Income Tax Officer(OSD) (TDS)-3(2), Mumbai v. M/s Triton Communication Pvt. Ltd
[Citation -2016-LL-1017-77]

Citation 2016-LL-1017-77
Appellant Name Income Tax Officer(OSD) (TDS)-3(2), Mumbai
Respondent Name M/s Triton Communication Pvt. Ltd.
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 17/10/2016
Assessment Year 2006-07
Judgment View Judgment
Keyword Tags commercial exploitation • advertising agency • land appurtenant • survey action • tax at source • use of land
Bot Summary: First Appellate Authority, Mumbai, deleting the addition made u/s 201(1)/201(1A) of the Income Tax Act, 1961 relying upon CBDT Circular No.715 dated 08/08/1995 ignoring the true facts and treating the payment made as advertisement on hoarding to fall within section 194C of the Act and not u/s 194-I of the Act. During the course of survey proceedings, it was observed that the assessee-company has debited expenses to the PL Account of payments made for the hire of hoardings, for the display of advertisements of its clients and TDS on such payments was deducted under the provisions of section 194C of the Act. The only issue for consideration is whether the payments made by the appellant company attract the provisions of section 194C or 1941 of the Act Regarding the scope and meaning of the term. The payments made directly to print and electronic 5 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. media wo u l d h e c o v e r e d u n d e r s e c t io n 1 9 4 C as th e s e ar e in th e n a tu r e of payments f or purpose of advertising. 5.1 The contention of the Assessing Officer that the payments made by the appellant were in the nature of payment of rent for displaying the hoardings is further examined. The only issue in the present appeal is whether the payments made by the assessee company attracts provisions of section 194C or 194-I of the Act. The assessee is an advertising agency, debited certain expenses to the profit loss account of payment made hire of hoardings for display of advertisement of his clients and TDS on such payment was deducted under the provisions of section 194 C of the Act.


IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI Before Shri Joginder Singh, Judicial Member, and Shri Manoj Kumar Aggarwal, Accountant Member ITA NO.3161/Mum/2014 Assessment Year: 2006-07 Income Tax Officer(OSD) M/s Triton Communication (TDS)-3(2), Pvt. Ltd. 1006, 10th Floor, Smt. K.G. 43, Prospect Chamber Mittal Ayurvedic Hospital Vs. Annexe-4th Floor, D.N. Road, Building, Charni Road,(W), Mumbai-400001 Mumbai-400002 (Revenue) ( Assessee) PAN. No.AABCT1560A Revenue by Shri Mallikarjun Utture Assessee by Shri Beharilal Date of Hearing : 13/10/2016 /Date of Order: 17/10/2016 2 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. O R D E R Per Joginder Singh (Judicial Member) Revenue is aggrieved by impugned order dated 19/02/2014 of ld. First Appellate Authority, Mumbai, deleting addition made u/s 201(1)/201(1A) of Income Tax Act, 1961 (hereinafter Act) relying upon CBDT Circular No.715 dated 08/08/1995 ignoring true facts and treating payment made as advertisement on hoarding to fall within section 194C of Act and not u/s 194-I of Act. 2. During hearing, Shri Mallikarjun Utture, ld. DR, defended addition made by Assessing Officer. On other hand, Shri Biharilal, ld. counsel for assessee, claimed that impugned issue is covered by decision of Tribunal dated 03/02/2016 (ITA No.4457/Mum/2014) in case of assessee itself. This factual matrix was not controverted by ld. DR. 2.1. We have considered rival submissions and perused material available on record. In light of above, we are reproducing hereunder relevant portion from aforesaid order of Tribunal dated 03/02/2016 for ready reference and analysis:- This is appeal filed by Revenue against order of learned CIT(A)-2, Mumbai dated 18.3.2014 for A.Y. 2007-08 on following grounds :- (i) Ld. CIT(A) has erred in law and on facts by 3 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. ignoring amended definition of rent w.e.f. 13.07.2006 as per section 1941 and by holding that payments made by assessee for hoarding transactions fall within purview of section 194C and not section 194I. (ii) Ld. CIT(A) has erred in law and on facts by deleting additions made u/s. 201(1) and section 201(1A) by relying upon CBDT circular No. 715 dated 08.08.1995 and without considering entire set of facts in totality read with amended definition of rent u/s. 194I. (iii) Ld. CIT(A) has erred in law and on facts by treating that payment made as advertisement on hoardings fall within purview of section 194C and is not in nature of rent within meaning of section 1941 of I.T. Act) by relying on decision of M/s. Roshan Publicity P. Ltd. (2005) 4 SOT 105 dated 13/05/2005, without appreciating that definition of rent u/s. 1941 has been widened w.e.f 13/07/2006 and as applicable in case of assessee which says that any person responsible for making any payment under any other agreement or arrangement for use of (either separately of together any ) a) land or b) building .h) fittings... whether or not any or all of above are owned by payee. (iv) Ld. CIT(A) has erred in law and on facts in deleting interest u/s. 201(1A) on issue of payments made by assessee for purpose of display of advertisement of assessee's clients, as this short deduction has been deleted by him & interest deletion is consequential to quantum deletion of short deduction, which is subject matter of further appeal as mentioned in (i), (ii) & (iii) above. 