Bombay High Court
Tlg India Private Limited vs Income Tax Officer (Tds) - 2 (3) (2) And 3 ... on 29 July, 2019
Bench: Akil Kureshi, S.J. Kathawalla
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1788 OF 2019
TLG India Pvt. Ltd. ... Petitioner
Versus
Income Tax Officer (TDS) 2 (3)(2) and Ors. ... Respondents
Mr.Vikram Nankani, Sr.Adv. a/w. Ms.Fereshete Sethna, Mr.Anay Banhatti,
Ms.Mrunal Parekh, Mr.Hasmukh Ravaria, Mr.Rishabh Dubey i/b. DMD Advocates
for the Petitioner.
Mr.P.C.Chhotaray for Respondent Nos. 1 to 3.
CORAM : AKIL KURESHI &
S.J. KATHAWALLA, JJ.
DATE : 29TH JULY, 2019 P.C.:
1. Heard the learned Counsel for parties for final disposal of the Petition. The Petitioner a Private Limited Company has challenged the three orders, all dated 31st May, 2019 passed by the Income Tax Officer (TDS), Mumbai, copies of which are produced at Annexures-A, B and C to the Petition. By such orders, the said authority held that the Petitioner has short deducted / not deducted the tax at source to tune of Rs.33.14 Crores for the assessment year 2017-18, to the tune of Rs.26.49 Crores for assessment year 2018-19 and to the tune of Rs.31.46 Crores for assessment year 2019- 20, totaling into Rs.91.10 Crores. Bulk of these sum comprises of the requirement of deducting the tax at source, which the Petitioner had done in terms of Section 194C of the Act, whereas the department argues that the same should have been under Section 194J of the Act. We notice that a small portion of these amounts comprises of a sum ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 2 / 18 13-WP-1788-2019-A.doc of payment on which the Petitioner did not deduct the tax at source contending that there was no accrual of liability and that therefore the payment was not to be made during the relevant period. The Petitioner is strongly resisted by the department on the ground of availability of alternative statutory appellate remedy, as also on merits.
2. Brief facts are as under :
The Petitioner company is an advertising and media agency, engaged in the business of advertising by creative and production work, media planning and incidental activities. The central dispute between the Petitioner and the Income Tax Department is the question of deduction of tax at source while the Petitioner company makes the payments to the agencies for such services provided. According to the Petitioner, the deduction of tax at source would be made in terms of Section 194C of the Income Tax Act, 1961 ('the Act' for short) as payments to the contractors. The department contends that such deduction should have been made as provided under Section 194J of the Act by way of professional or technical services. This controversy arose pursuant to a spot survey conducted at the registered office of the Petitioner company on 22nd March, 2018 by the departmental authorities, during which the statements of the representatives of the Petitioner company were recorded under Section 131 of the Act. Summonses were issued to the company requiring production of books of account and other information. The Petitioner filed a detailed submission before the authority on 5th April, 2018 offering its own version and explanation why the deduction of tax at source under Section 194C of the Act already made was proper ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 3 / 18 13-WP-1788-2019-A.doc and that the deduction under Section 194J of the Act was not called for.
3. This proceeding went on for a long time. Further replies and representations of the Petitioner were brought on record. Eventually, the Income Tax Officer (TDS) passed his impugned orders under Section 201 (1) / 201 (1A) of the Act and, as noted above, held that the Petitioner had short tax deducted / not deducted tax at source to the tune of Rs.91.10 Crores during the assessment years.
4. These orders, the Petitioner has challenged in the present Petition. The Petition is mainly pressed on the ground of breach of principles of natural justice, to which, we would elaborate at a later stage. The Petition is strongly resisted by the department, whose Counsel raised the preliminary contention that the impugned orders are appealable. The Petitioner must be relegated to such appeal remedy. Writ Petition directly challenging the orders, should not be entertained. On merits also, the Counsel has made elaborate submissions.
