases, the Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s order. The Tribunal's decision was based on the interpretation of legal provisions, precedents, and the clarification provided by the CBDT Circular, leading to the conclusion that the assessee was liable to deduct TDS under section 194C for the payments in question.

6. Ultimately, the Tribunal upheld the CIT(A)'s decision, dismissing the appeal and confirming that the payments made by the assessee for advertising on hoarding should be treated under section 194C, in accordance with the CBDT Circular and relevant legal interpretations.