2. Brief facts of case, assessee-company is advertising agency and is in business of creating ideas and execution of ideas for advertising of client's products and services. survey action u/s. 133A of Act was carried out on 10-10-2007 on assessee- company. During course of survey proceedings, it was observed that assessee-company has debited expenses to P&L Account of payments made for hire of hoardings, for display of advertisements of its clients and TDS on such payments was deducted under provisions of section 194C of Act. According to 4 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. Assessing Officer, in view of Circular No. 715 dated 08.08.1995, TDS was required to be deducted u/s 1941 of Act. Therefore after serving statutory notice and considering facts of case, Assessing Officer passed order of assessment u/s. 201/201(1A) of Act. 3. Being aggrieved by order of Assessing Officer, assessee preferred appeal before learned CIT(A) and learned CIT(A) allowed appeal filed by assessee. 4. Aggrieved by order of learned CIT(A), Revenue has preferred appeal before Tribunal on grounds mentioned hereinabove. 5. Although Revenue has raised four grounds mentioned hereinabove but all grounds are interconnected and interrelated, therefore for sake of convenience, we have decided to decide same by this consolidated order. only issue for consideration before us is whether payments made by assessee- company attract provisions of section 194-C or194-I of Act ? In this respect learned CIT(A) has passed detailed order. Operative paras of order of learned CIT(A) are as under : 5. I have carefully considered order of AO and written submissions of appellant. only issue for consideration is whether payments made by appellant company attract provisions of section 194C or 1941 of Act? Regarding scope and meaning of term .advertising used in section 194C(1). It is clarified in CBDT Circular no. 715, that advertising may he in print or electronic media. i.e. in news papers, periodicals, radio, television, etc. It is also stated in Circular no. 715 that during course of consideration of Finance Bill. 1995. Finance Minister clarified on floor of House that amended provisions of tax deduction at source would apply when client makes payment to advertising agency and not when advertising agency makes pay men t to med ia, wh ich includes both prin t and electronic media. deduction is required to he made at rate of 1 per cent. If advertising agencies give consolidated bill including charges for art work and other related jobs as well as payments made by them to media, deduction Will have to be made under section 194C at rate of 1 percent. payments made directly to print and electronic 5 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. media wo u l d h e c o v e r e d u n d e r s e c t io n 1 9 4 C as th e s e ar e in th e n tu r e of payments f or purpose of advertising. T he contract f or putting up hoarding is in n ature of advertis ing contr ac t and provis ions of section 194C would be applicable. 5.1 contention of Assessing Officer that payments made by appellant were in nature of payment of rent for displaying hoardings is further examined. It is seen from CBDT circular no. 715 dated 8/8/1995 that this issue has been clarified as under: Question 5: Whether contract for putting lip hoarding would be covered under section 194C of 1941 of Act? Ans: contract for putting up hoarding is in nature of advertising contract and provisions of section 194C would be applicable. It may, however, be clarified that if person has taken particular space on rent and thereafter sublets same fully or in part for putting up hoarding, he would be liable to TDS under sec tion 194-I and no t under section 194C of Act. 5.2 In th is c as e , th e ap pe l l t h as s tate d th at th e r e is n o le as e agreement with persons to whom payments have been made. There is no evidence brought on record to indicate that appellant had taken space on rent and thereafter has sub- let same for putting up hoarding so as to attract section 194-I of Act. On contrary, appellant has contended that only contractual arrangements were made with certain persons for display of advertisements of clients of appellant company. Further appellant has relied upon several judicial pronouncements which are mentioned in para 4.1 above, in support of contention that only section 194C of Act is applicable in respect of payments made by appellant. I find that CBDT circular no. 715 read with judicial pronouncement relied upon by appellant make lt clear that TDS has to be made in accordance with provisions of section 194 C of Act and section 194 I of Act is not applicable to facts of case of appellant. On facts and in circumstances of case, A.O. is hereby directed to re- 6 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. compute TDS liability in accordance with section 194C of Act. 6. In result, appeal is allowed. 