5. The answer to the department's objection to the maintainability of the Petition, must be found in the question whether there has been breach of principles of natural justice resulting into miscarriage of justice. If the answer is in the affirmative, the Court would be justified in bypassing the statutory appeal remedy and entertaining the Writ Petition directly. So much is settled law, not requiring reference to any authority.
6. In this context, we have perused the material on record with the assistance of the learned Counsel appearing for the parties. Learned Counsel for the Petitioner ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 4 / 18 13-WP-1788-2019-A.doc had drawn our attention to the detailed speaking impugned orders passed by the said authority and contended that the Income Tax Officer (TDS) had done extensive research on the nature of service provided to the Petitioner and the payments made by the Petitioner to various such agencies for such purpose. He contended that such research was never shared by the Income Tax Officer (TDS) with the Petitioner and thereby denied to the Petitioner opportunity of fair hearing. Had he brought such material to the notice of the Petitioner, the Petitioner would have been in a position to meet with the same and put forth its own explanation. Our attention was also drawn to the two Affidavits in Reply filed by the Income Tax Officer (TDS) specifically meeting with the Petitioner's contention of breach of principles of natural justice. It has contended that nowhere through these replies also, it comes out that such material ex- parte collected by the Income Tax Officer (TDS) was ever put to the Petitioner before the final orders were passed.
7. On the other hand, Counsel for the Department submitted that the Income Tax Officer had given ample opportunity to the Petitioner. The proceedings had gone on for a long time. The Petitioner has produced voluminous material which was duly considered.
8. On previous occasion, at the stage when the Income Tax Officer (TDS) had filed his first Affidavit in Reply on 11th July, 2019, we were prima facie of the view that neither the impugned orders nor the said reply refute the Petitioner's averments of breach of natural justice. We had therefore permitted him to file an Additional ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 5 / 18 13-WP-1788-2019-A.doc Affidavit in Reply since the Counsel contended that the reference to the material in the impugned orders traces its source to various replies given by the officers of the Petitioner company and the representations filed by the Petitioner before the said authority. Accordingly, the Income Tax Officer (TDS) has filed an Additional Affidavit in Reply dated 26th July, 2019. We would focus our attention to the contents of the impugned orders, the contents of the previous Affidavit in Reply filed on 11th July, 2019 and the latest Additional Affidavit in Reply dated 26th July, 2019, in order to ascertain whether the Petitioner's contention of breach of natural justice is correct.
9. In the impugned order, in order to hold that the services availed by the Petitioner are in the nature of the technical services, the Income Tax Officer (TDS) has observed as under :
" How Google and facebook ads work for its clients can be understood as given in the respective websites in the following paragraphs :
How does Facebook Ads work ? :
. The way Facebook determines what ads to show based on information provided by a user's online activity. By using things such as age, location, page likes, app use and even data from the mobile websites you browse, Facebook profiles into categories that advertisers can then use to target ads to user's Facebook account. If the ads one can see on Facebook sometimes seem frighteningly specific, that's because Facebook is constantly keeping track of activity, determined not only by everything user do on Facebook, but also by user's offline activity as well.
. With a few key partnerships in place, Facebook also uses what you buy in real life stores to influence and trace the ads you see. Through combined data, they have an idea of what you like, where you shop, and what you buy. It sounds a bit crazy, but do not be alarmed! This practice is actually much older than many people realize. Facebook combines the information from data collection companies like Epsilon, Datalogix, Acxiom and BlueKat with information they have about you. Through ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 6 / 18 13-WP-1788-2019-A.doc things like store loyalty cards, mailing lists, public records information, and browser cookies, these companies already collect information about you. For example, if you buy a bunch of frozen pizza at a grocery store, and use your loyalty card to get a discount, that information is cataloged and saved by a company like Acxiom.
