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TMI Blog2015 (9) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... erfere with the findings of the ld. CIT(A) and the appeals filed by the Revenue are accordingly dismissed. Whether the consultancy charges paid by the assessee are in the nature of salaries u/s.192 of the Act or in the nature of fees or professional service attracting the provisions of section 194J ? - Held that:- The appointment letter clearly shows that the persons have been appointed as a consultant. Though there is a restrictive clause that during the pendency of agreement with the assessee, the consultants will not take up any other assignment of temporary or permanent nature with any other person. However in our considered opinion, such restrictive covenants are provided in contract to safeguard the interest of the company and to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole issue is whether the ld. CIT(A) was justified in deleting the interest levied u/s.201(1A) of the Act on the issue of payments made by the assessee for the purpose of display of advertisement of the assessee s clients and whether the ld. CIT(A) was correct in holding that the provisions of section 194C would apply and not the provisions of section 194J, though quantum of interest may defer in both the appeals. 3. During the course of scrutiny assessment proceedings for the years under consideration, the Assessing Officer (A.O.) noticed that the assessee has shown expenditure on advertisement through outdoor display which includes payment for advertisement on hoarding/board. The A.O. further noticed that the assessee has deducted TDS @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up a hoarding nor does it take any space on rent from the hoarding contractors. It only obtains the right of displaying the advertisement on hoardings put up by the hoarding contractors. In other words, the Appellant had subcontracted the work for putting up the hoardings to hoarding contractors. The prime responsibility of payment of rent of the sites is of the hoarding contractor and not of the Appellant who acts as the main contractor. The subcontractor (hoarding contractor), in turn hires the sites and is responsible to put up the hoarding. Accordingly the provisions of the section 194C would be attracted and not the provisions of section 194-1, as held by the AO. and finally concluded by holding that the payments made by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discrepancy in the display would result into non-payment to the contractee. Therefore, the assessee has correctly deducted the tax at source as per the provisions of section 194C of the Act. 5. We have considered the rival submissions and have carefully perused the orders of the authorities below. It is an undisputed fact that none of the hoarding sites are owned by the assessee nor taken on rent. The assessee has only the limited right to display its clients advertisement on that hoarding for a particular period of time. It would not be out of place to consider the following extract from the CBDT Circular No. 715 dated 08.08.1995.: Question 5: Whether a contract for putting up a hoarding would be covered under section 194C or 194-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clause VA of Explanation to section 194C of the Act. We decline to interfere with the findings of the ld. CIT(A) and the appeals filed by the Revenue are accordingly dismissed. 8. In its cross objections, the only surviving ground relates to the issue whether the consultancy charges paid by the assessee are in the nature of salaries u/s.192 of the Act or whether it is in the nature of fees or professional service attracting the provisions of section 194J of the Act. During the course of assessment proceedings, the A.O. observed that the assessee has paid professional charges to the retainers and the assessee was having a employer-employee relationship and therefore the assessee was liable to deduct the tax at source as per the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company and to make it sure that the consultants do not give services to the rivals in the same line of business. Merely because of this restrictive covenant, no employer-employee relationship could be established. Further, it is an undisputed fact that the consultants have charged service tax to the assessee and the service tax so collected have been paid to the government. By any stretch of imagination no employee would charge service tax to its employer. Therefore, we do not find any merit in the views taken by the Revenue authorities. The assessee has correctly deducted the tax. We accordingly set aside the findings of the ld. CIT(A) and direct the A.O. to accept the assessee s contention. 11. In the result, these cross objec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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