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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 ..... ero Honda Motors Ltd., advertises their products and the total expenditure apportioned to several dealers. The assessee-company intimated to assessee-firm, by way of debit note that a sum of Rs. 4,82,318/- was payable to M/s. Hero Honda Motors Ltd. Before the AO, it was contended that as per the provisions of sec.194C of the Act, payment made to any contractor for work done, which includes advertisement, is subject to deduction of tax at source whereas there was no payment to any contractor since the work was not carried out by the assessee or on behalf of the assessee; the company advertises their products and apportions to several dealers as per certain ratio and thus it is only payment made to the company 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 hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond appeal before this Tribunal. 7. Ground Nos.1, 5 and 7 are general in nature. Ground NO.6 is with regard to the levy of interest which is consequential in nature and therefore need not be considered separately. 8. Vide ground Nos.2 and 3, assessee contends that the CIT(A) erred in confirming the addition of Rs. 4,82,318/- u/s 40(a)(ia). The learned counsel appearing on behalf of the assessee submitted that there was no direct payment to any advertising agency and it was only reimbursement to M/s. Hero Honda Motors which is the principal company engaged in manufacture of motor cycles and it is not undertaking advertisement contracts and as such provisions of sec.194C would not get attracted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in nature, for the maintenance of the building, some portion of the expenditure was capital in nature, which was already capitalized no proof of bifurcation of such expenditure was not placed before the bench. Both the AO as well as the CIT(A) observed that the expenditure was in the nature of capital since it was towards purchase of material and labour charges for construction of the building. In the absence of any material placed before the bench to contradict the findings of the CIT(A), I am of the opinion that the order passed by the CIT(A) does not call for any interference. Since the expenditure was treated as capital in nature, assessee is entitled to depreciation on such expenditure 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission of Rs. 45,348/- from the bank and the same has been credited to profit and loss account. However, as intimated to the assessee vide the proposal dated above, the assessee has received Rs. 33,185/- u/s 194A of the Income Tax Act 1961 and Rs. 13,333/-u/s194C of the Income-tax Act 1961 and the same has not been accounted in the books of account. As the assessee has already gave effect to all the expenditure affecting the profit and loss account, the entire amount of Rs. 46,518/- is treated as income of the assessee and brought to tax accordingly." 14. Aggrieved, assessee contended before the CIT(A) that 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 Rs. 33,185/- u/s 194A of the Act, Rs. 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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