. Basically it comes down to this : your online and offline activity combined - determines what kind of ads you'll see. Of course, a lot of complex math and algorithms are in place to actually produce this data, but much of it comes down to how much information you are making public - whether you're aware of it or not - that makes the system work. In theory, it does this to make targeted ads more relevant and specific to you.
. Facebook does break their targeting categories out into subcategories including Damographics, Interests and Behaviors.
. Damographics are used to reach people based on things such as education, employment, household, financial income, language and lifestyle. To take a look at how specific the targeting can get, let's look at education as an example. Damographics could answer question such as :
. What's their education level ? (Associate degree, college graduate, Master's degree, Doctorate degree, high school grad, in grad school, in high school, still in college, professional degree, some college, some grad school, some high school, not specified) . What was / is their field of study ? (Business, Marketing, Finance, etc.) . What school did they attend ? (High schools, colleges, graduate school etc.) . What years were they in undergrad ? (Select a range of years people graduated) . Another great example could be moms. Damographics could target not only are they a mom, but what type ? (Big-city moms, fit moms, corporate moms, green moms, moms of pre-school age children, moms of high school kids, new moms, soccer moms, stay-at-home moms, trendy moms, sports moms) . Interests reach specific audiences by their "interests" and this is where things can get really interesting, because you can type in just about any brand, place, or topic and target those users if the audience is large enough.::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 :::
Nitin 7 / 18 13-WP-1788-2019-A.doc . This category include : apps they use, posts they share on their timelines, and pages they "Like".
. Not surprising, the Interests section includes the most targeting options. There are tons of categories, with even more subcategories. The category breakdown is as follows :
. Business and Industry . Entertainment . Family and Relationships . Fitness and Wellness . Food and Drink . Hobbies and Activities . Shopping and Fashion . Sports and Outdoors . Technology . Bahaviors are used to reach people based on purchase behaviors or intents, device
usage and more. Typically this data is acquired by Facebook from third-party data collection companies. Like Interests, there are many, many Behaviors and even more subcategories to target. Some examples of Behavior targets and subcategories:
. Automotive : What kind of vehicle do they drive ? What cars are they interested in ? New or used ? Buy or lease ?
. Charitable Donations : Do they donate to charitable organizations, and if so, which ones ?
. Digital Activities : What Internet browser do they use ? Are they console gamers ? Are they early or late technology adopters ?
. Financial : Are they likely to invest ? Are they likely to be high spenders ? Do they have multiple lines of credit ?
. Mobile Device User : What brand of mobile device do they use ? Are they smartphone or tablet owners ?
. Purchase Behavior : Do they use coupons ? Do they shop from department stores or luxury stores ? The kinds of products they heavily buy : clothing, toys, house goods ?
. Residential Profiles : How long have they lived in their home ? Are they likely to
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move ? Have they recently borrowed money to purchase a home ? Are they renters ?
How does Google Ads work ?
Google Ads displays your ad to potential leads or customers who are interested in your product or service. Advertisers bid on search terms, or keywords, and the winners of that bid are placed at the top of search results pages, on YouTube videos, or on relevant websites, depending on the type of ad campaign selected. Many factors impact your ability to create effective and high-performing Google Ads. Let's cover them below.
. AdRank and Quality Score
. AdRank determines the placement of your ads, and Quality Score is one of
the two factors (the other being bid amount) that determines your AdRank. Remember, your Quality Score is based on the quality and relevance of your ad, and Google measures that by how many people click on your ad when it's displayed - i.e. your CTR. You CTR depends on the how well your ad matches searcher intent, which you can deduce from three areas :
1. The relevance of your keywords
2. If your ad copy and CTA deliver what the searcher expects based on their search.
3. The user experience of your landing page.
You QS is where you should focus most of your attention when you first set up your Google Ad campaign - even before you increase your bid amount. The higher your QS, the lower your acquisition costs will be and the better placement you'ill get.
. Ad Capaign Types : Search, Display, and Video You can select from one of three campaign types on Google Ads : search, display, or video. Let's cover the optimal uses for each and why you might choose one cover the other.
