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TMI Blog2017 (10) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961. In DBITA No. 70/2015 "Whether in the facts and circumstances of the case, the ITAT was justified in upholding the order of CIT(A) in deleting the addition of Rs. 15887514/- made by the Assessing Officer for non deduction of tax at source from payment made to advertising agencies and customers treating the same as commission u/s 194H of Income Tax Act." 4. Mr. Mathur contended that in the second matter, the Tribunal has relied upon the first judgment of Bhimsain Garg therefore, he has taken us to the original record of the first matter. 5. He has taken us the order of AO which reads as under:- "It is observed from the Direct Income mentioned in Schedule No. 6 of the audit report that the assessee has shown advertisement revenue of Rs. 22271252/- & further reduced Rs. 13197053/- in the form of discount on advertisement. In order to examine the nature of alleged discount, the assessee was asked to explain the nature of such head of alleged discount with supporting documents. The assessee vide written reply dt. 24.12.2009 has tried to explain that discount is allowed to the customers whose advertisement has been published in the news paper. Further explained that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/- is not allowed as expenditure in view of provisions of section 40(a)(ia) of the I.T. Act and added the same to the total income of assessee. 6. He contended that the CIT(A) while observing in para 4.1 has specifically given finding that the AO could have inquired in the agency and everything and he remanded back the matter to the AO. For ready reference the observations of CIT(A) are reproduced as under:- "I have duly considered the submissions of the appellant. The appellant is engaged in the business of publication of newspaper by the name of Mahaka Bharat. The appellant had paid discount of Rs. 1,31,97,053/- to his customers and various advertising agencies. The nomenclature of "discount paid" was evident from the entries in the books of account, audited profit & loss account wherein the expenditure was duly recorded as discount paid and tax audit report in Form No. 3CD wherein auditors had not made any qualification. All these documents categorically mentioned that discount was paid on advertising revenues. The AO however concluded without making any inquiries or bringing any material on record that the alleged discount was in nature of commission. The AO thereafter made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent are of two types, the unregistered agencies which are not entitled to any credit facility and the other type are registered agencies which are given accreditation and credit facility with Doordarshan. In other words, while the first category will be able to telecast advertisement programmes canvassed from customers only on advance payment, the other category can have telecast done before making payments. Advertisement charges are based on air-time used for telecasting advertisement material. Rates are also varying depending upon the time of advertisement. However, these matters have no relevance for the purpose of deciding this case because the issue involved is whether the commission paid @ 15 per cent by the respondent on advertisement charges remitted by the advertising agencies is subject to TDS as commission under Section 194H of the Act. For easy reference, we extract hereunder the relevant portion of Section 194H for the purpose of deciding this case: 194H. Commission or brokerage--Any person, not being an individual or an HUF, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring advertisement charges. We are unable to accept this contention because advertisement contract entered into between the customer and the agency is for telecasting advertisement in 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 tariff prescribed by 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 what is desired to be telecast by advertising agencies. In fact, Doordarshan is bound by advertisement contract canvassed by advertising agencies and it is their duty under the agreement between them and the advertising agencies to telecast advertisement material in terms of the contract which the agency signs with the customer. In our view, the transaction is a pure agency arrangement between the respondent and the advertising agencies because one acts for the other and the act of the agent binds the respondent in their capaci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r it is for the respondent to invoke, if permissible, the indemnity clause and recover the levies from the agents." 9. We have heard counsel for the appellant. 10. We have gone through the order and proceedings of the matter. It is not in dispute that the amount which has been received by the assessee was after deducting the commission, stock brokerage or whatever term is awarded and the same has been shown in the books of accounts and as stated by Mr. Mathur, if the details are to be given reads as under:- "The advertisement are to be procured by such agencies at the rates and terms decided between them and advertiser, assessee has no involvement therein. In the case of Kerala State Stamp Vendors Association vs. Office of the Accountant General, the Hon'ble Kerala High Court held that what is liable for TDS is commission of brokerage and not the incentives given on the basis of principal to principal relations." 11. The assessee also furnished that they ought not to have been added in the income of the assessee in spite of making ground under Section 194H or 40(a)(ia) of the IT Act. 12. In our considered opinion, the Tribunal while considering the matter has rightly come to ..... 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