INCOME TAX ACT, 1961

Section 194C

Tax deduction at source - Under section 194C - Agreement for bulk sale of advertising space in newspaper on principal-to-principal basis, whether contract for sale not liable to TDS compliance -

Assessee entered into an agreement for bulk sale of advertising space with its ultimate holding company of assessee, for purchase of bulk advertisement space in daily newspaper 'The Times of India' in Kannada language on a principal-to-principal (P2P) basis by transfer of rights therein. Issue arose as to whether assessee was liable for disallowance on failure by assessee to deduct tax at source under section 194C on cost of advertisement space. Held: In instant case, assessee-company entered into an agreement for bulk sale of advertising space with its holding company on a principal to principal basis by transfer of rights therein. Assessee under agreement made purchase of advertisement space and exercised control over such space with right to either sell it to other or retain it for itself. Thus, it was a transfer of advertising space to assessee who, in turn, sold it to others. Therefore, aforesaid transaction could not be termed as supply of goods. Further, in light of Circular No. 13 of 2006 issued by CBDT, it was axiomatic that provisions of section 194C would apply to a contract for work, and not to a contract for sale.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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