2015 (3) TMI 393 - AT - Income Tax

Applicability of section 201(1) - non deduction of TDS - Held that - As can be seen from the facts on record, A.O. raised the demand on the ground that the assessee has not deducted tax at source on the payments made. However, before the first appellate authority a plea was taken by the assessee that the concerned payees have offered the amounts received by them as their income of the relevant assessment year. A certificate from the Chartered Accountant was also filed certifying the aforesaid fact. The Ld. CIT(A) after considering this aspect and keeping in view the ratio laid down by the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd.(2007 (8) TMI 12 - SUPREME COURT OF INDIA) directed the A.O. to verify whether the concerned payees have offered the amount received by them as income of the relevant assessment year. In our view, the direction by the Ld. CIT(A) to verify this aspect cannot be faulted. - Decided in favour of assessee for statistical purposes. Non deduction of TDS - demand raised under section 201(1) - professional charges and consultancy charges - Held that - . It is the claim of the assessee not only before the first appellate authority but also before us that many of the payments constituting the professional charges of ₹ 8,24,762 and consultancy charges of ₹ 4,17,465 are less than ₹ 20,000. Hence, there is no requirement for deduction of tax at source. It is also the claim of the assessee that on all other payments exceeding ₹ 20,000 assessee has complied to the TDS provisions but due to some reason or other he could not produce the evidences before the A.O. or first appellate authority. In support of such claim, assessee has submitted certificates in Form No.16A containing the payment particulars, dates of remittance of TDS into the Government account, corresponding cheque numbers etc. We consider it appropriate to remit the matter back to the file of A.O. for necessary verification and deciding the matter afresh - Decided in favour of assessee for statistical purposes. Tds on advertisement and publicity expenses - demand raised under section 201(1) and 201(1A) - Held that - It is the claim of the assessee before us that assessee has not incurred the expenditure towards advertising and publicity directly but it was Siri Media P. Ltd., who is the distributor and has made the payments on behalf of the assessee. It is also the contention of the assessee that Siri Media P. Ltd., has deducted tax at source on such payments made to the payees towards advertising and publicity. In this context, he has produced before us the TDS certificates and Form 16A and has requested for treating them as additional evidence. As these evidences were not produced either before the A.O. or Ld. CIT(A) and has been submitted before us for the first time, in the interest of justice, we consider it appropriate to remit the matter back to the file of A.O. to verify assessee s claim - Decided in favour of assessee for statistical purposes. TDS on equipment hire charges - demand raised under section 201(1) and 201(1A) - Held that - There is no dispute to the fact that assessee has paid the amount of ₹ 3,50,000 towards equipment hire charges without deducting any tax. It is the claim of the assessee that the payee M/s. Parade has offered the amount received as income in the relevant previous year. Hence, as per the ratio laid down by the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd., (2007 (8) TMI 12 - SUPREME COURT OF INDIA ) no demand under section 201(1) can be raised against the assessee as he cannot be termed as assessee in default . Having heard the parties, we are of the view that the Ld. CIT(A) was correct in directing the A.O. to decide the issue after verifying assessee s claim of offering of income by the payee on the amounts received. If assessee s claim is found to be correct, A.O. cannot treat the assessee as assessee in default as held by the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd., (supra). Accordingly, we direct the A.O. to decide the issue within a period of six months from the date of this order - Decided in favour of assessee for statistical purposes. Payments made towards location rent - demand raised under section 201(1) and 201(1A) - Held that - matter requires re-consideration by the A.O. as the exact nature of payment has to be verified by examining the contract entered into between the parties. It is claimed by assessee, location rent also includes payments towards manpower and food, electricity, diesel expenses etc., Atleast these payments cannot be said to be coming within the expression rent as defined under section 194I. Therefore, without verifying the details of payments and terms of contract, it cannot be concluded that the location rent is payment received towards lease, sub-lease, tenancy etc., as per Explanation (i) of Section 194I. As the terms of contract and details of payment are not before us, we are not in a position to decide the issue. Accordingly, we remit the matter back to the file of A.O. for deciding afresh after due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues Involved:
1. Applicability of Section 201(1) and 201(1A) regarding TDS on payments.
2. Demand under Section 201(1) and 201(1A) for professional and consultancy charges.
3. Calculation of interest under Section 201(1A).
4. Demand under Section 201(1) and 201(1A) for advertisement and publicity expenses.
5. TDS on equipment hire charges.
6. TDS on location rent payments.
7. TDS on payments to Prasad Film Laboratories and Ramanaidu Colour Laboratories.

Detailed Analysis:

Issue 1: Applicability of Section 201(1) and 201(1A) regarding TDS on payments

The assessee challenged the decision of the Ld. CIT(A) regarding payments made to Gemini Labs and M/s. M.M. Srilekha. The A.O. found that the assessee did not deduct TDS on certain payments, leading to a demand under Section 201(1) and interest under Section 201(1A). The Ld. CIT(A) directed the A.O. to verify whether the payees offered the amounts as income. The Tribunal upheld this direction, instructing the A.O. to verify the income tax particulars of the payees within six months and decide accordingly, allowing this ground for statistical purposes.

Issue 2: Demand under Section 201(1) and 201(1A) for professional and consultancy charges

The assessee argued that some payments were below the threshold for TDS, and for others, TDS was deducted. The Ld. CIT(A) found no merit in the assessee's contention due to lack of details. The Tribunal considered additional evidence submitted by the assessee, including Form 16A certificates, and remitted the matter back to the A.O. for verification and fresh decision, allowing these grounds for statistical purposes.

Issue 3: Calculation of interest under Section 201(1A)

The assessee contested the method of interest calculation by the A.O. The Tribunal noted that interest under Section 201(1A) should be computed based on the tax demand under Section 201(1). Since the issue of TDS applicability was remitted back, the Tribunal directed the A.O. to compute interest strictly per statutory provisions after deciding the TDS issue, disposing of this ground.

Issue 4: Demand under Section 201(1) and 201(1A) for advertisement and publicity expenses

The A.O. raised a demand for non-deduction of TDS on advertisement and publicity expenses. The Ld. CIT(A) confirmed this demand. The assessee claimed that Siri Media P. Ltd. handled these expenses and deducted TDS. The Tribunal accepted additional evidence, including TDS certificates, and remitted the matter back to the A.O. for verification, allowing this ground for statistical purposes.

Issue 5: TDS on equipment hire charges

The A.O. raised a demand for non-deduction of TDS on equipment hire charges paid to M/s. Parade. The Ld. CIT(A) directed the A.O. to verify if the payee offered the amount as income. The Tribunal upheld this direction, instructing the A.O. to decide the issue within six months, allowing this ground for statistical purposes.

Issue 6: TDS on location rent payments

The A.O. raised a demand for non-deduction of TDS on location rent payments to M/s. Usha Kiran Movies. The Ld. CIT(A) directed the A.O. to compute TDS under Section 194I. The assessee claimed these were composite contract payments under Section 194C. The Tribunal remitted the matter back to the A.O. for verification of the contract terms and payment details, allowing this ground for statistical purposes.

Issue 7: TDS on payments to Prasad Film Laboratories and Ramanaidu Colour Laboratories

The A.O. raised a demand for non-deduction of TDS on payments to these laboratories. The Ld. CIT(A) directed the A.O. to verify if the payees offered the amounts as income. The Tribunal upheld this direction, instructing the A.O. to verify and decide within six months, allowing these grounds for statistical purposes.

Conclusion:

Both appeals were allowed for statistical purposes, with directions for the A.O. to verify the claims and decide the matters within specified timeframes, ensuring due opportunity for the assessee to be heard.