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2013 (5) TMI 154 - AT - Income TaxTDS U/s 194J or 194C - professional services - modelling activity is professional service or not - Matter of dispute is the assessee made TDS at 1.133 per cent as per section 194C, whereas the Assessing Officer applied at 11.33 per cent as per section 194J of the Act - Held that - It is a settled position vide the decisions in Dy. CIT v. Movies Stunt Artists Association (2005 (11) TMI 366 - ITAT MUMBAI )that the list of film artist cannot be extended to include other category of stunt actors, although they are engaged in the production of cinematographic film - It is also the decision of the Tribunal in EMC v. ITO( 2010 (1) TMI 832 - ITAT, Mumbai) that the photographer-cameraman, who of course figure in the list of film artist, cannot be covered by the list under provisions of Explanation (a) to section 194J of the Act and Notifications issued by the Board - when such cameraman is not engaged in skills, i.e., acting skill in films, modelling skills for display of merchandise, singing skills, etc., and such person can make earning out of such skills - It is not that the total earning of that person in lieu of services rendered which must attract the provisions of section 194J of the Act. The expressions services rendered used in the said Explanation assume significance and therefore, the taxable receipts under section 194J of the Act are services-specific and not person specific. In the instant case, the payments are payable for the services of modelling and it is unconnected with the production of cinematographic film. While modelling is aimed at display of merchandise, the acting is defined as to act in play or film (www.freedictionary.com), i.e., to portray a role authored by a story-writer with different purposes and objects and certainly not to displace merchandise to boost the sales of a manufacturer or a trader of the product or services. Therefore, the impugned payments made by the assessee to Matrix India on behalf of Ms. Katrina Kaif did not attract the provisions of section 194J of the Act - Accordingly, the grounds raised are allowed - We have granted relief to the assessee on the main issue - Adjudication of other ground constitutes an academic exercise. Therefore the said grounds are dismissed as academic - The appeal is allowed in favour of Assessee.
Issues Involved:
1. Applicability of Section 194J for payments made to Ms. Katrina Resomary Turcotte. 2. Accuracy of the payment amount considered by the Assessing Officer. 3. Excessiveness of interest levied under Section 201(1A). 4. Correctness of the recipient of the payment (Ms. Katrina Resomary Turcotte vs. Matrix India Entertainment Consultants P. Ltd.). 5. Consideration of Ms. Katrina Resomary Turcotte as an assessee on record. Issue-wise Detailed Analysis: 1. Applicability of Section 194J for payments made to Ms. Katrina Resomary Turcotte: The primary issue was whether the payments made to Ms. Katrina Resomary Turcotte (Katrina Kaif) for modeling services should be subjected to Tax Deducted at Source (TDS) under Section 194J, which pertains to professional services, or under Section 194C, which pertains to contracts. The Assessing Officer deemed the payments as professional fees under Section 194J, requiring a higher TDS rate of 11.33%, while the assessee applied Section 194C with a lower TDS rate of 1.133%. The Tribunal analyzed the definition of "professional services" under Section 194J and relevant notifications, concluding that modeling services do not fall under the purview of professional services as defined in the said section. The Tribunal also referred to previous judicial pronouncements, including the case of EMC v. ITO, which supported the view that services like modeling, not related to the production of cinematographic films, should not be classified under Section 194J. 2. Accuracy of the payment amount considered by the Assessing Officer: The assessee contended that the Assessing Officer incorrectly presumed the payment amount to be Rs. 70 lakhs, while the actual amount paid till the date of the order was Rs. 44,94,400. The Tribunal noted this discrepancy and highlighted that the demand under Section 201 should be adjusted to reflect the correct payment amount. 3. Excessiveness of interest levied under Section 201(1A): The assessee argued that the interest levied under Section 201(1A) was excessive and arbitrary. However, since the Tribunal decided in favor of the assessee on the main issue regarding the applicability of Section 194J, the question of interest became secondary. The Tribunal did not find it necessary to delve deeply into this issue, as the primary ground for relief was already granted. 4. Correctness of the recipient of the payment: The assessee argued that the payments were made to Matrix India Entertainment Consultants P. Ltd., not directly to Ms. Katrina Kaif, and hence, Section 194J should not apply. The Tribunal agreed, noting that the tripartite agreement involved Matrix India as the recipient of the payments on behalf of Ms. Katrina Kaif. This further supported the Tribunal's conclusion that Section 194J was not applicable. 5. Consideration of Ms. Katrina Resomary Turcotte as an assessee on record: The assessee contended that Ms. Katrina Kaif was already an assessee on record who had filed her income tax returns, implying that the Assessing Officer should not have passed an order under Sections 201(1) and 201(1A). However, since the Tribunal ruled that the payments did not fall under Section 194J, this issue became largely academic. Conclusion: The Tribunal concluded that the payments made by the assessee to Matrix India on behalf of Ms. Katrina Kaif for modeling services did not attract the provisions of Section 194J of the Act. Consequently, the grounds raised by the assessee were allowed, and the appeal was decided in favor of the assessee. The other grounds became academic and were dismissed as such. The appeal of the assessee was allowed.
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