2018 (1) TMI 604 - HC - Income Tax

TDS u/s 194C - payments to the distributors for carrying out the work of exhibitor without deducting tax at source - addition u/s 40(a)(ia) - Held that - In a similar matter, in the assessee s own case, for the assessment years 2002-03, 2003-04, and 2004-05, the Tribunal had held that the exhibition of film in the theatre is not an activity expressly covered by the Explanation. The Tribunal was of the view that anything which is not expressly covered under the category of work cannot be regarded as work by extended meaning of work as described in section 194C of the Act, also confirmed by HC 2015 (2) TMI 638 - GUJARAT HIGH COURT - Decided in favour of assessee

Summary

Issues Involved:
- Interpretation of Section 194C of the Income Tax Act, 1961 regarding deduction of tax at source for payments made for carrying out work.
- Whether exhibition of films falls within the ambit of the expression "work" as defined under Section 194C.
- Application of precedent in similar cases to determine tax liability for non-deduction of tax at source.

Analysis:

1. The appellant revenue challenged the order of the Income Tax Appellate Tribunal, Ahmedabad regarding the disallowance/addition made under section 40(a)(ia) of the Income Tax Act, 1961. The issue revolved around whether the provisions of section 194C, which require tax deduction at source for payments made for work, were applicable to the assessee's case.

2. The relevant assessment year was 2010-11, with the accounting period being the previous year 2009-10. The Assessing Officer disallowed a payment made by the assessee company to distributors for exhibiting films, as tax was not deducted at the source as per section 194C of the Act.

3. The Commissioner of Appeals deleted the addition, which was further upheld by the Tribunal. The appellant argued against the impugned order, questioning the reasoning adopted by the Assessing Officer.

4. The key consideration was whether exhibiting films constituted "work" under section 194C. The Act defines "work" to include various activities but does not explicitly mention exhibiting films. Citing a previous case, the Tribunal had ruled that activities not expressly covered under the definition of "work" could not be considered as such.

5. Referring to a precedent where similar issues were addressed, the Court found that exhibition of films did not fall within the scope of "work" as defined under section 194C. Therefore, non-deduction of tax at source for payments to distributors for exhibiting films did not attract the provisions of section 194C.

6. Based on the above analysis and the precedent set in previous cases, the Court concluded that the impugned order of the Tribunal was legally sound. As the issue was identical to previous cases where the Court had ruled in favor of the assessee, the appeal was dismissed, as there was no substantial question of law arising from the Tribunal's decision.