2015 (12) TMI 139 - AT - Income Tax

TDS u/s 194C or u/s 194J - payment of placement charges to cable operator/D.T.H. - Held that - The issue regarding deduction of tax at source for the payment made to cable operators as placement charges is fully covered in favour of the assessee by the various decisions and also by the Circular no. 720 of 30.08.1995, The Hon ble Delhi High Court in the case of CIT Vs. Prasar Bharati 2006 (11) TMI 159 - DELHI High Court on a similar issue has held 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 provisions 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. - Decided against revenue Uplinking charges were liable for deduction of tax at source u/s 194C or 194J - Held that - In the light of the proposition laid down by the Hon ble Delhi High Court in the case of CIT Vs. Prasar Bharati 2006 (11) TMI 159 - DELHI High Court , the specific provisions of section 194J are applicable in case of uplinking fees being integral part of the broadcasting and telecasting. Following the Judgment of Hon ble Delhi High Court in the case of CIT Vs. Prasar Bharati, and other decisions relied upon by the Ld. AR, we do not find any reason to interfere with the order of CIT (A) observing that uplinking was an integral part of broadcasting/telecasting and is covered under the Explanation to section 194C - Decided against revenue Payment for production of programmes for bradcasting and telecasting was liable to tax u/s 194C or 194J - Held that - The CIT(A) decided the issue in favour of the assessee by following the decision in the case of Prasar Bharati (Broadcasting Corporation of India) (Supra) and CBDT circular dated 30.08.1995 (supra) By holding that the AO was not justified in treating the payments for programmes production as royalty. In any case as also held in the aforesaid judgment provisions of section 194C are more specific as compared to those of section 194J( Since provision of 194C deals with very payment in question- production of programmes and not with general category of payment like fee for technical services or royalty as in section 194J and hence section 194J cannot apply to the payment for production of programmes. Section 194C clearly states that payment for production of programmes constitutes payment for work u/s 194C. Accordingly, applying the said Judgment of the Hoourable Delhi High Court and also relying on CBDT circular, CIT(A) correctly held that provisions of section 194C would prevail over section 194J of the Act in this case.- Decided against revenue

Summary

Issues Involved:
1. Applicability of Section 194C vs. Section 194J for placement charges.
2. Applicability of Section 194C vs. Section 194J for uplinking charges.
3. Applicability of Section 194C vs. Section 194J for payments for the production of programs.

Detailed Analysis:

1. Applicability of Section 194C vs. Section 194J for Placement Charges:

Facts:
The assessee, engaged in broadcasting and telecasting, paid placement charges to cable/D.T.H. operators for placing its channels on preferred bandwidths. The assessee deducted tax at source at the rate of 2% under Section 194C.

AO's View:
The Assessing Officer (AO) held that these payments were for technical services, necessitating a 10% deduction under Section 194J, not Section 194C. Consequently, the assessee was treated as in default under Sections 201(1) and 201(1A).

CIT(A)'s Decision:
The Commissioner of Income Tax (Appeals) [CIT(A)] disagreed with the AO, holding that placement charges fall under the definition of work contract under Section 194C, referencing the Delhi High Court's judgment in Prasar Bharati (Broadcasting Corporation of India) [2006] 158 taxmann 470.

Tribunal's Conclusion:
The Tribunal affirmed CIT(A)'s order, noting that the issue was covered by various decisions and Circular No. 720 dated 30.08.1995. The Tribunal cited the Delhi High Court's decision in CIT Vs. Prasar Bharati [2007] 292 ITR 580 (Del.), which emphasized that specific provisions like Section 194C should prevail over more general ones like Section 194J. Thus, the Tribunal dismissed grounds 1 to 5 of the Revenue's appeal.

2. Applicability of Section 194C vs. Section 194J for Uplinking Charges:

Facts:
The assessee paid uplinking charges to TV-18 India Ltd for uplinking its channels/signals and deducted TDS under Section 194C.

AO's View:
The AO contended that uplinking involved complex equipment and was not merely for broadcasting, thus falling under royalty and attracting Section 194J.

CIT(A)'s Decision:
CIT(A) rejected the AO's view, holding that uplinking is integral to broadcasting/telecasting and thus covered under Section 194C, referencing the Delhi High Court's judgment in Prasar Bharati and Circular No. 720 dated 30.08.1995.

Tribunal's Conclusion:
The Tribunal upheld CIT(A)'s decision, noting that the Mumbai Bench's decision in Asst. CIT Vs. Sanskar Info. T.V.P. Ltd [2008] 24 SOT 87 (Mum.) was not applicable as it involved a non-resident. Following the Delhi High Court's ruling in CIT Vs. Prasar Bharati, the Tribunal affirmed that Section 194C applies to uplinking fees, dismissing ground 6 of the Revenue's appeal.

3. Applicability of Section 194C vs. Section 194J for Payments for Production of Programs:

Facts:
The assessee paid external producers/studios for producing TV serials, films, and other programs, deducting TDS under Section 194C.

AO's View:
The AO argued that these payments were for royalty and technical fees, thus falling under Section 194J.

CIT(A)'s Decision:
CIT(A) held that these payments were for work contracts under Section 194C, referencing the Delhi High Court's decision in Prasar Bharati and Circular No. 720 dated 30.08.1995.

Tribunal's Conclusion:
The Tribunal upheld CIT(A)'s decision, noting that Section 194C specifically addresses payments for program production, making it more applicable than the general provisions of Section 194J. The Tribunal cited the Delhi High Court's ruling in CIT Vs. Prasar Bharati and dismissed ground 7 of the Revenue's appeal.

Final Decision:
The Tribunal dismissed the Revenue's appeals for all assessment years (2009-10, 2010-11, and 2011-12) and the assessee's cross-objections as infructuous. The order was pronounced on 14.10.2015.