CA Prarthana Jalan
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.
The assessee carried the matter before the ld. CIT(A) andreiterated its claim after considering the facts and the submissions, the ld. CIT(A) at para5.9 of his order observed as under :
‘5.9 The Appellant had booked hoarding sites through hoarding contractors on behalf of its clients for display of their advertisements. The Appellant neither puts up a hoarding nor does it take any space on rent from the hoarding contractors. It only obtains the right of displaying the advertisement on hoardings put up by the hoarding contractors. In other words, the Appellant had subcontracted the work for putting up the hoardings to hoarding contractors. The prime responsibility of payment of rent of the sites is of the hoarding contractor and not of the Appellant who acts as the main contractor. The subcontractor (hoarding contractor), in turn hires the sites and is responsible to put up the hoarding. Accordingly the provisions of the section 194C would be attracted and not the provisions of section 194-1, as held by the AO.’
and finally concluded by holding that the payments made by the assessee do not fall in the category of the rent. Hence the tax was not required to be deducted u/s. 194I of the Act.
Hon’ble ITAT Concluded that Considering all the facts in totality, we find that the assessee has entered into acontract with other parties for display of advertisement of its client and the transaction is purely in the nature of contract for the work of advertising as defined in clause VA of Explanation to section 194C of the Act. We decline to interfere with the findings of theld. CIT(A) and the appeals filed by the Revenue are accordingly dismissed.