Tds on online advertisement

This query is : Open

Sushant Mahajan (Querist)
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14 September 2013 Will TDS be liable to be deducted on payment for advertisement exp. to Pensa Media Solutions Pvt. Ltd which has been an Authorized Google AdWords Agency in India since January 2011?

Please reply.

Ajay Mishra

Ajay Mishra (Expert)
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14 September 2013 Yes,

you will make payment to advertisement agency after deducting TDS @ of 2% under section 194C.

Sushant Mahajan

Sushant Mahajan (Querist)
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14 September 2013 Thank you for replying sir.

But sir in these cases it was held that:

1)

[2011] 11 taxmann.com431(Mum.)

IN THE ITAT MUMBAI BENCH 'L'

Yahoo India (P.) Ltd.*

v.

Deputy Commissioner of Income-tax, Range 7(3), Mumbai

Section 9 read with section 195, of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India - Assessment year 2004-05 - Assessee-company was engaged in business of providing consumer services such as search engine, content and information on wide spectrum of topics, e-mail, chat, etc. - During year under consideration, Department of Tourism of India, through an advertisement agency, intended to display a banner advertisement on portal owned by Yahoo Holdings (Hong Kong) Ltd. (YHHL) and for that purpose, it hired services of assessee-company to approach YHHL to provide uploading and display services for hosting banner advertisement to Yahoo Hong Kong portal - Assessee-company, in turn, hired services of YHHL for uploading and display of banner advertisement on its portal and made payment to YHHL for such services without deducting tax at source - Revenue authorities held that payment was in nature of 'royalty' within meaning of clause (iva) of Explanation 2 to section 9(1)(vi) and same being taxable in India in hands of YHHL, assessee was under obligation to deduct tax at source from said payment - Whether since uploading and display of banner advertisement on its portal was entirely responsibility of YHHL and assessee had no right to access portal of YHHL, payment made by assessee to YHHL for services rendered for uploading and display of banner advertisement of Department of Tourism of India on its portal was not in nature of royalty taxable in India and, therefore, assessee was not liable to deduct tax at source from such payment - Held, yes

2)

[2013] 32 taxmann.com 99 (Kolkata - Trib.)

IN THE ITAT KOLKATA BENCH 'B'

Income-tax Officer, Ward 12 (2), Kolkata

v.

Right Florists (P.) Ltd.*

IT/ILT : Online advertising fees paid to foreign search engine company is not fees for technical services and is not taxable in India due to absence of permanent establishment of such foreign company in India

Please tell if these cases have any relevance.

Regards
Sushant Mahajan

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