2017 (12) TMI 935 - AT - Income Tax

TDS u/s 194C or 194J - short deduction of tds - payment made for the services rendered in the nature of channel carriage fees, up-l inking charges and bandwidth charges - Held that - This appeal of the Revenue is squarely covered in favour of the assessee by the decision of this Tribunal in assessee s own case for the immediately preceding year, i .e. AY 2010-11 2014 (8) TMI 1133 - ITAT KOLKATA whereby the order passed by the ld. CIT(Appeals) cancelling the demand raised by the Assessing Officer against the assessee under sect ion 201(1)/201(1A) for the alleged short deduction of tax at source from the similar payments made by the assessee was upheld by the Tribunal We uphold the impugned order of the ld. CIT(Appeals) deleting the demand raised by the Assessing Officer for the alleged short deduction of tax at source by the assessee from the payments made towards channel carriage fees, up-l inking charges and Bandwidth charges and dismiss this appeal of the Revenue.

Summary

Issues:
- Challenge to the action of considering payment for services not covered under section 194J
- Determination of tax deduction on channel carriage fees, uplinking charges, and bandwidth charges
- Appeal against order under section 201(1)/201(1A)
- Interpretation of sections 194C and 194J
- Application of judicial precedents in deciding tax deduction on payments

Analysis:
1. The Revenue challenged the decision of the Commissioner of Income Tax (Appeals) regarding the tax treatment of payments made by the assessee for channel carriage fees, uplinking charges, and bandwidth charges. The Revenue contended that these payments should fall under section 194J instead of section 194C for tax deduction purposes.

2. The Assessing Officer argued that the assessee should have deducted tax at source at 10% under section 194J instead of 2% under section 194C for the payments mentioned. The Assessing Officer issued a notice under section 201(1) for short deduction of tax and raised a demand against the assessee.

3. The assessee, a media broadcasting company, defended its position by stating that the payments were contractual and not for technical services, hence subject to a 2% tax deduction under section 194C. The assessee relied on legal precedents to support its argument, including the decision of the Delhi High Court in a similar case.

4. The Commissioner of Income Tax (Appeals) considered the submissions from both sides and canceled the demand raised by the Assessing Officer. The Commissioner held that the payments in question were not covered under section 194J before the relevant amendment, and therefore, the tax deduction under section 194C was valid for the assessee.

5. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) based on a previous ruling in the assessee's case for the preceding year. The Tribunal found that the nature of the payments for broadcasting services did not involve technical services, and therefore, tax deduction under section 194C was appropriate. The Tribunal dismissed the Revenue's appeal, citing consistency with the earlier decision.

6. The Tribunal concluded that the demand raised by the Assessing Officer for short deduction of tax at source by the assessee was unfounded, and the order of the Commissioner of Income Tax (Appeals) deleting the demand was upheld. The Tribunal dismissed the Revenue's appeal, affirming the decision in favor of the assessee.

7. The judgment highlighted the importance of correctly interpreting the provisions of sections 194C and 194J in determining the appropriate tax deduction for specific types of payments, emphasizing the need to consider the nature of services rendered in such transactions.