P.M. JAGTAP, ACCOUNTANT MEMBER 
AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER

ORDER

The order of the Bench was delivered by

1. All the above appeals by the assessee are directed against the common order of the Commissioner of Income-tax (Appeals)-II, Hyderabad dated November 26, 2013 for the assessment years 2006-07 to 2009-10. Since the issues involved are common and all the four appeals belong to the same assessee, these appeals are clubbed and heard together and are being disposed of by this common order for the sake of convenience.

2. The common grounds of appeal raised by the assessee in all the four appeals are as under :

3. Since the facts in all the four appeals are identical, we are narrating the facts as in I. T. A. No. 230/Hyd/2014 Mahabubnagar Municipality is a local authority of the Government of Andhra Pradesh. There was a TDS survey under section 133A in the premises of the assessee on February 16, 2009 to verify the compliance of TDS provisions. During the survey it was found that the assessee did not deduct TDS on contract payment, rent and on professional charges. Thereafter, TDS assessments were completed on March 23, 2011 for all the four assessment years 2006-07, 2007-08, 2008-09 and 2009-10.

4. During the course of appellate proceedings, the assessee submitted additional evidence under rule 46A of the Income-tax Rules, 1962. The Commissioner of Income-tax (Appeals) sent this information to the Assessing Officer and the Assessing Officer submitted his remand report vide letter dated November 5, 2013 and a copy of the remand report was sent to the assessee for his comments vide letter dated November 12, 2013 with a request to submit his comments/objections if any by November 26, 2013. Objections were submitted by the assessee on November 26, 2013. With regard to the payments made towards advertisement the, year-wise details are as under :

5. Before the Commissioner of Income-tax (Appeals) the assessee submitted that the payments were made to agents who in turn made the payment to publishers. It was further submitted that since the payments were made to agents the provisions of section 194C are not applicable as the publishers included this amount as income in their respective returns.

6. The Commissioner of Income-tax (Appeals) observed that as per Board's Circular No. 715 dated August 8, 1995 ([1995] 215 ITR (St.) 12)) payments made to advertising agencies are clearly held liable to TDS. Question No. 1 of the said circular dealing with the subject of "Advertising" reads as under (page 12) :

"Question 1 : What would be the scope of an advertising contract for the purpose of section 194C of the Act ?

Answer : The term 'advertising' has not been defined in the Act. During the course of the consideration of the Finance Bill, 1995, the Finance Minister clarified on the floor of the house that the amended provisions of tax deduction at source would apply when a client makes payment to an advertising agency and not when advertising agency makes payment to the media, which includes both print and electronic media. The deduction is required to be made at the rate of 1 per cent. It was further clarified that when an advertising agency makes payments to their models, artistes, photographers, etc., the tax shall be deducted at the rate of 5 per cent. as applicable to fees for professional and technical services under section 194J of the Act."

7. In view of the above circular, the Commissioner of Income-tax (Appeals) directed the Assessing Officer to compute the TDS liability if the amount paid exceeds the threshold limit for that particular assessment year. Aggrieved the assessee is in appeal before us.

8. Learned counsel for the assessee Sri S. Rama Rao relied on the decision in the case of Hindustan Coca Cola Beverage (P.) Ltd. v. CIT [2007] 293 ITR 226/163 Taxman 355 (SC) and stated that in the present appeal, with regard to some payments, the payee has deducted tax at source, while in case of certain payments TDS provisions do not apply as the amount does not exceed Rs. 20,000.

9. With regard to deduction of TDS under section 194J towards payments made to professionals, learned counsel for the assessee submitted that the ground of appeal with respect to the same is not being pressed. Hence, we dismiss ground No. 3 in all the appeals.

10. Learned counsel for the assessee further submitted that the matter may be sent back to the Assessing Officer for verification as to whether TDS has been paid by the payee and also to identify the cases for which the provisions of TDS will not be applicable as the payment do not exceed Rs. 20,000.

11. The learned Departmental representative did not object to the issue being sent back to the Assessing Officer for the purpose of verification.

12. We have heard both parties. In the case of Hindustan Coca Cola Beverage (P.) Ltd. (supra) at para 10 it has been held as follows (page 230) :

"Be that as it may, Circular No. 275/201/95-IT(B) dated January 29, 1997, issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares 'no demand visualised under section 201(1) of the Income-tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under section 201(1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under section 271C of the Income-tax Act'."

13. Hence, we remit the matter to the Assessing Officer to verify as to whether the payee has declared the respective income and paid tax thereon and if so, the assessee shall not be held as "the assessee in default" for the purpose of invoking provisions of sections 201 and 201A. Further, from the details at para 6.3 produced at page 6 of the Commissioner of Income-tax (Appeals) order, we find from the payments made towards advertisement the following do not exceed Rs. 20,000.

14. The Assessing Officer is directed (i) not to apply the provisions of section 194C to the items listed above where payments do not exceed Rs.20,000 (ii) verify whether tax has been paid by the payee with respect to the remaining payments towards advertisement and thereafter decide the issue in accordance with law.
15. In the result, all the four appeals of the assessee are allowed for statistical purposes.

The order pronounced in the open court on the 18th September, 2014.