TDS Not Deductible On Trade Discount Allowed By Newspaper Company To INS Accredited Advertising Agent: Calcutta High Court

The Calcutta High Court has held that TDS is not deductible on trade discounts allowed by newspaper companies to Indian Newspaper Society (INS) accredited advertising agents.

The bench of Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya has observed that the trade discount given by the assessee, engaged in the business of publishing and selling newspapers, to newspaper vendors and advertising agencies, was not in the nature of the commission, and no TDS was to be deducted under Section 194H on the same.

The department has filed an appeal under Section 260A of the Income Tax Act against the order passed by the Income Tax Appellate Tribunal. The ITAT, while ruling in favor of the assessee, held that the assessee's trade discount to the INS-accredited advertising agent did not have the characteristics of a commission and was not liable to TDS as required by Section 194H of the Income Tax Act.

The court relied on the CBDT-issued Circular No. 5 of 2016 dated February 29, 2016. The CBDT circular stated that no TDS is attracted on payments made by television channels or newspaper companies to the advertising agency for booking, procuring, or canvassing for advertisements.

The court held that the Tribunal deeply examined the factual position, and more importantly, the various clauses as contained in the rules and regulations prescribed by the Indian Newspaper Society noted that there was no principal and agent relationship between the newspaper and the advertising agency.

Case Title: Commissioner Of Income Tax TDS, Versus ABP Private Limited

Case No.: ITA/458/2008

Date: 20/03/2023

Counsel For Appellant: Tilak Mitra

Counsel For Respondent: J.P. Khaitan

Click Here To Read The Order