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TMI Blog2013 (10) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... me and not to broadcast and telecast any programme at the level of the assessee. The assessee is not authorized to change either in programme or create or produce any programme of his own. As regards the judgement of Hon'ble Punjab & Haryana High Court in the case of Kurukshetra Darpans (P) Ltd. vs. Commissioner of Income Tax, [2008 (3) TMI 48 - High Court Punjab and Haryana] relied upon the Revenue, the same distinguishable on facts as in that case the cable operator was engaged in broadcasting and giving signals to the customers whereas in the case under consideration the assessee received packed signal from channels i.e. Star TV and others and giving to cable operator without modification. It is a case of simple using of plant & machinery i.e. DSR Digital Satellite Receiver for the purpose of distribution and transmission of signals against payment and while making such payment, we are of the considered view that section 194C of the Act including Explanation (iv)(b) of Section 194C is not applicable. Since section 194C is not applicable, the assessee is not liable to deduct tax at source - Decided against Revenue. - ITA Nos.116/Agra/2011 and 61/Agra/2012 - - - Dated:- 24-5- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enjoys income from his proprietary concern M/s. Varun Cable Network, Aligarh which is engaged in Cable TV operation. During the assessment proceedings, the A.O. noticed that the assessee has filed copies of agreement deeds with M/s. Star India Private Limited, M/s ESPN Software India Pvt. Ltd. and M/s Zee Turner Limited. Rest of the agreement deeds have not been furnished by the assessee. From the perusal of these agreement deeds, the A.O. noted that there is a written contract between the assessee and the respective channels under which the assessee is making payment of subscription charges at the rates and terms conditions prescribed in the written agreements. The A.O. mentioned as per clause (b) of Explanation III below sub-section (2) of section 194C of the Income Tax Act 1961, wherein it is provided that for the purpose of sub-section (1) of section 194C, the term "work" includes broadcasting and telecasting including production of programmer for such broadcasting and telecasting.. However, in the bills of the respective channels the classification of the services against which the payment is being made has been mentioned as "Broadcasting". The A.O. noted that the aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted in computing the income chargeable under the head "Profit Gains of business or profession". The A.O. accordingly made addition of Rs.72,72,807/- by disallowing this expenditure for A.Y. 2007-08. On identical set of facts, similar addition of Rs.67,90,170/- was made by the A.O. in A.Y. 2008-09. 5. The CIT(A) noted the nature of transactions as under :- (page nos.26 to 28) "Cable Television refers to community Antenna television (CATV). CATV does not broadcast, but picks up signals at a Central Anteena and delivers them to individual subscribers via coaxial or optical-fibre cables. Originally designed for areas with poor reception and no local station, cable television, nearby private franchise, increasingly relays satellite transmission from the central antenna. Television companies beam these signals to the satellite from grounds stations. The satellites transmit the signals back to viewers' dish-shaped receiving aerials, or to cable-operators' local transmitting stations, to be further distributed to the viewers through cables. These days, with newer technology, these TV programs are transmitted even through phone connections. So, the Cable operators are replaced, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is more akin to manufacture and distributor; or a distributor (Star TV, Zee, Sony etc., distributing the various channels/programs) and sub-distributor (assessee taking the transmission to the doorsteps of public) rather than contractor and sub-contractor. (3.1) The above description of the nature of transaction is evidenced by the sample subscription agreement, which the assessee has furnished before the undersigned. The agreement is titled as "subscription agreement". This sample subscription agreement is between STAR India Pvt. Ltd and assessee (Varun Cable Network) 6. The CIT(A), after examining various clauses of the agreement, held as under:- (Page nos.31 to 34). "The above excerpts of agreement clearly establishes that assessee is a sub-distributor/distributor of channel/programs which are manufactured and deemed by various TV network to the public or subscribing and viewing. The bills raised by various channel network STAR India, ESPN, further corroborate this view. These bills can be perused. It is like normal sale bill, wherein total subscription fee is mentioned on which Service Tax and Education Cess are added. Thus, in my opinion, the entire nature of tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be intimated by the AO so that such cases are analyzed from TDS angle, so as to decide as to whether such transactions attract TDS liability or not; and if yes, (under which section; and who is liable to deduct TDS, at which rate, which points of transaction and what amounts? When these pertinent questions are not yet decided, i.e. when the TDS liability is still very much doubtful; It would not be appropriate or legally tenable to invoke Section 40(a)(ia). (3.5) It is also important to note that mostly COs/MSOs like assessee are not deducting TDS on such payments. There