6. We have also heard counsels of parties and perused record. We are of considered view that CBDT Circular No. 715 dated 8.8.1995 has clarified controversy and moreover facts of present case are identical with facts in case titled ITO Vs. Roshan Publicity (P) Ltd., wherein Coordinate B Bench of ITAT has decided issue and passed following order : Tax deduction at source- rent/payment to contractor/sub- contractor - Applicability of s. 194- I /194C - Assessee advertis ing agent acqu iring r igh t of displ aying advertise ment at hoarding site and making payment to hoarding site owners - There was no lease, sub-lease, tenancy etc. - Sec. 194-I is not applicable as paymen t cannot be ter med as rent - Assessee was justified in deducting tax at source at 1 per cent under s. 194C. Sec. 194-I provides that person who is responsible for paying to any person any income by way of rent shall deduc t IT thereon at rate prescribed there in. Expin. ( i) to s. 194-I def ines rent to me an y payme n t b y wh atever n ame c alled, unde r y le as e, sub-le as e, ten anc y or y o th er agree men t or arrangement for use of any land or building together with furniture, fittings and land appurtenant th e r e to . In th e c as e b ef o r e u s , th e as s e s s e e h as t ak e n d ac q u ir e d o n l y th e r ig h t o f d is pl ay in g th e advertisement to hoarding sites belonging to others. It is, therefore, clear that what is being used by assessee in case before us is only right of displaying advertisement. In other words, use of a, hoarding site is to f acilitate display of advertise ment. T he amount is paid for commercial exploitation of display r igh ts and not f or using hoarding sites under any le ase, sub-le ase, tenancy, e tc. Sec. 194-1 is more appropriatel y appl ic abl i , 2 to c ase wh ere ren t is paid in consider ation f or use of any l and or s o b u il d in g , e tc . , u n d e r y l e as e , s u b - l e as e , te n c y, e tc . In o th e r wo r d s , th e r e s h o u l d b e l iv e l in k ho between payment of compensation 7 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. kno wn as rent and use of land or building and this live link is by ac lease, sub-lease, tenancy, etc. This live link is absent in case before us. Therefore, charges, ho wh ich were paid by assessee, were not paid in cons ideration of mere use of any land or building. It COI was paid for commercial exploitation of display rights. Payments made by advertising agents to hoarding owners fall under provisions of s. 194C and not under provisions of s. 194-1 as held by Assessing Officer . 7. After analyzing facts of present case and after hearing parties, we are of view that learned CIT(A) has rightly followed order passed by Coordinate Bench of ITAT in Roshan Publicity (P) Ltd. (supra), wherein on contrary Revenue relied upon amended provisions of section 194I of Act. We have also peruse amended definition of rent as per section 194I of Act but payments made for putting up hoarding is in nature of advertising contract and therefore provisions of section 194C would be applicable. said proposition has already been decided by Coordinate Bench in aforementioned case and it was held that use hording site is to facilitate display of advertisement , amount is paid for commercial exploitation of display rights and not for using hoarding sites under any lease, sub-lease, tenancy etc. In our view, section 194I is more appropriately applicable to case where rent is paid in consideration for use of any land or building etc. under any lease, sub-lease, tenancy etc. In other words, there should be live link between payment of compensation known as rent and use of land or building and this live link is by lease, sub-lease, tenancy etc. However, this live link is absent in case of before us. We are therefore, unable to say that charges, which were paid by assessee, were paid in consideration of mere use of any land or building. But according to facts of case, it was paid for commercial exploitation of display rights. In this view of matter, order of learned CIT(A) is confirmed and appeal filed by Revenue is dismissed. 8 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. 2.2. On analysis of aforesaid order, we find that while coming to particular conclusion, Co-ordinate Bench followed decision of another Bench in Income Tax Officer vs Roshan Publicity Pvt. Ltd. and also CBDT Circular No.715 dated 08/08/1995, which has clarified controversy. only issue in present appeal is whether payments made by assessee company attracts provisions of section 194C or 194-I of Act. assessee is advertising agency, debited certain expenses to profit & loss account of payment made hire of hoardings for display of advertisement of his clients and TDS on such payment was deducted under provisions of section 194 C of Act. As per ld. Assessing Officer TDS was to be deducted u/s 194-I of Act and he passed order u/s 201/201(1A) of Act. issue has already been decided by Co-ordinate Bench by holding that use hoarding site is to facilitate display of advertisement and thus amount paid is for commercial exploitation of display rights and not for using hoarding sites under any lease, sub-lease tenancy etc. In our view, section 194-I is more appropriately applicable to case, where rent is paid in consideration for use of any land or building. In other words, there should be live link between payment of compensation known as rent and use of land or building and this live link is by lease, sub-lease, tenancy, etc. However, this live-link is absent in present appeal before us. Following decision, that to in case of assessee itself for Assessment year 2007-08 (order dated 03/02/2016), we find 9 ITA No.3161/Mum/2014 M/s Triton Communications Pvt. Ltd. no infirmity in stand of Ld. Commissioner of Income Tax (Appeal). It is affirmed, resulting in to dismissal of appeal of Revenue. Finally, appeal of Revenue is dismissed. This Order was pronounced in open court in presence of ld. representatives from both sides at conclusion of hearing on 13/10/2016. Sd/- Sd/- (Manoj Kumar Aggarwal) (Joginder Singh) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated : 17/10/2016 P.S/. Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT, Mumbai. 4. CIT(A)- Mumbai 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai Income Tax Officer(OSD) (TDS)-3(2), Mumbai v. M/s Triton Communication Pvt. Ltd
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