2019 (1) TMI 806 - HC - Income Tax

TDS u/s 194C OR 194J - short deduction of TDS - placement fees / carriage fees paid to cable operators / MSO/DTH Operators - payments for work contract OR fees for technical service - Held that - As decided in CIT VERSUS M/S. UTV ENTERTAINMENT TELEVISION LTD. 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. Sub-clause (b) of clause (iv) of the explanation to Section 194C covers the work of broadcasting and telecasting including production of programmes for such broadcasting or telecasting. The work of subtitling will be naturally a part of production of programmes. Both Sections 194C and 194J having introduced into the Income Tax Act on the same day, it is observed that the activities covered by Section 194C are more specific and the activities covered by Section 194J are more general in terms. Therefore, for the activities covered by Section 194C, Section 194J cannot be applied being more general out of the two. - Decided against revenue

Summary

Issues:
1. Interpretation of provisions under Section 194C and Section 194J of the Income Tax Act for channel placement fees.

Analysis:
1. The primary issue in this case revolved around determining the correct provision under which the payments made by the assessee for channel placement should be classified. The Revenue contended that tax deduction should have been done under Section 194J, while the assessee argued that it was correctly done under Section 194C.

2. The High Court observed that the Tribunal had previously dismissed the Revenue's appeal and upheld the CIT(A)'s view, citing a previous case involving UTV Entertainment Television. In that case, it was established that the placement fees paid to cable operators were for providing the choice of desired channel placement, not for technical services. The Commissioner (Appeals) found that the activities of cable operators fell under the definition of "work" as per Section 194C, specifically related to broadcasting and telecasting, regardless of whether it was a standard fee or placement fee.

3. The Court further noted that the Appellate Tribunal, while lacking detailed findings, expressed general agreement with the Commissioner (Appeals)' detailed findings based on the material on record. Consequently, the High Court concluded that no new question of law arose for their consideration, leading to the dismissal of both Income Tax Appeals.

4. In summary, the judgment clarified the distinction between payments for work contracts under Section 194C and fees for technical services under Section 194J concerning channel placement fees. The decision emphasized the importance of analyzing the nature of services provided and the applicability of relevant provisions to determine the correct tax deduction at source, ultimately upholding the Tribunal's decision and dismissing the Revenue's appeals.