. Search Ads Search ads are text ads that are displayed on Google results pages. As an example.
Google Pocket Squares
Volume 80,500/mo/Competition 1
All Shopping Images Videos News More
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About 85,000,000 results (0.54 seconds)
The TieBar Pocket Squares / Well-Made, Wallet Friendly/The TieBar.com Ad www.theUebar.com/ A celebrity secret for years. Fine mens accessories don't have to cost a fortune. The Look Without the Cost. Exclusive in-House Design. No Compromise Quality Customers are #1 Priority Compare to Premium Brands. We're Always Here to Help Save by Buying Direct Seen in GQ. NYT. Forbes.
Pocket Squares & Handerchiefs / Shop Men's Accessories / JoS Ad www.josbank.com/ ***** Rating for jobbank.com 4.4 - 265 reviews - Return policy : Most Items 90+ days Shop Our Collection of Mens Apparel Orders $50+ Ship For Free! Buy More Save More BOGO Deals.
Free Shipping Offer. Ship To Store. Special Value Pricing. In Store Pick-Up. Styles :
Slim Fit Traditional Fit, Tallored Fit, Regal Fit 265 18th St NW Suite 4180, Atlanta, GA - Open today 10:00 AM - 9:00 PM The benefit of search ads is that you're displaying your ad in the place where most searchers look for information first - on Google. And Google shows your ad in the same format as other results (except for denoting it as an "Ad") so users are accustomed to seeing and clicking on results.
. ResponsiveSearchAds Responsive search ads allow you to enter multiple versions of headlines and ad copy (15 and four variations, respectively) for Google to select the best performers to display to users. With traditional ads, create one static version of your ad, using the same headline and description each time. Responsive ads allow for a dynamic ad that is auto-tested until you arrive at the version that is best suited for your target audience
- for Google, that means until you get the most clicks.
. DisplayAds Google has a network of websites in various industries and with an array of audiences that opt in to display Google Ads. known as the Google Display Network.
The benefit to the website owner is that they're paid per click or impression on the ads. The benefit to advertisers is that they can get their content in front of audiences that are aligned with their personas. These are typically image ads that draw users attention away from the content on the webpage ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 10 / 18 13-WP-1788-2019-A.doc Additional options for Display Ads include shopping campaigns and app campaigns, which are displayed on search engine results pages.
. Video Ads Video ads are displayed before or after (and sometimes in the middle of ) YouTube videos. Remember, YouTube is a search engine, too. The right keywords will place you in front of a video, disrupting the user's behavior just enough to grab their attention.
. Location When you first set up your Google Ad, you'll select a geographical area where your ad will be shown. If you have a storefront, this should be in a reasonable radius around your physical location. If you have an ecommerce store and a physical product, your location should be set in the places where you ship. If you provide a service or product that is accessible worldwide, then the sky's the limit. Your location settings will play a role in placement. For instance, if you own a yoga studio in San Francisco, someone in New York that enters "yoga studio" will not see your result, no matter your AdRank. That's because Google's main objective is to display the most relevant results to searchers, even when you're paying.
. Keywords Keyword research is just as important for paid ads as it is for organic search. Your keywords need to match searcher intent as much as possible. That's because Google matches your ad with search queries based on the keywords you selected. Each ad group that you create within your campaign will target a small set or keywords (one to five keywords is optimal) and Google will display your ad based on those selections.
. Match Types Match Types give you a little wiggle room when it comes to your keyword selections - they tell Google whether you want to match a search query exactly or if your ad should be shown to anyone with a search query that's semi-related. There are four match types to choose from :
. Broad Match is the default setting that uses any word within your keyword phrase in any order. For example, "goat yoga in Oakland" will match "goat yoga" or "yoga ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 11 / 18 13-WP-1788-2019-A.doc Oakland".
