2006 (11) TMI 159 - HC - Income Tax

TDS u/s 194C Or 194J - Payments to outside producers for television programmes - HELD THAT - We observe that Explanation III, which was introduced simultaneously with section 194J, is very specific in its application to not only broadcasting and telecasting but also include production of programmes for such broadcasting and telecasting . If, on the same date, two provisions are introduced in the Act, one specific to the activity sought to be taxed and the other in more general terms, resort must be had to the specific provision which manifests the intention of the Legislature. It is not, therefore, possible to accept the contention of the Revenue that programmes produced for television, including commissioned programmes , will fall outside the realm of section 194C, Explanation III of the Act. We find no infirmity in the view taken by the Tribunal which we hereby affirm. Thus, we hold that these appeals do not involve any substantial question of law. The appeals are accordingly dismissed.

Summary

Issues:
1. Interpretation of sections 194C and 194J of the Income-tax Act, 1961 regarding tax deduction on payments to outside producers for television programmes.
2. Application of Explanation III to section 194C introduced by the Finance Act, 1995.
3. Determination of whether specific provisions or general terms should apply in tax deduction cases.

Analysis:
1. The case involved appeals by the Commissioner of Income-tax against the ITAT's order favoring the respondent, Prasar Bharti, regarding tax deduction on payments to outside producers for television programmes. The Revenue argued for tax deduction under section 194J at 5%, while the respondent applied section 194C at 2%. The ACIT's order held the respondent liable for short deduction of Rs. 6.40 crores, which was later overturned by the ITAT.

2. The introduction of Explanation III to section 194C by the Finance Act, 1995 expanded the definition of "work" to include broadcasting and telecasting, covering production of programmes for such activities. This explanation clarified that payments related to broadcasting and telecasting fall under section 194C, which requires a lower tax deduction rate compared to section 194J.

3. The key question was whether the specific provision of section 194C, as amended by Explanation III, should take precedence over the more general terms of section 194J. The ITAT correctly held that the specific provision targeting broadcasting and telecasting work under section 194C should apply in this case, as it aligns with the legislative intent. The Tribunal's decision was affirmed by the High Court, rejecting the Revenue's argument for applying section 194J.

4. The Court emphasized that when specific and general provisions are introduced simultaneously, the specific provision should be given precedence to reflect the legislative intent accurately. In this context, the Court upheld the ITAT's decision, concluding that programmes produced for television, including commissioned programmes, fall within the scope of section 194C as per Explanation III. Consequently, the appeals were dismissed as they did not raise any substantial question of law, with no costs awarded.

This detailed analysis of the judgment highlights the interpretation of relevant sections, the impact of legislative amendments, and the application of specific versus general provisions in tax deduction cases, providing a comprehensive overview of the legal issues addressed in the judgment.