Allahabad High Court Jagran Prakashan Limited vs The Deputy Commissioner Of Income Tax ... on 23 May, 2012 HIGH COURT OF JUDICATURE AT ALLAHABAD Reserved on 04.5.2012 Delivered on 23.5.2012 Case : WRIT TAX No. 388 of 2012 Petitioner : Jagran Prakashan Limited Respondent : The Deputy Commissioner Of Income Tax (Tds) Petitioner Counsel : Ritvik Upadhya Respondent Counsel : Bharat Ji Agrawal,B. Agarwal,Govind Krishna Hon'ble Ashok Bhushan,J. Hon'ble Prakash Krishna,J. (Delivered by Hon'ble Ashok Bhushan, J.) This writ petition by a public Ltd. Company, publishing a Hindi daily newspaper "Dainik Jagaran" has invoked the jurisdiction of this Court under Article 226 of the Constitution of India challenging the initiation of proceedings under sections 201 and 201 (1A) of Income Tax Act, 1961 (hereinafter referred to as 'Act') vide notices dated 19.3.2012 and 21.3.2012 on the allegation that although the petitioner had allowed trade discount of 15% to advertising agencies in the assessment years in question but had failed to deduct the tax at source hence, the petitioner may show cause as to why it may not be declared as an asessee in default of such tax. The petitioner replied the notices. During the pendency of the writ petition assessment orders dated 28.3.2012 (Financial Year 200910) and 29.3.2012 (Financial Year 200809) were passed fastening liability of Rs.13,15,31,472 and Rs.3,26,82,953 respectively, which orders were also challenged in this writ petition by means of an amendment application, which was allowed on 18.4.2012. The brief facts giving rise to this writ petition are; the petitioner is engaged in the business of printing and publishing newspapers 'Dainik Jagaran' and 'Inext' from different centres across the country. The registered office of the petitioner's company is situate at Kanpur Nagar. The major source of revenue of the petitioner is generated from advertisements published in the said newspapers. The petitioner is also member of Indian Newspaper Society (hereinafter referred to as INS). The petitioner has been giving 15% trade discount to accredited advertising agency and trade discount of 10% to 15% to nonaccredited advertising agency as per Rules and Regulations of INS for last several years. On 15.3.2012, the respondent conducted a survey under section 133A of the Act at the premises of the petitioner at Kanpur Nagar and recorded statement of General Manager Taxation and Legal. The notice dated 19.3.2012 for the financial year 20092010 was issued to the petitioner stating that during the course of survey on 15.3.2012, it has been gathered that the petitioner has failed to deduct tax at source under section 194 H of the Act on the payment received from advertising agencies after allowing 15% trade discount, which is as well a deemed commission. Details of monthwise amount of payment of discount were required to be submitted. The petitioner was asked to show cause as to why order under section 201 (1) and 201(1) A of the Act be not passed declaring the petitioner as an assessee in default in respect of such taxes and interest thereon. The petitioner was asked to appear on 22.3.2012. Another notice dated 21.3.2012 for the financial year 200809 was issued requiring details as mentioned therein including monthwise amount of payment of trade discount by the petitioner along with copy of the bills from January to March 2009. The petitioner filed a reply to the notices dated 19.3.2012 and 21.3.2012 on 22.3.2011. On 22.3.2012, the petitioner was required to submits monthwise bills of the advertisements received and trade discount given thereon by the next date i.e. on 23.3.2012. On 23.3.2012, another notice was issued by the respondent calling the petitioner to submit reply along with documents called for by 12:00 noon on 26.3.2012 positively. The petitioner was also informed by the same notice that Kerala High Court in 325 ITR 205 on the similar issue had decided that advertising agency has acted as an agent of the principal hence trade discount allowed can be considered as commission or brokerage defined under Explanation (i) of Section 194H of the Act. This writ petition was filed in this Court on 23.3.2012 praying for quashing the notice dated 29.3.2012 and 21.3.2012. The writ petition was heard on 19.3.2012 on which date following order was passed. "Supplementary affidavit filed today is taken on record. On a mention made by learned counsel for the petitioner, the matter is taken up in the presence of learned counsel appearing for the department. By means of this petition, the petitioner has prayed for quashing the notice dated 19.3.2012 and 21.3.2012 issued by the respondent ( Annexure No. 4 and 5 to the writ petition) by which the petitioner has been asked to furnish certain informations as required. Learned counsel for the petitioner