. Modified Broad Match allows you to lock in certain words within a keyword phrase be denoting them with "+" sign. Your matches will include that locked-in words at the very least. For example, "+goats yoga in Oakland" could yield "goats", "goats like foods", or "goats and yoga".
. Phrase Match will match with queries that include your keyword phrase in the exact order but may include additional words before or after it. For example, "goat yoga" can yield "spotted goat yoga" or "goat yoga with puppies".
. Exact Match maintains your keyword phrase as it is written in the exact order. For example, "goat yoga" will not shown up if someone types "goats yoga" or "goat yoga class."
If you're just starting out and don't know exactly how your persona will be searching, move from a broad match to a more narrow approach so you can test which queries yield the best results. However, since your ad will be ranking for many queries (some unrelated) you should keep a close eye on your ads and modify them as you can gain new information.
. Headline and Description Your ad copy can be the difference between a click on your ad and a click on your competitor's ad. It's important that your ad copy matches the searcher's intent, is aligned with your target keywords, and addresses the personas pain point with a clear solution.
To illustrate what we mean, let's review as example.
The Swim Revolution / Baby Swimming Lessons - Headline Ad www.theswimrevolution.com/ Skills are Taught Using Fun Games Designed to Foster Confidence & Comfort in the Water. Little to ... Description Swimming Levels Our Fantastic Facilities - FAQ Our Client's Own Words A search for "baby swim lessons" yielded this result. The copy is concise and uses the limited space wisely to convey their message and connect with their target audience.
The Swim Revolution knew to put the keyword in their headline so we instantly know that this ad matches what we're looking for. The description tells us why this is the best option for swim lessons because it addresses the concerned of their persona - a ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 12 / 18 13-WP-1788-2019-A.doc parent looking to enroll their baby in a swim class. They use words like "skills", "fun", "confidence", and "comfort in the water" to ease our nerves about putting a baby in a pool and to prove to us that we will get what we want out of this class - an infant that can swim.
This kind of ad copy will get you clicks, but conversions will result from carrying this level of intention into your landing page copy.
. Ad Extensions If you're running Google Ads. you should be using Ad Extensions for two reasons :
they're free, and they give users additional information and another reason to interact with your ad. These extensions fall within one of these five categories.
Sitelink Extensions extend your add - helping you stand out - and provide additional links to your site that offer users more enticing reasons to click Ray-Ban Official Site / Free Overnight Shipping Ad www.ray-ban.com/ ***** Rating for ray-ban.com 4.4. Average delivery time 1-2 days Stand Out in Ray-Ban Sunglasses Shop Brand New Styles or Design Your Own Pair online ! Prescription Lenses : Accessories Dedicated Customer Care Customize Your Ray-Ban Secure Payment Free Express Shipping Styles Aviator Wayfarer, Clubmaster, Round, Custom Clubround Women's Sunglasses Customize Your Own Shades Check Out The Latest Women's Styles Exclusively Online! Customize Your And Trends For Any Occasion Favorite Ray-Ban Sunglasses Prescription Eyeglasses Shop Women's Day Gifts Ray-Ban Framed Prescription Lenses Flowers Are Overrated Give The Get Your Complete Pair Online Gift of Custom Ray-Bank Styles! . Call Extensions allow you to incorporate your phone number in y our ad so users have an additional (and instant) way to reach out to you. If you have a customer service team that is ready to engage and convert your audience, then include your phone number.
Spaces Coworking in USA, USA / Discover Your New Workspace Ad www.spaceworks.com/Coworking/USA - (844) 861 - 7145 Begin Your Search Today By Speaking With our Team Of Professional Advisors.::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 :::
Nitin 13 / 18 13-WP-1788-2019-A.doc Offices in Chicago Spaces Community Office Space Service Offers Spaces Membership . Location Extensions include your location and phone number within your ad so Google can offer searchers a map to easily find you. This option is great for businesses with a storefront and it works well for the search query "... near me."
