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2015 (4) TMI 256 - AT - Income TaxShort deduction of TDS - payment of channel placement charges to cable operators/MSOs - TDS u/s 194J @ 10% or 194C @ 2% - CIT(A) held that assessee was not in default on account of short deduction of tax u/s 201(1) as well as interest levied thereon u/s 201(1A) - Held that - The assessee had utilized the services of dubbing studio Ninety Degrees by using their equipments as well as the artists who were working for Studio Ninety Degrees. The assessee had thus carried out the work of dubbing by engaging services and the same was of the nature of getting work done through a sub-contractor. The findings of the CIT(A) in this regard are not in challenge before us. In such circumstances we are of the view that the provisions of section 194C were applicable and the assessee has rightly deducted tax at source at 2 per cent treating the payment as a payment to sub-contractor for carrying out a work. We do not find any ground to interfere with the order of CIT(A). Respectfully following the order of the Tribunal in assessee s own case we hold that channel replacement charges paid by assessee were liable for deduction of tax u/s 194C of the Act and the assessee has correctly deducted tax at source u/s 194C of the Act, therefore, there is no liability u/s 201(1) and 201(1A) of the I.T. Act. - Decided in favour of assessee.
Issues Involved:
1. Applicability of TDS under Section 194J vs. Section 194C for channel placement charges. 2. Nature of payment for channel placement charges. 3. Consideration of channel placement charges as brokerage or commission under Section 194H. 4. Verification of tax payment by deductee cable operators. 5. Levy of interest under Section 201(1A). Detailed Analysis: 1. Applicability of TDS under Section 194J vs. Section 194C for Channel Placement Charges: The primary issue revolves around whether the payments made by the assessee for channel placement charges should be subject to TDS under Section 194J (fees for technical services) or Section 194C (payments for work contracts). The AO argued that these payments should attract TDS under Section 194J at 10%, while the assessee contended that they fall under Section 194C at 2%. 2. Nature of Payment for Channel Placement Charges: The CIT(A) held that the payments made for channel placement should be considered under Section 194C. The key observations included: - The placement of channels by cable operators does not constitute a technical service. - The work performed by cable operators is integral to broadcasting and telecasting, which falls under the definition of "work" in Section 194C. - The CIT(A) cited the Punjab & Haryana High Court's decision in Kurukshetra Darpans (P) Ltd. Vs. CIT, which supported the view that such payments are for broadcasting and telecasting work. 3. Consideration of Channel Placement Charges as Brokerage or Commission under Section 194H: The AO alternatively argued that the payments should be considered as brokerage or commission under Section 194H. The CIT(A) rejected this argument, stating: - Brokerage or commission typically involves payment for services rendered without the recipient engaging in independent business. - The cable operators conduct independent business using their resources and are not merely intermediaries. - Therefore, the payments cannot be categorized as brokerage or commission. 4. Verification of Tax Payment by Deductee Cable Operators: The assessee argued that the AO should verify whether the cable operators had paid tax on the income received from the channel placement charges. If the tax had been paid, the assessee should not be held liable for the principal amount of tax under Section 201(1). 5. Levy of Interest under Section 201(1A): The assessee also contested the levy of interest under Section 201(1A) from the date the tax was deductible until the date of the order. However, since the primary issue was resolved in favor of the assessee, this argument became academic. Conclusion: The Tribunal upheld the CIT(A)'s decision that the payments for channel placement charges fall under Section 194C and not Section 194J. The Tribunal also dismissed the Revenue's appeal, reinforcing that the assessee correctly deducted TDS under Section 194C. Consequently, the assessee was not liable under Section 201(1) and 201(1A). The cross-objections filed by the assessee were dismissed as academic due to the favorable ruling on the primary issue.
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