2018 (6) TMI 87 - AT - Income Tax

TDS u/s 194C OR 194I - tds liability on display charges paid by the assessee - Held that - Assessing Officer has gone by a sample contract which is dated 01.01.2011 and is clearly not relevant to the period under dispute. Therefore the reference and reliance on such contract by the Assessing Officer is of no avail to adjudicate the controversy in question for the period under consideration - set-aside the order of CIT(A) and direct the Assessing Officer to re-decide the controversy based on the material assessee may furnish before him.

Summary

Issues involved:
Determination of tax deduction at source under Sec. 194-I vs. Sec. 194C of the Income Tax Act for display charges paid by the assessee to private parties.

Analysis:

1. Assessment Year 2003-04 - Applicability of Sec. 194-I vs. Sec. 194C:
- The Assessing Officer held that tax should be deducted at source under Sec. 194-I for display charges paid by the assessee for hoarding space rental, resulting in a shortfall in tax deduction.
- The CIT(A) upheld the Assessing Officer's decision, considering the display charges as 'rent' under Sec. 194-I, but directed relief based on recipient's tax payments.
- The assessee contended that the payments fell under Sec. 194C, not Sec. 194-I, citing contracts with advertising entities, not hoarding space owners.
- The Tribunal noted the disparity in interpretations, emphasizing the need to analyze the nature of agreements for payment purposes.
- The Tribunal set aside the CIT(A)'s order, directing the Assessing Officer to reevaluate based on relevant contracts for the disputed period.

2. Consistency in Assessment Years 2004-05 and 2005-06:
- The Tribunal found the issues in subsequent assessment years similar to 2003-04, applying the decision made for the latter mutatis mutandis.
- Consequently, the appeals for all three assessment years were allowed in favor of the assessee.

3. Conclusion:
- The Tribunal's decision focused on the distinction between Sec. 194-I and Sec. 194C regarding display charges payment nature.
- Emphasizing the importance of relevant contract examination, the Tribunal directed reassessment for accurate tax deduction determination.
- The consistent approach in all assessment years ensured uniformity in the resolution of the tax deduction issue for the assessee.

This detailed analysis highlights the core issue of tax deduction applicability for display charges under different sections of the Income Tax Act, emphasizing the necessity of contract scrutiny for accurate assessment.