Shop at CVS Pharmacy Online - & Earn Pharmacy Rewards Today Ad www.cvs.com/Pharmacy/Rewards ***** Rating for cvs.com 4.2 On-time delivery 94% + Get ExtraBucks Rewards by Shopping at CVS Pharmacy Online.Start Saving Today! 1 Coca-Cola Plaza Nw Nat, Atlant, GA - Open today 7:00 AM - 6:00 PM . Offer Extensions work if you're running a current promotion. It can entice users to click your ad over others if they see that your options are discounted compared to your competitions.
$19.99 Same Day Flowers / Delivery in 4 Hours or Less Ad www.fromyouflowers.com/ ***** Rating for fromyouflowers.com : 4.5 - 86,772 reviews - Email reply time : 3 hours Hand Delivery in 4 Hours - 20 % Off All Items - "Best Value Flowers" - CBS News! Satisfaction Guarantee. $ 19.99 Same Day Delivery Types : Birthday, Sympathy, Romance, Get Well.
Value Arrangement : from $ 19.99 - Florist Designed Bouquet More . App Extensions provide a link to an app download for mobile users. This reduces the friction from having to perform a new search to find and download the app in an AppStore.
Claritymoney.com / Clarity Money - Budget Manager / See Your Expenses in One Place Ad app.claritymoney.com/budget Take control of your budget and spending with our automated tools. Sign Up Now! Get a better view of your financial picture and personalized insights with Clarity Money. Save Money. Cancel Subscriptions.
View Recurring Expenses.
4.3 In view of the above, it can be seen that web-portals like google, yahoo,
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facebook and like others available in the current market, provides series of services to the advertising agencies which are purely in the nature of technical services. The web portals are giving specific services which are based on the digital behaviour of the clients by placing appropriate ads when targeted group is indulging in web search. Various parameters like, country, age, location, gender, preferences etc. are too applied for satisfying the needs of the advertiser company for targeted advertising which is highly technical in nature.
4.4 The claim of the assessee company that these payments are covered under circular No.715 dated 08.08.1995 is not acceptable as the assessee company itself makes TDS at the rate of 2% on these payments to web portals/digital service providers. Further, the Circular was dated 08.08.1995 and the web portals like Google and Facebook were available for use at that point of time and hence not applicable in the case of payments to digital platforms."
10. Clearly thus, the Income Tax Officer (TDS) had referred extremely to in- depth research carried out by him on the internet to make the above noted observations. There is nothing in the impugned orders to suggest that he shared such research with the Petitioner before he passed the final orders.
11. In this context, in his Affidavit in Reply filed on 11th July, 2019, he had stated as under :
"8. So far as the first issue of short deduction is concerned, I say that, this issue has been discussed by me at great length in the orders passed by me [eg. Paragraphs 4.2 to 4.4 of the order for AY 2017-18 running into six pages]. I have devoted a lot of time and have made research to find out how this advertising system works. I have exhaustively dealt with this subject in my order passed u/s. 201(1)/201(1A). I have summarized my conclusion in paragraph 4.4 of the order dated 31.05.2019 as under :::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 :::
Nitin 15 / 18 13-WP-1788-2019-A.doc "4.4 In view of the above, it can be seen that web portals like google, Facebook, yahoo and like others available in the current market provides series of services to the advertising agencies which are purely in the nature of technical services. The web portals are giving specific services which are based on digital behaviour of the clients by placing appropriate ads when targeted group is indulging in web search. Various parameters like country, age, location, gender, preferences etc. are applied for satisfying the needs of the advertiser company for targeted advertising which is highly technical in nature."
In paragraph 5, of the order, I have given a long list of the parties to whom such payments have been made.
9. I respectfully submit that I have done substantial research into the subject of advertising on on-line platform and elaborately discussed the system in my order and come to the conclusion that the payment is made for technical services. I have given detailed reasons for my conclusion. It is not a summary order but a speaking order. The subject has to be examined in detail in the appellate channel. I respectfully submit that there is no scope for interference through a writ petition."
