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TMI Blog2015 (9) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... us the provisions of sec.194C are not applicable in the instant case and consequently, the AO was not justified in making addition by applying the provisions of sec. 40(a)(ia) of the Act. In the result, the addition made by the AO is hereby deleted. - Decided in favour of assessee. Not accounting amount received from HDFC bank - assessee stated that he has received only commission of ₹ 45,348/- from the bank and the same has been credited to profit and loss account - Held that:- AO, in the proposal dated 19/9/2011, specified that the assessee received ₹ 33,185/- u/s 194A of the Act, ₹ 13,333/- u/s 194C of the Act which was not accounted in the books of account whereas the assessee was referred to the commission of ₹ 45,348/-received from the bank and credited to the profit and loss account which is different from the amounts referable to 194A and 194C of the Act. Since no explanation was filed even before the CIT(A), the CIT(A) affirmed the action of the AO. Even before the Tribunal, assessee could not furnish proper explanation to highlight that it has not received any commission and whatever was offered to tax was only the amount received from HDFC ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cannot be treated as payment made to any contractor. 3. The AO rejected the contentions of the assessee. According to the AO, the expression work includes advertisement and the assessee has debited the expenditure under the head advertisement and hence the assessee is liable to deduct tax at source u/s 194C of the Act. The plea of the assessee was that it was payment made to the principal from time to time and M/s. Hero Honda Motors is not an advertising agency and hence it cannot said to have been payment made to any advertising agency, was rejected by the AO. 4. Aggrieved, assessee contended before the CIT(A) that the AO was not justified in invoking the provisions of sec. 40(a)(ia) of the Act since it was only payment made to a principal and cannot be treated as advertisement expenditure incurred by the assessee in the form of payment to any contractor. The ld. CIT(A) rejected the contentions of the assessee. In this regard, he observed that the amount debited and recovered by M/s. Hero Honda Motors has been classified by the assessee as advertisement expenditure. When the assessee itself classifies expenditure as advertisement it was duty bound to make TDS on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted in the instant case. The learned counsel for the assessee also adverted attention of the bench to pages 23 and 24 of the paper book, which is the letter dated 31/10/2011 addressed to the AO, to submit that as per the provisions of sec.194C, deductions should be made at the point of actual payments to the contractor and in this case tax was deducted by the company and therefore it is not necessary for the assessee to deduct tax as it is only reimbursing the expenditure incurred by the company. In this regard, reliance was placed upon an unreported decision of the Hon ble Delhi High Court in the case of DLF Commercial Project Corporation wherein the court observed that when the payee therein has already deducted tax on various payments made by it to third parties and the payments made by the assessee being only reimbursement of expenses incurred by the payee, no tax is deductible by the assessee. (Income Tax Appeal No.627/2012 and 507/2013 dated 15/07/2015). It was, therefore, strongly submitted that tax authorities erred in treating reimbursement made by the assessee to the principal as a payment towards work contract. On the other hand, learned Departmental Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure as per law. In the result, ground No.4 of the assessee is rejected. 11. As regards assessment year 2009-10, ground Nos.1, 7 and 9 are general in nature and do not require specific consideration. Ground No.8 is only consequential in nature. 12. Vide ground Nos.2 and 3, assessee contends that the amount reimbursed to M/s. Hero Honda Motors towards advertisement expenditure should not have been added by the AO by invoking the provisions of sec.194C read with sec. 40(a)(ia) of the Act. During the course of hearing, it was noticed that out of total expenditure of ₹ 2,74,854/- only a sum of ₹ 2,31,817/- was reimbursed to M/s. Hero Honda Motors and the balance amount was directly spent by the assessee towards advertisement, as reflected in the page 22 of the paper book. The learned counsel for the assessee submitted that as per provisions of sec.194C(5), if payment made to a contractor is less than ₹ 30,000/- there is no need to deduct tax at source on such payment and thus even in respect of the balance payments there is no liability to deduct tax. It may be noticed that the total expenditure, other than reimbursement to M/s. Hero Honda Motors, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amount was duly credited to the bank interest and commission account and offered to tax and therefore the same should not have been added separately. The ld. CIT(A) observed that the AO had given sufficient opportunity to prove that the amount offered to tax and the amount referred to by the AO are one and the same. In fact, the AO, in the proposal dated 19/9/2011, specified that the assessee received ₹ 33,185/- u/s 194A of the Act, ₹ 13,333/- u/s 194C of the Act which was not accounted in the books of account whereas the assessee was referred to the commission of ₹ 45,348/-received from the bank and credited to the profit and loss account which is different from the amounts referable to 194A and 194C of the Act. Since no explanation was filed even before the CIT(A), the CIT(A) affirmed the action of the AO. Even before the Tribunal, assessee could not furnish proper explanation to highlight that it has not received any commission and whatever was offered to tax was only the amount received from HDFC referable to taxes u/s 194A and 194C of the Act. In fact, the total sum referred by the AO works out to ₹ 46,518/- whereas the assessee offered to tax com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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