2017 (12) TMI 914 - AT - Income Tax

TDS u/s 194C or 194J - default in respect of payment by way of Channel carriage fees, up-linking charges and Bandwidth charges and Airtime Charges - Held that - We hold that the issue is covered in favour of the assessee and hence the assessee is liable to deduct tax at source only u/s 194C of the Act in respect of aforesaid subject mentioned payments. Accordingly the grounds raised by the Revenue are dismissed. See assessee's own case 2017 (12) TMI 935 - ITAT KOLKATA

Summary

Issues:
1. Applicability of section 194C vs. section 194J for tax deduction.
2. Classification of channel carriage fees, up-linking charges, bandwidth charges, and airtime charges.
3. Interpretation of payments under section 194C vs. section 194J.
4. Determination of default under section 201(1)/201(1A) for short deduction of tax.

Analysis:

Issue 1: Applicability of Section 194C vs. Section 194J:
The appeal concerned the dispute over whether the assessee was liable to deduct tax at source under section 194C or section 194J of the Income Tax Act. The Assessing Officer (AO) held that tax should be deducted under section 194J, while the Commissioner of Income Tax (Appeals) (CIT(A)) ruled in favor of section 194C. The Tribunal referred to previous decisions and upheld the CIT(A)'s decision, emphasizing that no technical services were involved in the payments made by the assessee for broadcasting services. The Tribunal concluded that the payments were for carriage charges falling under section 194C, not technical services under section 194J.

Issue 2: Classification of Payments:
The dispute also involved the classification of channel carriage fees, up-linking charges, bandwidth charges, and airtime charges. The Revenue contended that these payments should be considered technical services under section 194J. However, the Tribunal agreed with the CIT(A) that these payments were for carriage charges related to broadcasting services, not technical services. The Tribunal relied on precedents and interpretations of technical services under the Income Tax Act to support its decision.

Issue 3: Interpretation of Payments under Sections 194C and 194J:
The Tribunal analyzed the nature of the services provided by the assessee and the recipients of the payments. It was established that the payments were for broadcasting services where no technical or consultancy services were involved. The Tribunal referred to legal definitions and case laws to support its conclusion that the payments fell under section 194C for deduction of tax at source.

Issue 4: Determination of Default under Section 201(1)/201(1A):
The AO had raised a demand against the assessee for alleged short deduction of tax at source. However, the CIT(A) ruled in favor of the assessee, and the Tribunal upheld this decision based on previous judgments and the nature of the payments involved. The Tribunal dismissed the appeal of the Revenue, stating that the assessee was not in default under section 201(1)/201(1A) and was liable to deduct tax at source only under section 194C for the relevant payments.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision regarding the applicability of tax deduction sections and the classification of payments. The judgment provided a detailed analysis of the legal provisions, interpretations, and precedents to support its findings.