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TMI Blog2015 (8) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is correct. The assessee has a contractual relationship with only clients for providing marriage related services for which the assessee placed matrimonial advertisements in the newspapers. Further, the payments made on behalf of the clients and the payments ranged between ₹ 600 to ₹ 1200 each. Hence it appears that the assessee has placed advertisements from time to time as per requirements of its business. Though, the payments for the entire year was in excess of ₹ 50,000, in the absence of a contractual relationship between the assessee and the publishers, section 194C does not apply to the payments made to the newspaper publishers for the advertisements made by the assessee. - Decided in favour of assessee. Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed that the payments were made on behalf of its clients and the payment ranged between ₹ 600 to ₹ 1200 each. Assessee also submitted before the AO that advertisements were issued by it in the capacity of an agent of its customers. 3. AO did not accept the explanation and held that section 194C cast an obligation on a person who is responsible for paying any amount to the resident (contractor) that the assessee was responsible for making payment to the contractor and therefore liable u/s 194C for deducting tax. AO also held that the assessee had charged lump sum amounts from its clients for the services rendered, that the services included publishing advertisements in the newspapers and therefore, section 194C applied to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and those publishers, hence section 194C does not apply to payments made to the newspapers for advertisements. 5. Aggrieved, the Revenue is in appeal and the assessee has also filed cross objection. The grounds of appeal raised by the Revenue read as follows: 1. The ld CIT (A) erred both in law and on facts of the case. 2. Whether ld CIT (A) is correct in law in holding that there is no contractual relationship between the assessee and the newspaper publishers in view of the fact that the assessee is the person responsible for placing the advertisements in the newspapers. 3. Whether ld CIT (A) is correct in law in holding that section 194C does not apply to the payments made to the newspaper publishers for advertisements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed advertisements from time to time as per requirements of its business. Though, the payments for the entire year was in excess of ₹ 50,000, in the absence of a contractual relationship between the assessee and the publishers, section 194C does not apply to the payments made to the newspaper publishers for the advertisements made by the assessee. Hence, we confirm the order of the CIT (A). 7. In the result, appeal filed by the Revenue is dismissed. C.O. No.63/Hyd/2014 8. In the cross objection, the assessee raised the following grounds: 1. The ld CIT (A) ought to have held that no disallowance can be made u/s 40(a)(ia) of the I.T. Act as the amounts were paid during the previous year relevant for the A.Y and they were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en a different view. Authorised Representative (AR) supported the order of the FAA. We have heard the rival submissions and perused the material before us. We find that expenses related to professional fees, advertisement and management were debited in P L Account, that same were paid. Therefore, in our view, no disallowance u/s 40(a)(ia) of the Act should be made. We further find that while deciding the appeal in the case of Janapriya Engineers Syndicate (I.T.T.A. No. 352 of 2014- dt. 24.06.2014) the Hon'ble Andhra Pradesh High Court has clarified the issue of interim stay granted by it in the case of Merilyn Shipping Transports (supra). We will like to reproduce the relevant part of the said order and same reads as under: 4. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities had not disputed the fact that the assessee paid depository charges without deducting the tax and taxes are already paid by the recipient [see para 3.3 3.4 of the order passed by the CIT(A)]. Since the amount was already paid and the taxes are paid by the recipient, in our opinion, the decision of the Special Bench in the case of Marilyn Shipping Transports (supra) is applicable and by following the decision of the ITAT, Mumbai Benches (supra) we hold that the Tax Authorities have wrongly invoked provisions of section 40(a)(ia) in the instant case. We, therefore, set aside the orders passed by the Tax Authorities disallowing ₹ 6,27,423/-. In the light of the decision on merit it is not necessary for us to deal with the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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