2015 (4) TMI 719 - AT - Income Tax

TDS liability from the payments made towards advertisements - CIT(A) confirming the order of the Assessing Officer in demanding tax and interest under section 201(1) and 201(1A) in respect of the payments made to the professionals - Held that - As decided in Hindustan Coca Cola Beverage P. Ltd. v. CIT 2007 (8) TMI 12 - SUPREME COURT OF INDIA the circular No. 275/201/95-IT(B) dated January 29, 1997 declares 'no demand visualised under section 201(1) of the Income-tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under section 201(1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under section 271C of the Income-tax Act. Hence, we remit the matter to the Assessing Officer to verify as to whether the payee has declared the respective income and paid tax thereon and if so, the assessee shall not be held as the assessee in default for the purpose of invoking provisions of sections 201 and 201A. Further, from the details at para 6.3 produced at page 6 of the Commissioner of Income-tax (Appeals) order, we find from the payments made towards advertisement the following do not exceed ₹ 20,000. AO is directed (i) not to apply the provisions of section 194C to the items listed above where payments do not exceed ₹ 20,000 (ii) verify whether tax has been paid by the payee with respect to the remaining payments towards advertisement and thereafter decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Whether tax is to be deducted from payments made towards advertisements.
2. Whether tax and interest under section 201(1) and 201(1A) of the Income-tax Act are applicable to payments made to professionals.

Analysis:
1. The appeals by the assessee contested the Commissioner of Income-tax (Appeals)'s decision regarding the deduction of tax from payments for advertisements. The assessee argued that since payments were made to agents who then paid publishers, section 194C did not apply. However, the Commissioner referred to Circular No. 715, stating that payments to advertising agencies are subject to TDS. The Commissioner directed the Assessing Officer to calculate TDS liability if the payment exceeded the threshold for each assessment year.
2. The issue of tax and interest under section 201(1) and 201(1A) in relation to payments to professionals was raised. The counsel for the assessee cited the Hindustan Coca Cola Beverages case, highlighting that TDS provisions did not apply when the amount was below Rs. 20,000. The counsel also mentioned that the appeal related to TDS under section 194J was not being pursued. The Tribunal decided to send the matter back to the Assessing Officer for verification of TDS payments by the payee and identification of cases where TDS would not apply due to the payment amount being below Rs. 20,000.

Conclusion:
The Tribunal allowed all four appeals of the assessee for statistical purposes. The matter was remitted to the Assessing Officer to verify TDS payments, particularly for payments towards advertisements where the amounts did not exceed Rs. 20,000. The Tribunal emphasized compliance with TDS provisions and the need for verification before invoking sections 201 and 201A of the Income-tax Act.