2019 (1) TMI 1703 - HC - Income Tax

TDS u/s 194C OR 194J - Channel Placement fees - whether is not in the nature of Royalty u/s 9(1)(vi)? - HELD THAT - The question of deducting tax at source on Channel Placement fees has been decided by this Court in favour of the assessee in M/S. NGC NETWORKS (INDIA) PVT. LTD. 2018 (5) TMI 1148 - BOMBAY HIGH COURT wherein held that no expenditure can be disallowed under Section 40(a)(i) of the Act in respect of fee paid for Channel Placement. The present situation being identical no further examination is necessary. No question of law arises.

Summary

Issues:
1. Whether Channel Placement fees is in the nature of Royalty u/s 9(1)(vi) and if tax deduction u/s 194J of the IT Act is required?
2. Whether disallowance of Channel Placement fees can be made u/s 40(a)(ia) of the IT Act when tax was deducted u/s 194C instead of section 194J?

Analysis:
1. The High Court considered the appeal challenging the judgment of the Income Tax Appellate Tribunal regarding the nature of Channel Placement fees and the tax deduction requirements. The Revenue contended that the fees should be treated as Royalty under section 9(1)(vi) and tax should be deducted under section 194J. However, the Court noted that a similar issue had been decided in favor of the assessee in a previous case. Since the present situation was identical, the Court held that no further examination was necessary, and no question of law arose. Therefore, the Tax appeals were dismissed on this issue.

2. The second issue involved whether disallowance of Channel Placement fees could be made under section 40(a)(ia) of the IT Act when tax was deducted under section 194C instead of section 194J. The Court considered the arguments presented and the previous decision in favor of the assessee in a similar case. After deliberation, the Court concluded that the question of deducting tax at source on Channel Placement fees had already been decided in favor of the assessee in a previous judgment. As the current situation was the same, the Court held that no further examination was required, and no question of law arose. Consequently, the Tax appeals were dismissed on this issue as well.