B.R. Baskaran ORDER
B.R. Baskaran, Member (A)
1. The assessee has filed these three appeals challenging the common order dated 16.03.2020 passed by LD CIT(A)-12, Bengaluru and they relate to the assessment years 2012-13 to 2015-16. In all the three years, the Ld. CIT(A) has confirmed the demand raised by the AO u/s. 201(1)/201(1A) treating the assessee as an 'assessee in default' for non-deduction of tax at source from the payments made to M/s. Facebook Ireland towards advertisement fees.
2. The assessee herein is an Indian company. The AO noticed that the assessee has made payments to M/s. Face Ireland Ltd. towards advertisement charges as detailed below:-
The AO noticed that the assessee had made the above said payments without deducting tax at source u/s. 195 of the Act. Hence the AO initiated proceedings u/s. 201(1) of the Act treating the assessee as an 'assessee in default'.
3. The assessee company furnished following objections to the AO:-
• The Consideration for advertisement is paid to the overseas bank account of Non-resident. Therefore, the said payments cannot be construed to be received or deemed to be received in India.
• The non resident does not carry out any of the activities in India and they are wholly carried out outside India and accordingly there is no business connection in India. Therefore, the payments to non-resident would not be deemed to accrue or arise in India.
• The company submits that the payment made to Non resident payee is towards the services rendered for uploading and display of the banner advertisement of the Company on its portal. The company submits that the banner advertisement hosting did not involve use or right to use by the Company any Industrial, Commercial or Scientific equipment and no such use was actually granted by non resident payees to the Company.
• The Company submits that the service rendered by non-resident payees is a wholly automated process. Further, there is no human touch at all in the services rendered which provide these advertising opportunities. In light of the above legal position that services are rendered without human touch would not qualify as fees for technical services under section.
4. The AO has explained the concept of online advertisement made in the portal of Face book. The relevant observations made by the AO are extracted below:-
"Para 4.4
(i).......
(ii) The transaction with the Payee as per the details submitted by the assessee, namely, M/s. Facebook Ireland Limited (Hereafter referred as Facebook) is examined here. It is submitted that the contents are uploaded to Facebook by the business team of the assessee. Facebook provides many options to the businesses/advertisers to reach its database of users. To touch upon a few of the alternatives that Facebook provides - the businesses could choose their target market based on the age group, location, gender etc. The advertisement made in the Facebook platform is not a dormant or passive or broad based advertisement as made in TVs, or newspapers or public hoarding. Unlike the traditional medium of advertisements, what Facebook offers is - dynamic, highly target group specific and real time monitored advertising.
(iii)......
(iv) It is evident that a business entity or advertiser can target specific groups and monitor the conversions or the success of the advertisements. There are provisions to monitor and evaluate the overall effectiveness of the ad campaign, to study the market behaviour with respect to the products of various range, to generate a wealth of actionable data using tools of business analyt........