12. Thus, in this Affidavit in Reply also, he refers to his elaborate discussion in the impugned orders, which is based on research made by him through devotion of plenty of time. In this Affidavit in Reply, he has nowhere stated that such research or even summary of such research was pointed out to the Petitioner enabling the Petitioner to meet with the same. In the Additional Affidavit in Reply dated 26th July, ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 16 / 18 13-WP-1788-2019-A.doc 2019, he has tried to suggest that his observations were based on various statements and the representations made by the Petitioner. He has also tried to suggest that in any case the Petitioner company is in the same business, was totally aware about the nature of the activity and therefore cannot claim ignorance. In particular, in the said Affidavit in Reply, he has stated as under :
"Nothing new has been discussed in the assessment order which is not in public knowledge and of which the Petitioner is not fully and completely aware. Thus to raise the issue that the Assessing Officer mentioned something new in the assessment order and the assessee was caught by surprise is not correct and is intended only to create confusion. After proper understanding the system of the working of digital advertisement, the Assessing Officer came to a conclusion that this was a technical service. This is a view of a quasi- judicial authority who has passed a reasoned order. This cannot be the subject matter of a Writ Petition. The Petitioner may avail the appellate channel."
13. He has further stated that -
"The fact that the Petitioner was completely familiar with the entire working of the digital system is evident from the wording used : The company is an advertising agency which helps its clients, (the advertisers) to place their advertisements on various media (such as TV, Digital media etc.)."::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 :::
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14. In this Affidavit in Reply also, the stand of the Income Tax Officer (TDS) is that the Petitioner doing the same business, was well aware about the nature of the services being rendered. In short, therefore the stand of the Income Tax Officer (TDS) is that the Petitioner being well aware of the nature of the services, it was futile to share with the Petitioner the research that he carried out. In clear terms, the Income Tax Officer (TDS) has collected extensive material, which is attributable to his own research, never put such material to the Petitioner for its comments and most importantly his entire orders are founded on such research material.
15. We do not grudge, the Income Tax Officer (TDS) carrying out such research, devoting time and energy in doing so nor do he find anything objectionable about his final order based on such information which he may from reliable and legitimate sources collect. Nevertheless, none of this would be permissible without following the principles of natural justice. The least that he was expected to do was to share such material with the Petitioner giving an opportunity to rebut the same if so desired by the Petitioner. By suggesting that the Petitioner is already engaged in the same business and therefore would be aware about intrinsic nature services rendered, is begging the question. In plain terms, the impugned orders cannot survive the test of following principles of natural justice. In the result, the orders are quashed only on this ground. Since the declaration of non deduction on payments, which according to the Petitioner had not accrued is in any case small element of the entire amount, we have not expressed any opinion on the same. However, the impugned orders being ::: Uploaded on - 31/07/2019 ::: Downloaded on - 31/07/2019 20:28:27 ::: Nitin 18 / 18 13-WP-1788-2019-A.doc composite, it would be pointless to split it in two parts, first part for enabling the Petitioner to file Appeal and the other part remanding for fresh consideration.
16. Under the circumstances, the impugned orders at Annexures-A, B and C to the Petition, are set aside. The entire issue is placed back before the Income Tax Officer (TDS).
17. Now that the Petitioner already has what the Income Tax Officer (TDS) proposed to utilize against the Petitioner, which forms part of the impugned orders, there would be no further requirement of the Income Tax Officer (TDS) to putting to the Petitioner's notice the same, which would in any case be futile requirement. The Petitioner would have six weeks from today to make a representation along with desired material before the said authority. If the same is done, the Income Tax Officer (TDS) shall take it into consideration before passing final orders.
18. Petition disposed off accordingly.
( S.J.KATHAWALLA, J. ) ( AKIL KURESHI, J.)
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