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2019 (3) TMI 795 - AT - Income TaxShort deduction of tds u/s. 201(1) - TDS u/s 194C or 194J - payments made to various artists like singers, musicians etc who participated in the reality shows as guests or judges - payment is not related to production of services rendered by a person in connection with production of cinematograph film - payment made towards broadcasting and telecasting - assessee in default - HELD THAT - As seen from the Explanation, services rendered by a person in connection with production of cinematograph film should be liable to deduct TDS u/s. 194J of the Act. A person who is engaged in production of reality show cannot be equated with a person engaged in the production of cinematograph film. Therefore, the persons who are engaged in production of film falls under the realm of said Explanation to s. 194J It is not possible to accept the contention of the Revenue that payments made to artists who participated in reality shows produced for television will fall outside the realm of section 194C r.w. Explanation III of the Act. In our opinion, it would fall under section 194C and not under section 194J of the Act. Since the assessee deducted TDS u/s. 194C there is no infirmity in the action of the assessee. Being so, we are inclined to decide the issue in favour of the assessee and against the Department.
Issues Involved:
1. Determination of short deduction of tax under Section 201(1) of the Income Tax Act. 2. Applicability of Section 194C versus Section 194J for tax deduction at source (TDS) on payments made to artists. Issue-wise Detailed Analysis: 1. Determination of Short Deduction of Tax under Section 201(1) of the Income Tax Act: The primary issue in the appeal was the determination of short deduction of ?8,25,310/- under Section 201(1) of the Income Tax Act. The assessing authority found that the assessee had deducted tax at 1% under Section 194C instead of 10% under Section 194J, leading to a shortfall. The assessee argued that the payments made to artists for participating in reality shows were covered under Section 194C, which pertains to contracts for work, including broadcasting and telecasting. However, the assessing authority concluded that these payments were for professional services, thus falling under Section 194J, which requires a 10% TDS. 2. Applicability of Section 194C versus Section 194J for TDS on Payments Made to Artists: The CIT(A) upheld the assessing authority's view, stating that Section 194C applies to contracts for broadcasting and telecasting, including the production of programs, only when there is a contract between the parties. The CIT(A) noted that the payments made to artists were for their professional services as guests or judges, which required specialized skills and thus fell under Section 194J. The CIT(A) also referred to the CBDT's Circular No. 681 of 1994, which clarified that Section 194C applies to payments for arranging advertisements, broadcasting, telecasting, etc., but not to individuals providing professional services. The Tribunal, however, disagreed with the CIT(A) and the assessing authority. It referred to Explanation III to Section 194C, which includes broadcasting and telecasting, including the production of programs, under the definition of "work." The Tribunal emphasized that the payments made to artists for participating in reality shows produced for television should be covered under Section 194C, not Section 194J. The Tribunal cited several decisions, including those of the ITAT Mumbai and Lucknow, which supported the view that payments to artists for television programs fall under Section 194C. Conclusion: The Tribunal concluded that the payments made to artists for participating in reality shows were covered under Section 194C and not Section 194J. Therefore, the assessee had correctly deducted TDS at 1% under Section 194C. The appeal was allowed in favor of the assessee, and the short deduction of ?8,25,310/- under Section 201(1) was not upheld. The Tribunal's decision emphasized the importance of distinguishing between payments for professional services and payments for work contracts related to broadcasting and telecasting.
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