Section 194C – TDS applicable on payment towards advertisement charges
The Relevant Text of the as Order follows :
5.2. Assessee submitted that since PAN was obtained from the respective transporters to whom payments were made, pursuant to the amendment brought in the provisions of Section 194C of the Act w.e.f. 01/10/2009, there was no requirement for the assessee payer to deduct tax at source once PAN is obtained. We find that the ld. AO however, ignored the contentions of the assessee and observed that the said payment would attract provisions of Section 194C of the Act and proceeded to make disallowance of Rs.2,06,255/- u/s.40(a)(ia) of the Act in the assessment. We find that before the ld. CIT(A), the assessee had indeed made a submission that the respective transporters had included these sums in their returns and hence, the assessee should not be invited with disallowance u/s.40(a)(ia) of the Act in terms of second proviso to Section 40(a)(ia) r.w.s. 201(1) of the Act.
The assessee also placed reliance on the decision of the Hon’ble Supreme Court in the case of Hindustan Coca-Cola Beverages Pvt. Ltd., reported in 293 ITR 226 to support its contentions in this regard. We find that the ld. CIT(A) had not discussed on this particular submission of the assessee at all and had not given any finding in its appellate order regarding the same. We find that this is a statutory benefit provided to the assessee which should not be taken away. However, even before us, we find that the ld.AR exceot making oral statement that the payees have included the said receipts in their income tax returns, had not produced any documentary evidence before us.
However, in order to avoid double taxation, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the ld. AO for the limited purpose of verification of the income tax returns for the Asst Year 2010-11 of the respective payees in the light of the second proviso of Section 40(a) (ia) r.w.s. 201(1) of the Act.
We have already held that second proviso has already been held to be retrospective in operation by the decision of the Hon’ble Delhi High Court reported in 377 ITR 635 supra. We hold that if the payees have included the subject mentioned transaction in their income tax returns, then the assessee payer should not be treated as assessee in default and disallowance u/s.40(a)(ia) of the Act should be deleted in its hands. IF the subject mentioned transaction is not reflected in the income tax returns of the payees, then disallowance made in the hands of the assessee u/s 40(a)(ia) of the Act would remain in force. Accordingly, the ground No.3 raised by the assessee is allowed for statistical purposes subject to directions contained hereinabove.
6. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 13/07/2020 by way of proper mentioning in the notice board.
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