Summary
The Supreme Court dismissed Prasar Bharati’s appeals concerning assessment years 2002–03 and 2003–04. Under the particular accreditation agreement, the 15 per cent paid to advertising agencies was commission for securing advertisements in a principal–agent relationship, attracting tax deduction under section 194H and default consequences under section 201. The agreement’s substance and express terms supported that result. Jagran Prakashan was distinguished on its different facts, so the decision did not treat every advertising discount as commission.
Issues
- Whether the 15 per cent agency payment under the particular agreement was commission attracting section 194H.
- Whether the transaction was principal-to-principal and Jagran Prakashan required a different result.
- Whether the default consequences under section 201 applied.
Provisions considered
- Section 194H and Explanation (i), Income-tax Act, 1961The statutory inclusive definition covered the payments under this agreement for agencies acting on behalf of Prasar Bharati to secure advertisements. Tax deduction was required on the relevant credit or payment. The decision concerned the specified assessment years and contractual arrangement. (¶¶ 25, 26, 27, 28, 29, 30, 31, 32, 33)
Held
- The agreement repeatedly and unambiguously treated the payment as commission. The nature and tenure of the arrangement, the agencies’ role in bringing business, the principal–agent relationship and the express tax-deduction clause supported application of section 194H. The Court rejected the asserted principal-to-principal airtime transaction on these facts. (¶¶ 20, 21, 29, 30, 31, 32)
- Failure to deduct the required tax attracted section 201, which the assessing authority had rightly invoked. The High Court’s restoration of the assessment and first appellate orders was upheld. (¶¶ 12, 13, 17, 33, 34, 38)
- Jagran Prakashan involved a different relationship without an agreement like this one. Classification depended on each case’s facts; that authority did not displace the conclusion drawn from the agreement before the Court. (¶¶ 35, 36, 37)
Result
Assessee’s appeals dismissed; High Court judgment sustaining section 194H applicability and section 201 consequences for the relevant payments upheld.