Law:

Section:

Section 194H of the Income-tax Act, 1961 - Deduction of tax at source - Commission or brokerage, etc. - Assessment years 2009-10 and 2010-11 - Assessee, printing and publishing newspapers, was giving trade discount to advertising agencies - There was no control of assessee on advertising agencies in case of a relationship of any principal and its agent, where principal retains full control over activities of agent - In fact advertising agencies were working for advertisers/clients and not on behalf of assessee-company - Further, it was advertising agency which was responsible for payment to assessee even if advertiser had not paid amount to advertising agency - Whether no foundational fact existed on basis of which any inference could be drawn that advertising agencies were agent of assessee and, further, that advertising agencies rendered any service to newspaper - Held, yes - Whether, therefore, no proceedings could be initiated under sections 201/201(1A) - Held, yes [In favour of assessee] Section 191 of the Income-tax Act, 1961 - Deduction of tax at source - Direct payment - Assessment years 2009-10 and 2010-11 - Whether to declare a deductor who has failed to deduct tax at source as an assessee-in-default, condition precedent is that assessee-deductee has also failed to pay tax directly - Held, yes [In favour of assessee] Section 201 of the Income-tax Act, 1961 - Deduction of tax at source - Consequence of failure to deduct or pay - Assessment years 2009-10 and 2010-11 - Whether in a case where tax has not been deducted at source, short deducted tax cannot be realized from deductor and liability to pay such tax shall continue to be with payee/deductee direct, whose income is to be charged and a person who fails to deduct tax at source, at best is liable for interest and penalty only - Held, yes [In favour of assessee] Circulars and Notifications : Circular No. 715, dated 8-8-1995 FACTS The assessee was engaged in the business of printing and publishing newspapers from different centres across the country. The assessee was also a member of Indian Newspaper Society (INS). The assessee had been giving 15 per cent trade discount to accredited advertising…

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