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2016 (1) TMI 213 - AT - Income TaxTDS u/s 194C or u/s 194J - payment in question was made by the assessee to the cable operators/ MSOs for placing the TV channels in the prime band in order to enhance the viewership and better advertisement revenue - Held that - When two provisions are simultaneously introduced in the Act, one is specific and another is more general in terms then the resort must be to the specific provision. Therefore, when the work of broadcasting and telecasting of the programmes specifically falls under the ambit of provisions of section 194C, then in view of the decision of CIT Vs. Prasar Bharati (Broadcasting Corporation of India) (2006 (11) TMI 159 - DELHI High Court ), the provisions of section 194J cannot be applied on such payments. The CBDT Circular No. 720 dated 30.08.1995, also supports this view - Decided in favour of assessee.
Issues Involved:
1. Classification of placement charges under Section 194C or Section 194J of the Income Tax Act, 1961. 2. Nature of services rendered by cable operators/MSOs and their classification as technical services or otherwise. 3. Applicability of Section 194J concerning royalty payments. 4. Classification of carriage fees as commission or brokerage under Section 194H. 5. Correctness of the CIT(A)'s application of Section 194C to placement charges. Detailed Analysis: 1. Classification of Placement Charges: The primary issue revolves around whether the placement charges paid by the assessee to cable operators/MSOs fall under Section 194C or Section 194J of the Income Tax Act, 1961. The AO contended that these charges should be classified as technical fees under Section 194J, requiring a 10% TDS deduction, while the assessee argued for Section 194C, which mandates a lower TDS rate. 2. Nature of Services Rendered by Cable Operators/MSOs: The AO's position was that the services provided by cable operators/MSOs involved technical expertise, thus falling under the purview of Section 194J. The CIT(A) disagreed, stating that the nature of these services was more aligned with broadcasting and telecasting, which are specifically covered under Section 194C. The Tribunal upheld the CIT(A)'s view, referencing the Explanation to Section 194C, which includes broadcasting and telecasting within its scope. 3. Applicability of Section 194J Concerning Royalty Payments: The Revenue argued that the placement charges could be considered as royalty payments under Section 9(1)(vi) of the Act, thereby falling under Section 194J. However, the CIT(A) and the Tribunal found that the nature of the payments was more appropriately covered under Section 194C, which specifically deals with broadcasting and telecasting services. 4. Classification of Carriage Fees as Commission or Brokerage: The AO also suggested that the carriage fees paid to cable operators/MSOs could be classified as commission or brokerage under Section 194H. The CIT(A) rejected this view, and the Tribunal concurred, stating that the payments were for broadcasting and telecasting services, which are explicitly covered under Section 194C. 5. Correctness of CIT(A)'s Application of Section 194C: The Tribunal extensively reviewed the CIT(A)'s application of Section 194C to the placement charges. It referenced multiple judicial precedents, including decisions from the Punjab & Haryana High Court and the Delhi High Court, which supported the CIT(A)'s interpretation. The Tribunal emphasized that when two provisions are simultaneously introduced, the specific provision (Section 194C) should take precedence over the general provision (Section 194J). Conclusion: The Tribunal upheld the CIT(A)'s decision, affirming that the placement charges paid by the assessee to cable operators/MSOs fall under Section 194C of the Income Tax Act, 1961. It dismissed the Revenue's appeals, reinforcing that the payments for broadcasting and telecasting services are specifically covered under Section 194C and not under Section 194J or Section 194H. The Tribunal's decision was based on a thorough examination of the relevant legal provisions and judicial precedents, ensuring that the specific nature of the services rendered was appropriately classified.
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