194C - TDS

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Prabin Paudyal (Querist)
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18 December 2010 According to 194C, In case of payment by a client to an advertisement agency, TDS should be deducted but not when the payment is made by the advertisement agency to the media.
If a payment is made by a client to an advertisement agency (say X) and X pays the amount to the media via any other advertisement agency (say Y), should TDS be deducted in respect of payment by X to Y???

I would be thankful if this query is clarified with appropriate citations / supportings.

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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18 December 2010 Yes, Here in UR Case X Will Be Deducting TDS While Making Payment to Y.In case of Contract is Exist.

If Paying as A Commission By One Agency to Another Agency Then Under 194H TDS Should Be Deducted.

Regards,
Ayush Agrawal

Prabin Paudyal

Prabin Paudyal (Querist)
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18 December 2010 Thanks for your immediate reply Mr. Ayush.

But

During the course of the consideration of the Finance Bill, 1995, the Finance Minister clarified on the floor of the House that the amended provisions of tax deduction at source would apply when a client makes payment to an advertising agency and NOT when an advertising agency makes payment to the media, which includes both print and electronic media.

In this case X is an adv agency but not a client......TDS was already deducted by the client while making the payment to X. Y is only a route through which the amount is paid to media.

Hence, wouldnt it be a double deduction for the same amount??

I am in need of any case laws that can help in supporting my contention.

Regards,
Prabin Paudyal

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