9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (4) TMI 1381 - AT - Income TaxTDS u/s 194J - Carriage Fees/Channel Placement Fees - Whether payments made for use/right to use of 'process are 'royalty' as per Explanation 6 to section 9(l)(vi) hence such payments are covered u/s. 194J ? -HELD THAT - Co-ordinate Bench of ITAT, Mumbai A Bench in assessee s own case has considered the issue in the light of the provisions of Section 194J and by following the decision of Hon ble Bombay High Court in the case of CIT vs. NGC Networks (India) Pvt. Ltd., 2018 (5) TMI 1148 - BOMBAY HIGH COURT held that channel placement fees is not a royalty in terms of Explanation-2 to Section 9(i)(vi) of the Income Tax Act, 1961, therefore, no disallowance could be made u/s.40(a)(ia) for failure to deduct tax at source u/s.194J There is no error in the findings recorded by the CIT(A) in deleting additions made by the AO towards carriage fees / channel placement fees u/s.40(a)(ia) of the Income Tax Act, 1961. Hence, we are inclined to upheld the order of CIT(A) and dismiss the appeal filed by the revenue. Addition u/s 14A - disallowance of expenses incurred in relation to exempt income - HELD THAT - Assessee has not earned any exempt income for the year under consideration. AO has brought out this fact in his assessment order. Once, there is no exempt income for the year under consideration whether expenses incurred in relation to earning exempt income contemplated u/s.14A could be disallowed or not is no longer res integra. See BALLARPUR INDUSTRIES LIMITED 2016 (10) TMI 1039 - BOMBAY HIGH COURT and CHEMINVEST LIMITED VERSUS COMMISSIONER OF INCOME TAX-VI 2015 (9) TMI 238 - DELHI HIGH COURT . Decided in favour of assessee.
Issues Involved:
1. Disallowance of carriage fees/channel placement fees under Section 40(a)(ia) for failure to deduct tax at source under Section 194J. 2. Disallowance of agency commission and transponder hire charges under Section 40(a)(ia). 3. Disallowance of expenses incurred in relation to exempt income under Section 14A read with Rule 8D. Issue-wise Detailed Analysis: 1. Disallowance of Carriage Fees/Channel Placement Fees under Section 40(a)(ia) for Failure to Deduct Tax at Source under Section 194J: The revenue appealed against the deletion of disallowance of carriage fees/channel placement fees by the CIT(A), arguing that these payments should be treated as 'royalty' under Explanation 6 to Section 9(1)(vi) and thus subject to TDS under Section 194J. The assessee contended that the issue was covered in its favor by previous ITAT decisions, which held that such fees are not 'royalty' and are subject to TDS under Section 194C. The Tribunal upheld the CIT(A)'s decision, citing the Bombay High Court's ruling in CIT vs. NGC Networks (India) Pvt. Ltd., which stated that channel placement fees do not constitute 'royalty' under Explanation 2 to Section 9(1)(vi) and thus cannot be disallowed under Section 40(a)(ia) for non-deduction of TDS under Section 194J. 2. Disallowance of Agency Commission and Transponder Hire Charges under Section 40(a)(ia): The CIT(A) deleted the disallowance of agency commission and transponder hire charges, noting that the assessee had deducted TDS as required. The CIT(A) relied on the Allahabad High Court's decision in Jagran Prakashan Ltd., which clarified that the relationship between the assessee and advertising agencies is on a principal-to-principal basis, and thus TDS under Section 194H is not applicable. The Tribunal upheld the CIT(A)'s decision, agreeing that the assessee had complied with TDS requirements for transponder hire charges and that the agency commission was not subject to TDS under Section 194H. 3. Disallowance of Expenses Incurred in Relation to Exempt Income under Section 14A Read with Rule 8D: The AO disallowed ?19,39,204 under Section 14A read with Rule 8D, arguing that the assessee had not maintained separate accounts for exempt income and related expenses. The CIT(A) upheld this disallowance, citing the Karnataka High Court's decision in United Breweries Ltd., which held that Section 14A applies even if investments are made for strategic purposes. However, the Tribunal reversed this decision, noting that the assessee had not earned any exempt income during the year. The Tribunal relied on the Bombay High Court's decision in Ballarpur Industries Ltd. and the Delhi High Court's ruling in Cheminvest Ltd., which held that no disallowance under Section 14A can be made if no exempt income is earned during the relevant year. Conclusion: The Tribunal dismissed the revenue's appeal and upheld the CIT(A)'s deletion of disallowance of carriage fees/channel placement fees and agency commission. It also allowed the assessee's appeal regarding the disallowance of expenses under Section 14A, directing the AO to delete the additions. The cross-objection filed by the assessee was dismissed as infructuous.
|
