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TMI Blog2014 (1) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... the said payment is liable to TDS, it is only ZTL who was required to deduct tax at source thereon, and deposit the same to the credit of the central government, and not the assessee, who could not be charged with the non- deduction of tax at source - with the said liability, much less the consequence/s - This is as the deduction of tax at source by the assessee was unfeasible, representing an impossibility – the order deleting the disallowance u/s. 40(a)(ia) for non-deduction of tax at source upheld – Decided against Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer (A.O.), attracted the provision of section 194C of the Act. No deduction of tax at source having been admittedly made, he effected a disallowance qua the same, invoking section 40(a)(ia). In appeal, preferred by the assessee, inter alia, in respect of this disallowance, the background facts were noted by the ld. CIT(A). The assessee had contracted with Zee Telefilms Ltd. (ZTL) (vide an Agreement dated 15.11.2006) for production of a TV serial, which was to be handed over to ZTL, who had the telecasting rights in its respect. The assessee raised charges for the same on ZTL, who made payments thereto; in fact, deducting TDS (at Rs.5,27,528/-) on the gross sum. Certain technical problems in the production led to a delay therein, requirin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in dispute or denied. Clearly, what the assessee paid, by way of deduction from the amount/s due to it by ZTL, thereto, is a compensation for the uplinking charges incurred by the latter for the delay in the production of some of the episodes. At whose door the fault for the same lies and, consequently, whether the said deduction by the payer, or 'payment' by the assessee, was justified in the facts and circumstances of the case, being disputed, is another matter altogether. The assessee claims that it was not responsible for the delay, so that the deduction as made is in breach of the contract, so that it could not be considered as made in pursuance thereof; the contract only obliging ZTL for the broadcasting of the TV serials. Even so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration for the application or otherwise of s. 194C. Toward this, the assessee nowhere states of it being not so. What it in fact claims is of having not violated the terms of the Agreement, so as to be liable for the expenses incurred by the payee-broadcaster by way of uplinking charges, and which stand recouped by it from the assessee. The same itself confirms of the compensation as arising out of the terms of the contract. It, in fact, represents a general clause in any agreement whereby the loss suffered by one (of the parties) for the default by the other is to the account of the latter. In any case of the matter, it stands to be governed by the contract law inasmuch as the two, the payer and the payee, share only a contractual relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s liable to TDS, it is only ZTL who was required to deduct tax at source thereon, and deposit the same to the credit of the central government, and not the assessee, who could not be charged with the non- deduction of tax at source and, consequently, with the said liability, much less the consequence/s thereof. On this aspect we are in full agreement with the ld. CIT(A). This is as the deduction of tax at source by the assessee was unfeasible, representing an impossibility. We, therefore, have no hesitation in upholding the impugned order deleting the disallowance u/s. 40(a)(ia) for non-deduction of tax at source on the said sum. We decide accordingly. 5. In the result, the Revenue's appeal is dismissed. Order pronounced in the open court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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