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2018 (3) TMI 317 - HC - Income TaxTDS u/s 194C OR 194J - placement fees / carriage fees paid to Cable Operators / MSO / DTH Operators - Held that - As relying on UTV Entertainment Television Ltd. case 2017 (11) TMI 915 - BOMBAY HIGH COURT the placement fees are paid under the contract between the respondent and the cable operators/ MSOs. Therefore, by no stretch of imagination, considering the nature of transaction, the argument of the appellant that carriage fees or placement fees are in the nature of commission or royalty can be accepted. - Decided in favour of assessee TDS u/s 194H - reimbursement of expenses as part of the commission paid by the assessee to Zee Turner Ltd. Held that - In the present case, the respondent made payments which were reimbursement by the assessee to Zee Turner Ltd. Thus holding that there was no occasion to deduct tax on the reimbursement of the expenses paid by the respondent assessee to Zee Turner Ltd. This concurrent finding of fact by the CIT(A) as well as by the Tribunal has not been shown to be perverse. It is settled position in law that reimbursement of expenses is not taxable as held by this Court in Commissioner of Income Tax Vs. Siemens Aktiongesellschaft 2008 (11) TMI 74 - BOMBAY HIGH COURT and Director of Income Tax (International Taxation) Vs. Krupp Udhe Gmbh 2010 (3) TMI 287 - BOMBAY HIGH COURT - Decided in favour of assessee Commission paid by the assessee to the directors treated as salary by AO - relationship between the directors and the assessee - Held that - CIT(A) as well as the Tribunal have on examination of the facts come to the conclusion that the commission which was paid to the directors to attend meetings of the board as well as various committees of the company were not payment made to employees of the company as these directors were non-executive / independent directors of the respondent.The payments made to these non-executive / independent directors could not be treated as salary and there would be no occasion to deduct tax. The concurrent finding of fact has not been shown to be perverse by the Revenue in any manner. Short deduction of tax at source resulting in the respondent assessee becoming liable under section 201(1) and 201(1A) - Held that - On examination of all the details, the CIT(A) found that there has been no default in deducting tax at source. Thus, no short deduction of tax. This finding of fact by the CIT(A) has been upheld by the impugned order dated 20th February, 2015 of the Tribunal. This finding of fact has not been shown to be perverse in any manner. Appeal is admitted on substantial question at (ii) and (iii) above. (ii) Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the payments for programme software purchases, equipment hire charge and other production related expenses excluding dubbing and processing charges made to production houses, are payments for work contract covered u/s 194C and not fees for technical services under section 194J? (iii) Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the assessee has correctly deducted tax under section 194C on the payments made to event managers, for events other than sport related activities, as per CBDT s notification no.188 of 2008 dated 21.08.2008, without appreciating that this notification has merely brought sport related event managers under section 194J whereas the other professional event managers are always covered under section 194J for TDS purpose?
Issues involved:
1. Interpretation of payments to Cable Operators/MSO/DTH Operators under section 194C or 194J. 2. Classification of payments for programme software purchases, equipment hire charges, and production expenses under section 194C or 194J. 3. Correct deduction of tax on payments to event managers under section 194C or 194J. 4. Treatment of purported reimbursement of expenses in relation to section 194H. 5. Determination of commission paid to directors as salary or not. 6. Assessment of default under section 201(1) for short deduction of tax at source. Analysis: 1. The first issue pertains to the classification of payments made to Cable Operators/MSO/DTH Operators as work contract under section 194C or fees for technical services under section 194J. The Tribunal's decision was based on a previous ruling, which was upheld by the High Court, indicating no substantial question of law. 2. The second issue involves determining if payments for programme software purchases, equipment hire charges, and production expenses fall under section 194C or 194J. The Tribunal and CIT(A) found no requirement for tax deduction on reimbursement of expenses, supported by legal precedents. 3. The third issue concerns the correct deduction of tax on payments to event managers. The Tribunal upheld the deduction under section 194C based on a CBDT notification, dismissing the appeal as no substantial question of law arose. 4. The fourth issue addresses the treatment of purported reimbursement of expenses in relation to section 194H. Both the CIT(A) and Tribunal found no requirement for tax deduction on such reimbursements, citing legal precedents. 5. The fifth issue involves determining if commission paid to directors should be treated as salary. The authorities concluded that payments to non-executive/independent directors were not akin to salary, leading to no tax deduction requirement. 6. The final issue concerns the assessment of default under section 201(1) for short deduction of tax at source. The CIT(A) and Tribunal found no default in tax deduction upon complete examination of details, with no substantial question of law arising. The High Court admitted the appeal on substantial questions related to the second and third issues for further consideration. The Registry was directed to provide necessary documents for the hearing, to be conducted jointly with another related appeal.
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