TDS U/s. 194C attracted on contract of putting up hoarding

Hon’ble Mumbai ITAT has in the case of DCIT V/s Madison Communication  Pvt Ltd has held that sec 194C is attracted for contract of putting up a hoarding as it is in the nature of advertisement. Brief facts of the case are as under:-

The assessee has shownexpenditure on advertisement through outdoor display which includes payment for advertisement on hoarding/board. The A.O. further noticed that the assessee has deducted TDS @ 2% u/s.194C on these payments. The A.O. was of the firm belief that theprovisions of section 194I apply on the facts of the case, drawing support from the CBDT Circular No. 715 dated 08.08.1995. The assessee was asked to justify why TDS has beenmade as per the provisions of section 194C of the Act and why 194I should not be applied. The assessee filed a detailed reply dated 13.01.2012. It was claimed that thecontract between the assessee and the two payee firms is covered under the definition of work contract as given in Explanation to section 194C of the Act, which includes theword ‘advertising’ in definition of “work”. It was further explained that there was no nexus between the assessee and the owner of the land, building, or plant and machinery, etc. Therefore, there is no question of assessee being liable to deduct the tax u/s.194I of the Act.  The explanation filed by the assessee did not find favour with the A.O. The A.O. relied upon certain judicial decisions and held the assessee to be liable forinterest u/s.201(1A) of the Act.