Case Law Details
Times VPL Limited Vs CIT (Karnataka High Court)
In the instant case, appellant company had enter into an agreement for bulk sale of advertising space with its’ holding company on a principal to principal basis by transfer of rights therein. The appellant under the agreement makes purchase of advertisement space and exercises control over such space with the right to either sell it to other or retain it for itself. Thus, it is a transfer of advertising space to the assessee who in turn sells it to others. Therefore, aforesaid transaction can not be termed as supply of goods.
It is evident that the Commissioner of Income Tax as well as the Income Tax Appellate Tribunal has nowhere held that the contract in question is not a contract for sale and is contract for work.
If the order passed by the Commissioner of Income Tax as well as the order passed by the Income Tax Appellate Tribunal are read in conjunction in the light of the Circular No.13 of 2006 issued by the Central Board of Direct Taxes, it is axiomatic that provisions of Section 194C would apply to a contract for work and not to a contract for sale.
In the result, the order passed by the Income Tax Appellate Tribunal as well as by the Commissioner of Income Tax insofar as it holds that for the assessment year 2007-08, the amount has to be disallowed under Section 40a(ia) of the Act is hereby set aside and it is held that the provisions of Section 194C do not apply to the case of the assessee.
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