The Income Tax Appellate Tribunal (ITAT), Delhi Bench that TDS on publication charges must be deducted beneath section 194C at the 2% and not 194J at the rate of 10%.
The taxpayer Perfect Probuild P. Ltd is a private limited company engaged in the business of construction. The taxpayer has done the lease agreement with Noida Authority executed on 4th June 2010 in which the taxpayer is a lease and furnished lease rent to the Noida authority. The taxpayer shall not deduct TDS on these payments furnished for the yearly lease rent on the grounds of the letter provided through Noida authority. Indeed the year the taxpayer has furnished some payments towards the advertisement of the expenses and the taxpayer had deducted TDS with 2% under section 194C of the Income-tax Act, 1961.
Two judges K.Narasimha Chary and Accountant Member R.K.Panda mentioned that under section 194C with the explanation (iv) stood that the individual is liable to pay the sum to any resident so as to carry out the work of advertising, broadcasting, and telecasting will cut out the 1% in which the payment is furnished to the person and at 2% for the other concern. The learned assessing officer sees that the procurement of section 194J is subject as there is no contract amid the taxpayer and the advertising agency for the concern and thus these payment needs to be seen as the payment through the fee for the professional services.
“ITAT added that It could be seen that the word advertising has been clarified by CBDT in Circular No. 714 dated 03/08/1995 while stating that according to the amended provisions, tax has to be deducted @ 1% in case of advertising and at 2% in other cases. It is further stated in Circular No. 714 that a fee for professional or technical services to be formed under section 194J would mean the services rendered by a person in the course of carrying on legal, medical, engineering or the profession of accountancy or technical consultancy or interior decoration or advertising or such activity as is notified by the Board for the purpose of section 44AA or section 194J.
This circular makes it clear that the tax will be deducted at source u/s. 194J from the payments made for professional services, when the advertising agency makes the payment for professional services to a film artist such as an actor, a cameraman, a director etc., in which case the tax will be deducted at 5%,”
Towards the assessing officer, the judges stated that they need to remove the addition seems that the contract need not always be in writing and can be executed. In this case, we can see that the payment furnished through the taxpayer for the advertisement linking towards the business falls in the ambit of section 194C and excludes section 194J.
