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TMI Blog2014 (12) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... 4J cannot be applied on such payments – the order of the CIT(A) is upheld – Decided against revenue. Payment for subtitling and editing charges to be treated as fee for technical service or not – Applicability of provisions of section 194J – Held that:- Following the decision in ACIT Vs. Manish Dutt [2012 (7) TMI 186 - ITAT MUMBAI] - the assessee had utilized the services of dubbing studio Ninety Degrees by using their equipments as well as the artists who were working for Studio Ninety Degrees - The assessee had thus carried out the work of dubbing by engaging services and the same was of the nature of getting work done through a subcontractor - the provisions of section 194C were applicable and the assessee has rightly deducted tax at source at 2 per cent treating the payment as a payment to sub-contractor for carrying out a work – thus, the order of the CIT(A) is upheld – Decided against revenue. - ITA No. 2699/mum/2012, 4204/mum/2012, 4205/Mum/2012, 2700/Mum/2012, 205/Mum/2013, 2699/mum/2012, 206/mum/2013, 4204/Mum/2012, 207/Mum/2013, 4205/Mum/2012, 208/Mum/2013, 2700/Mum/2012 - - - Dated:- 29-10-2014 - Vijay Pal Rao, JM And Rajendra, AM,JJ. For the Petitioner : Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) CIT(A) has erred in law and on facts in holding that section 194C applies to the payment of placement charges without appreciating the correct nature of these charges, as is clearly brought out in the statement of fact annexed to the ground of appeal and the order u/s. 201(1) of the Income-tax Act, 1961. 2. The Ld. CIT(A) has erred on law and in facts in not appreciating that the sub. titling and editing charges require providing of technical services as defined in the Act and therefore, are within the purview of section 194J of the Act. 2. Ground no. 1 is regarding deduction of tax at source u/s 194C or u/s 194J in respect of the payment made by the assessee to the cable operators. The assessee in this case, is engaged in the business of distribution of television channels. The TV channels are distributed by the assessee through cable operators/MSOs. Due to bandwidth constrains with the cable network, it was up to the cable operator to decide which channel will reach the end viewer at what frequency (placement). Accordingly, Broadcasters make payments to the cable operator to carry their channels at a particular frequency which is generally referred to as carriage fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that when the payment is in relation to broadcasting work which is specifically provided u/s 194C then the general provisions u/s 194J cannot be applied. He has referred the CBDT Circular No. 720 dated 30.08.1995, wherein it was clarified that each section under chapter XVII, deals with a particular kind of payment to the exclusion of all other sections in this chapter. The payment of any sum shall be liable for tax deduction only under one section. In support of his contention he has relied upon the decision of Hon'ble Punjab Haryana High Court in the case of Kurukshetra Darpans (P) Ltd. Vs. CIT (supra) and submitted that the Hon'ble High Court has held that the receipt of telecasting signals from the licensor is essentially under the contract to obtain broadcasting and telecasting facility of TV channels. Therefore, section 194C is attracted to the payments made to the licensor for obtaining TV signals and the assessee was required to deduct tax at source on such payments. He has also relied upon the decision of Hon'ble Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting Corporation of India) (292 ITR 580) and submitted that the Hon'ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the Act. 15. It is also relevant to mention here that in the agreement between the assessee and the licensor, the licensor is referred to as 'company engaged in the business of distribution of satellite based television channel(s) services including the service and has exclusive rights to market and distribute the services in India to various customers and users of the service'. Further, the agreement refers to the assessee subscriber as a party, which is desirous to subscribe for and receive the telecast signals of the service from the company in order to further distribute the same to the customers). 16. From the recital of the agreement Itself, it is clear that the service that the assessee subscriber is availing is the receipt of 'telecasting signals' from the licensor or the company. The expression 'service' has also been referred to mean the TV channel which is dealt with by the licensor or the company. Therefore, what the assessee has transacted for with the licensor or company certainly includes within its ambit broadcasting and telecasting facility. The essence of the contract is to obtain broadcasting and telecasting of TV channels an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing material purchased from a person, other than such customer.] 8. The Hon'ble Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting Corporation of India) (supra), has observed in para 11 as under:- We are unable to agree with this submission. We observe that Explanation III, which was introduced simultaneously with section 194J, is very specific in its application to not only broadcasting and telecasting but also include production of programmes for such broadcasting and telecasting . If, on the same date, two provisions are introduced in the Act, one specific to the activity sought to be taxed and the other in more general terms, resort must be had to the specific provision which manifests the intention of the Legislature. It is not, therefore, possible to accept the contention of the Revenue that programmes produced for television, including commissioned programmes , will fall outside the realm of section 194C, Explanation III of the Act. We find no infirmity in the view taken by the Income-tax Appellate Tribunal which we hereby affirm. 9. The Hon'ble Delhi High Court has made it clear that when two provisions are simultaneously introduced in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own studio could not be used the assessee used to give the job of carrying out dubbing work to other dubbing studios. In respect of one such work entrusted by the assessee to another studio by name Ninety Degrees the assessee had made a payment of ₹ 1,60,000. According to the assessee, the payment was made to a sub-contractor for execution of a contract and, therefore, in terms of section 194C the assessee deducted tax at source at 2 per cent. The Assessing Officer however, was of the view that the payment in question was rent paid by the assessee and, therefore, in terms of section 194-1 of the Act the assessee ought to have deducted tax at source at 20 per cent. Since the assessee did not deduct tax at source at the proper rate the Assessing Officer disallowed the claim of the assessee for deduction of a sum of ₹ 1,60,000 under the head studio hire charges by invoking the provisions of section 40(a)(ia) of the Act. 9. Before the CIT(A), the assessee submitted that the contract details were not called for during the assessment and that the work done by 90 Degree was for work as provided for under section 194C of the Act. The assessee pointed out that studio is booke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the decision of this Tribunal, we do not find any error or illegality in the order of CIT(A) qua this issue. 14. In the Cross Objection, the assessee has raised common grounds which reads as under:- 1. On the facts and in the circumstances of the case, the learned Commissioner of Income- tax (Appeals) - 14, Mumbai, erred in not adjudicating on the following contentions raised by the Appellant: (i) The learned TDS officer erred in holding that the Appellant is liable to pay principal amount of tax under section 201 (1) of the Income tax Act, 1961 without verifying the payment of tax on such income by the deductee cable operators in their respective returns/ assessments. The Appellant prays that the learned TDS officer be directed to verify the payment of tax by cable operators on the channel placement charges received from the Appellant and based thereon hold that the Appellant is not liable to pay the principal amount of tax. (ii) Without prejudice to the above, the learned TDS officer erred in levying interest under section 201 (1A) of the Income tax Act, 1961 from the date the tax was deductible till the date of order under Section 201(1) / 201(1A) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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