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TMI Blog2023 (10) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... l, there was no obligation on the part of the respondent/assessee to deduct TAS under Section 194H of the Act. Tribunal in this regard has noted the contents of the CBDT s Circular No. 05/2016 dated 29.02.201 held relationship between the media company and the advertising agency is that of a principal to principal and therefore, not liable for TDS under section 194H. Decided in favour of assessee. Disallowance u/s 14A under Rule 8D(2)(iii) - HELD THAT:- AO, in our view, has wrongly taken into account the investments other than the investments made to earn exempt income. [See Cargo Motors (P.) Ltd. vs. Deputy Commissioner of Income-tax [ 2022 (10) TMI 571 - DELHI HIGH COURT] . - HON'BLE MR. JUSTICE RAJIV SHAKDHER AND HON' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the declared income amounting to Rs. 57,14,28,530/-. 8. In framing the assessment order, the AO made the following two significant disallowance/additions, which is the subject matter of the instant appeal: (i) First, the AO disallowed Rs. 11,20,43,563/- by taking recourse to provisions of Section 40(a)(ia) of the Act. This step was taken by the AO as according to him, the respondent/assessee had not deducted Tax at Source (TAS) as required under Section 194H of the Act. (ii) Second, an addition was made amounting to Rs. 23,26,926/- under Section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962. 9. The respondent/assessee, being aggrieved, preferred an appeal with the Commissioner of Income Tax (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been deducted, disallowance of Rs. 11,20,43,563/- had to be made by taking recourse to the provisions of Section 40(a)(ia) of the Act. 13.1 It was the AO s view that the amount retained by the agencies engaged in providing advertorials was in the nature of commission, and therefore, tax had to be deducted under Section 194H of the Act. 14. Likewise, insofar as the other issue is concerned, the AO, while disallowing the expenses connected with earning exempt income, applied the formula in the manner which he took into account the entire investment made by the respondent/assessee, which included income which was exempt from tax. 15. The CIT(A), as noted hereinabove, scaled down the expenses which were disallowed by taking into ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utside the purview of TDS under section 194H. The Department, on the other hand has taken the stand in some cases that since the advertising agencies act on behalf of the media companies for procuring advertisements, the margin retained by the former amounts to constructive payment of commission and, accordingly, TDS under section 194H is attracted. 4. The issue has been examined by the Allahabad High Court in the case of jagran prakashan Ltd and Delhi High Court in the matter of Living media Limited and it was held in both the cases that the relationship between the media company and the advertising agency is that of a principal to principal and therefore, not liable for TDS under section 194H. The SLPs filed by the Supreme Court vid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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