are other MSOs/COs in Aligarh itself and those have reportedly not deducted any such TDS. Without an uniform and consistent view; it would tantamount to unduly punish the assessee, for a TDS liability, which is itself shaky and sketchy. (3.6) The appellant has also submitted letters of 3 of these channel- networks, to the effect that most of COs/MCOs were not deducting any such TDS, in the relevant time period. (3.7) The AO's understanding, even regarding amounts of Rs.72,72,807/- and Rs.17,91,286/- is also erroneous, probably guided by above mindset. According to AO, assessee has Rs.17,91,286/- from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... last night ?" - Broadcast over the airwaves, as in radio or television; "we cannot air this X-rated song" TELECAST TELECAST TELECAST ED Meaning of TELECAST in English: - A television broadcast - Broadcast via television; "The Royal wedding was televised" II) As per "Angrezy - Hindi Kosh (An English - Hindi Dictionary)", Broadcast. Adj., 1. 2 (scattered) n. 1 (radio) 2 (sowing) v. 1. 2 (spread) 3 (scatter) broadcaster 2 (transmitter) -broadcasting, Telecast] III) As per "The New International Webster's Comprehensive Dictionary of the English Language" Broadcast: (1) To send or transmit (music, newscasts, etc.) by radio or television. (2) To scatter or cast, as seed, over a wide area; sow. (3) To disseminate; make public, as gossip. (4) To speak, sing, etc., for broadcasting proposes - adj. (1) Transmitted by radio. (2) Cast or scattered abroad, as seeds - n. (1) Telecom (a) The process of transmitting a program by radio. (b) A radio program. (c) The time period of a broadcast. 2 A casting or scattering of seed, etc. over the ground - adv. By scattering abroad, or so as to scatter abroad or disseminate. Broadcaster: (1) One who owns or operates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Access System. Direct To Home (Ku Band), Headends- in-the-Sky, Multipoint Microwave Distribution System/Multi-channel Multi-point Distribution System ("MMDS"), Digital Terrestrial Transmission,, Direct-To-Home ('C' Band), Broadband, IP TV, Terrestrial Transmission, or any other medium or technology or device now known and/or invented or that may be invented, and the use of which is permitted by STAR, in the future. 11. The equipment which is to be used by the assessee for distribution is an equipment called as 'DSR Digital Satellite Receiver'. The obligation of the affiliate, assessee provided in Clauses-5(b), 5(f) 5(h) of the agreement which read as under :- "5(b) The Affiliate shall use its best efforts to maintain a high quality of signal transmission for the Subscribed Channels and shall take all other necessary steps to ensure that; (i) the Subscribed Channels are received only by the Subscribers who pay the full applicable fees for such subscribed channels and (ii) the subscriber, who has not paid the Subscription/Fee is not capable of viewing the Subscribed Channels. The Affiliate further agrees and undertakes that it shall cause continuous distribution of the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ietary or other rights in the trade names and marks to which STAR or its associates or principals (the owners/broadcasters of the Subscribed Channels) assert proprietary or other rights, which STAR may notify the Affiliate from time to time in writing ("STAR Marks"), and agrees not to use the STAR Marks in any corporate or trade name. The Affiliate may use the STAR Marks solely for the purpose of advertising and promoting the Subscribed Channels only with the prior written consent of STAR. Marketing materials generated by the Affiliate may refer to the STAR Marks only if it is clear that such STAR Marks represent trademarks or service marks for the Subscribed Channels, which are distributed by the Affiliate. Such marketing materials shall require the prior written approval of STAR." 13. On perusal of various clauses of the agreement, we find that the assessee is to distribute the subscribed channels in its entirety as it is delivered by Star India Pvt. Ltd. without any cutting, editing, dubbing, scrolling or ticker tape, voice-over, sub title, substituting or any other modification, alternation, addition, deletion or variation. The Star India Pvt. Ltd. is the owner/broadcaster of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al remain packed, under that circumstances, it cannot be held that the assessee is engaged in the business of broadcasting and telecasting. This view is supported by fact that the party engaged in broadcasting and telecasting requires registration and necessary permission from the Ministry of Information Broadcasting for telecasting TV channels. In the case under consideration, the Star India Pvt. Ld. is having the said permission and registration whereas the assessee is not having registration with the Ministry. As stated above, registration was not necessary for transmitting of distribution of signals. The Star India Pvt. Ltd. is also registered under the service tax. The assessee filed an invoice of Star India Pvt. Ltd. of which copy has been placed at page no.15 of assessee's Paper Book, wherein under the column 'classification of service' it is written as "broadcasting". The I.T.A.T. Mumbai Bench in the case of ACIT vs. NGC Net Work (India) (P) Ltd. (2011) 10 Taxmann.com 140 accepted assessee's contention that broadcasting and distribution are different. Thus, in the case under consideration, broadcasting work was carried out by Star India Pvt. Ltd. and other channels and no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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