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TMI Blog2009 (11) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 194H of the Income-tax Act, 1961, which provides for deduction of tax at source on payments of commission or brokerage. We have heard standing counsel appearing for the Revenue and Sri Dale P. Kurien, counsel appearing for the respondent. 2. The respondent is a fully owned Government of India undertaking engaged in telecast of news, various sports, entertainments, cinemas and other programmes. Advertisement income is a major source of revenue for all telecasting companies including the respondent. Advertisements are canvassed through agents appointed by the respondent under the agreement with them. Advertising agencies recognised by the respondent are of two types, the unregistered agencies which are not entitled to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also that no deduction shall be made under this section on any commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees. Explanation.-For the purposes of this section,- (i) 'commission or brokerage' includes any payment received or receivable directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities." 3. During hearing copies of agreements executed by the respondent with two parties are produced. The nature of transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vertisement in the Doordarshan channels. The agent canvasses advertisement on behalf of Doordarshan under agreement between them and the advertisement charges recovered from the customers are also in accordance with the tariff prescribed by the Doordarshan which is incorporated in the agreement. Further it is specifically stated in the agreement that advertisement material should also conform to the discipline introduced by Doordarshan which is nothing but a Government agency which cannot telecast all that is desired to be telecast by advertising agencies. In fact, Doordarshan is bound by the advertisement contract canvassed by advertising agencies and it is their duty under the agreement between them and the advertising agencies to telecas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n full all discount earned as an advertising agency and that it will at no time pay or otherwise allow directly or indirectly any part of such discount or remuneration to any person, advertiser or representative of any advertiser for whom it may be acting or has acted as an advertising agency. Agency agrees to pay the TDS/income-tax liability as applicable under the income-tax law on the discount retained by him. For this purpose agency agrees to make payment to Doordarshan Commercial Service by means of cheque/demand draft for the TDS on 15 per cent. discount retained by them. This cheque/demand draft will be drawn separately and should not be included in the telecast fee/advertisement charges. 6. It is very clear from the above provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Doordarshan, it is nothing but a payment made to agents in advance by Doordarshan before remittance of net advertising charges to them by the agents. We are therefore of the view that permission granted by Doordarshan under the agreement to the agencies to retain 15 per cent. of the commission amounts to payment of commission by them to agents which is subject to deduction of tax at source under section 194H of the Act. It is clear from section 194H that payment includes credit of such sum to the account of the payee or at the time of payment of such income in cash or by the issue of cheque or draft or by any other mode. When the respondent receives 85 per cent. of the advertising charges from the advertising agency concerned, Doordarshan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Gujarat High Court pertains to sale of stamp by the Government to stamp vendors at a discount and the case decided by this court pertains to sale of lottery tickets to the agents at a discounted price. In both the cases, the purchasers, namely, stamp vendors and lottery agents purchased stamps and lottery tickets respectively at a discounted price and they run the business at their risk. They will get the discount retained by the Government only if stamp paper or lottery ticket is sold and destruction of the stamp paper or lottery ticket before sale in their hands will be a complete loss to them. Therefore the transactions of purchase at discounted price and sale at face value were rightly treated as not agency transactions by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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