2016 (11) TMI 956 - AT - Income Tax

TDS u/s 194J - payment made to the artist - non deduction of tds - Held that - There is a difference between an artist/entertainer and a film artist . An artist/entertainer can be called a film artist, if he renders his/her services pursuant to production of film. However, an artist/entertainer will not be film artist if he entertains people not involved in production of film. The case of the revenue is not that Jasbir Jassi, Kunal Ganjawala have performed an activity while film production was going on and the assessee had made the payment, for the said activity performed by these persons. There is no doubt that Jasbir Jassi, Kunal Ganjawala and others are artists and if they perform in film as an actor or director or music director or assistant director or art director or singer or editor or lyricist or story writer or dialogue writer or as a dress designer could have attracted section 194J of the Act. It is not the case of the revenue that the assessee was producing a film and the artists were engaged in any of these activities which has been stated before. Therefore, the payment made to the artist does not fall in the ken of section 194J of the Act and so no TDS need to be deducted on this as per section 194J of the Act. It has been pointed out by the learned authorised representative that the payments made to Sonlibre International and Rhythm is not as per any contract and it was only for managing and arranging the artist for carrying out the performance. The payments has been made event wise on different dates by means of different cheques. Thus, we find that each payment made to them is an independent contract so the provisions of TDS are not attracted in the facts and circumstances of this case- Decided in favour of assessee

Summary

Issues:
- Interpretation of section 194J of the Income-tax Act, 1961 regarding payments made to artists and models by the assessee for event management programs.

Analysis:
1. The appeal was filed by the assessee against the Commissioner of Income-tax (Appeals)-II, Lucknow's order for the assessment year 2007-08. The Tribunal had previously remanded the matter to reconsider whether payments to local artists and models attract section 194J of the Income-tax Act. The issue before the Tribunal was whether the payments to artists and models by the assessee would attract section 194J or not.

2. The assessee, engaged in event management programs, made payments to various artists and models for their services. The Assessing Officer disallowed the payments under section 40(a)(ia) of the Act due to non-deduction of tax at source under section 194J. The Commissioner of Income-tax (Appeals) upheld this decision in the second round of appeal. The Tribunal noted the discrepancy in the treatment of payments to artists and models under section 194J.

3. The Commissioner of Income-tax (Appeals) relied on a previous case involving payments to film actress Katrina Kaif and distinguished it from the current case involving payments to leading film singers and artists. The Commissioner concluded that all payments made by the assessee to artists and models were covered under section 194J, necessitating tax deduction at source. However, the Tribunal analyzed the definition of "professional services" under section 194J and the notification of film artists under section 44AA, clarifying the distinction between film artists and general artists/entertainers.

4. The Tribunal emphasized that a person engaged in the production of a cinematograph film is considered a film artist under section 44AA, and payments to such individuals would attract section 194J. Since the revenue did not establish that the artists in question were engaged in film production activities, the Tribunal concluded that the payments made by the assessee did not fall under section 194J. Additionally, the Tribunal noted that payments to Sonlibre International and Rhythm were independent contracts for managing and arranging artists, not subject to TDS under section 194J.

5. Consequently, the Tribunal allowed the grounds of appeal raised by the assessee, setting aside the orders of the lower authorities. The appeal was allowed in favor of the assessee, emphasizing that the payments to artists and models did not attract section 194J, leading to the success of the assessee in the case.