1. ACC Ltd. vs District Valuation
Officer & Others
Whether reference made to the
District Valuation Officer is invalid once the assessment under Section 143(3)
There is no
provision in the Act which says what would happen to a reference made to the
DVO under section 55A which is pending completion at the time of passing the
assessment order. Obviously the assessment order cannot be deferred in view of
the limitation prescribed for passing the same. The report of the DVO, as and when received
by the Assessing Officer, may be acted upon by the income tax authorities and
if they do so, the validity of that action can be questioned by the assessee on
grounds which he may be advised to take. Section 55A does not in terms create
any bar on the DVO proceeding to value the property on the basis of a valid
reference made by the Assessing Officer. We need not speculate as to what
purpose the report of the DVO would serve if it is received after the
completion of the assessment. If any action is taken by the departmental
authorities on the basis of the report of the DVO received after the completion
of the assessment, such action will be open to challenge by the petitioner and
it is at that point of time that the Court may be called upon to examine the
validity of the action taken by the revenue authorities.
It is in
this behalf pointed out in the counter affidavit that the reference to the DVO
does not become invalid on the completion of the assessment proceedings before
the receipt of the valuation report and that after the receipt of the valuation
report after completion of the assessment proceedings, the report would become
part of the record which may enable the income tax authorities to take action
as permissible under the Act, such as Section 147, Section 263, appellate power
under Section 250 or Section 251 etc. It is not necessary to examine the
contention of the petitioner that once the assessment proceedings are
completed, the pending proceedings under Section 55A become infructuous or
invalid or get automatically terminated.
2. Jagran Prakashan Ltd. vs DCIT(TDS)
Whether trade discount can be
termed as commission u/s 194H
The
petitioner has failed to deduct tax at source under section 194H of the Act on
the payment received from advertising agencies after allowing 15% trade
discount, which is as well a deemed commission.
This writ
petition by a public Ltd. Company, publishing a Hindi daily newspaper
"Dainik Jagaran" has invoked the jurisdiction of this Court under
Article 226 of the Constitution of India challenging the initiation of
proceedings under sections 201 and 201 (1A) of Income Tax Act, 1961
(hereinafter referred to as 'Act') vide notices dated 19.3.2012 and 21.3.2012
on the allegation that although the petitioner had allowed trade discount of
15% to advertising agencies in the assessment years in question but had failed
to deduct the tax at source hence, the petitioner may show cause as to why it
may not be declared as an asessee in default of such tax.
The petitioner
was also informed that Kerala High Court in 325 ITR 205 on the similar issue
had decided that advertising agency has acted as an agent of the principal
hence trade discount allowed can be considered as commission or brokerage
defined under Explanation (i) of Section 194H of the Act. This writ petition
was filed in this Court on 23.3.2012 praying for quashing the notice dated
29.3.2012 and 21.3.2012.
As Rule 10
of the Indian Newspapers Society Rules clearly provides that advertising agency is free from
control or interference from any business or person who owns or controls
newspaper, the newspaper agency cannot be treated to be principal and
advertising agency as agent.
As rules 10
of INS delineate the clear picture of relationship between the newspaper
agencies and advertising agencies. It is useful to refer to certain rules of
INS which clearly negate the relationship of principal and agent between the
newspaper agency and the advertising agency. Under the heading "Rules and
Regulations Governing Accreditation of Advertising Agencies", Rule 10
clearly indicates that there is no control of newspapers agency on the
advertising agency whereas in a relationship of principal and agent principal
retains full control over the activities of agent.
It is clear
that no foundational fact exists on the basis of which any inference can be
drawn that advertising agencies are agent of the petitioners and further
advertising agencies render any service to the newspaper. The above two foundational
facts being non existent, the proceedings under Section 201/201(1A) of the Act
were clearly not permissible.
For
applicability of Section 194H of the Act i.e. as to whether any payment was
made to the advertising agency as commission. The case of the petitioner
throughout has been that petitioner has been paying a trade discount at the
rate of 15% as per Rule 32 of the Rules. The sample bills, which were collected
by the department at the time of survey and are part of the assessment order,
mention the total amount paid to advertising agency and the discount provided
for and the net bill amount. The petitioner's case is that trade discount has
been provided by the petitioner throughout as a part of trade practice. The
trade discount is claimed to be given in normal business practice which has
been recognised in several cases. Reliance has been placed on the judgment of
the Apex Court in the case of Moped India Ltd. vs. Assistant Collector of
Central Excise, Nellore and others reported in (1986)1 SCC 125.
Held, that
there is no liability of deduction of tax at source under Section 194H with
regard to trade discount of 15% given to the advertising agency.
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