2022 (7) TMI 595 - AT - Income Tax

TDS u/s 194C - advertisement charges paid to media - Default u/s 201(1) - as argued appellant is not liable to Deduct Tax at Source in respect of the payment of advertisement charges paid to the media directly and not through contractors - HELD THAT - As per Section 194C(5) the twin conditions must be satisfied, i.e. the payment should exceed Rs.30,000/- and the aggregate payment should be more than Rs1,00,000/- in a year to one recipient. But in the case before us there are some payments made to the parties which are less than Rs.1,00,000/-. Therefore in this case TDS provision will not be applied as the total payment is below Rs.1,00,000/- during the year to a single party. As per proviso of Section 201(1) of the Act if the recipient pays the tax on the amount received from the assessee the assessee will not be treated as an assessee in default,if the recipients have complied as per the proviso of Section 201(1) of the Act then the assessee shall not be treated as an assessee in default. As per the documents available before us, there no any such proof submitted by the assessee for complying the proviso of Section 201(1) of the Act. Therefore,we consider it fit to send back the matter to the file of the AO for ve rification if the recipients have fulfilled the conditions of the proviso of Section 201(1) of the Act and if the AO finds as per the proviso of Section 201(1) of the Act then the assessee shall not be treated as assessee in default. We make it further clear that interest shall be charged as per Section 201A(1) - Needless to say the assessee should be provided reasonable opportunity of hearing and the assessee is directed to file the necessary documents for substantiating his case. The assessee is also directed not to take unnecessary adjournments for the speedy disposal of the appeal. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Non-deduction of TDS on advertisement charges under Section 194C of the Income Tax Act 1961.
2. Applicability of TDS provisions on payments to advertising media.
3. Compliance with Section 201(1) proviso for not treating the assessee as default.

Analysis:
1. The appeal was filed against the order of the CIT(A) for AY 2013-14 regarding the non-deduction of TDS on advertisement charges under Section 194C. The AO observed that the assessee failed to deduct TDS on payments made to advertising media, leading to being held as an assessee in default. The CIT(A) partly allowed the appeal, deleting the addition for non-deduction under Section 194J but upholding it under Section 194C. The Tribunal observed that some payments were below the threshold of Rs.1,00,000 to a single recipient, hence not mandating TDS as per Section 194C(5). However, the assessee needed to comply with Section 201(1) proviso to avoid default status, which required proof of tax payment by recipients. The matter was remanded to the AO for verification, with a directive for the assessee to provide necessary documents for substantiation, emphasizing the provision of a fair hearing and warning against unnecessary delays.

2. The Tribunal noted that the assessee paid advertisement charges to multiple parties, with disputed amounts totaling Rs.14,18,581. While some payments were below the threshold for TDS applicability, compliance with the Section 201(1) proviso was crucial for avoiding default status. Lack of proof of recipient tax payments necessitated further verification by the AO. The Tribunal emphasized the importance of timely submission of supporting documents by the assessee and directed against delaying proceedings for efficient appeal resolution.

3. The non-appearance of the assessee led to an ex-parte disposal of the appeal. The Tribunal scrutinized the details of payments made by the assessee and highlighted the necessity of complying with the Section 201(1) proviso to prevent default status. Emphasizing the requirement for the assessee to provide evidence of recipient tax payments, the Tribunal remanded the matter to the AO for verification, with a clear directive for the assessee to facilitate the process by submitting necessary documents promptly and avoiding unnecessary adjournments. Ultimately, the appeal was allowed for statistical purposes, underscoring the significance of adherence to tax deduction provisions and procedural compliance in such cases.