Gujarat High Court
Commissioner Of Income Tax Iii vs Honest on 6 August, 2013
Bench: M.R. Shah, Sonia Gokani
COMMISSIONER OF INCOME TAX III....Appellant(s)V/SHONEST PUBLICITY....Opponent(s) O/TAXAP/24/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 24 of 2013 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ====================================== COMMISSIONER OF INCOME TAX III....Appellant(s) Versus HONEST PUBLICITY....Opponent(s) ====================================== Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI Date : 06/08/2013 ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH)
1. The present Tax Appeal has been preferred by the revenue challenging the impugned judgment and order dated 18/05/2012 passed by the ITAT, Ahmedabad in ITA No. 2758/Ahd/2009 with respect to the Assessment Year 2006-07 by which the tribunal has dismissed the said appeal preferred by the revenue confirming the order passed by the CIT(A) deleting the addition made on account of disallowance under Section 40(a)(ia) of the Income Tax Act amounting to Rs.29,78,272/- by the Assessing Officer.
2. The facts leading to the present Tax Appeal in a nutshell are as under;
3. The assessee was engaged in the business of advertising working as an agent in some newspapers. During the assessment proceedings with respect to the Assessment Year in question the Assessing Officer observed that the assessee claimed the advertisement expenses of Rs.1,07,12,129/- to various parties including media. The assessee was asked to furnish complete details in respect of the aforesaid payment. On verification of the details furnished by the assessee, it was found that the assessee has paid/credited Rs.29,78,272/-. On verification it was observed by the Assessing Officer that the assessee has not deducted TDS from the above mentioned amount of Rs.29,78,272/- as per the provisions of Section 194C of the Income Tax Act. As the assessee could not furnish the details of the TDS on the aforesaid amount, the Assessing Officer was of the opinion that the assessee has violated the provisions of TDS by not deducting the same under Section 194C of the Act and, therefore, he disallowed the expenses i.e. Rs.29,78,272/- and added to the income of the assessee under Section 40(a)(ia) of the Act.
4. Being aggrieved and dissatisfied with the order passed by the Assessing Officer in disallowing the aforesaid expenses and adding to the income of the assessee under Section 40(a)(ia) of the Act, the assessee preferred appeal before the CIT(A) and the CIT(A) by order dated 16/07/2009 allowed the appeal by observing in paragraph 4.2 as under;
I have considered the facts of the case, arguments advanced by the AR of the appellant as also the observation of the AO. The appellant has clearly made his case for the reasons narrated as above in as much as appellant is acting as an agent for advertisement and publicity and has to act as an agent of the media who in turn allow to collect advertisement and in turn collect the advertisement on their behalf directly and pass on to them on commission basis. Further it may be noted that in certain cases they are appointed as sub agent of media/newspaper and they have to act as sub agent of different advertisement agencies to whom the appellant has to transfer the advertisements so received directly from the clients who deduct TDS from the payments of such advertisement. As is clear from the above, the appellant acting as sub agent is not supposed to deduct TDS from the payments so made to various advertising agencies as the provisions of Section 194C of the Act are not attracted. In the given facts and circumstances, I am of the view that the AO was not justified in disallowing the claim of the appellant under Section 40(a)(ia) of the IT Act, 1961. Hence, I am of the view that the AO was not justified in making the addition on this count. The AO is accordingly directed to delete the addition of Rs.29,78,272/- made on this count. Thus, this ground of appeal is allowed
5. Being aggrieved and dissatisfied with the impugned order passed by the CIT(A) in directing to delete the addition of Rs.29,78,272/- under Section 40(a)(ia) of the Income Tax Act, the revenue preferred appeal before the ITAT and by impugned judgment and order the ITAT has dismissed the appeal confirming the order passed by the CIT(A).
6. Having heard Shri Parikh, learned Counsel appearing on behalf of the revenue and considering the fact that with respect to the aforesaid amount of Rs.29,78,272/- the assessee acted as sub agent and whatever amount was received from the client the same was paid to the aforesaid five agencies, who in fact deducted the TDS from the payment, both the CIT(A) as well as ITAT have rightly held that the assessee acting as sub agent was not supposed to deduct TDS from the payment so made to various advertising agencies as per the provisions of Section 194C of the Act. As stated hereinabove and even the finding given by the CIT(A) as well as the ITAT, various advertisement agencies of whom the assessee worked as sub agent they deducted the TDS from the payment of such advertisement.
7. In view of the above, we see no reason to interfere with the impugned judgment and order passed by the ITAT. No question of law much less substantial question of law arises in the present appeal. Hence, the present appeal deserves to be dismissed and is accordingly dismissed.
(M.R.SHAH, J.) (MS SONIA GOKANI, J.) Siji Page 5 of 5