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TMI Blog2014 (12) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... vies for exhibiting films in the theatre owned by it. The distributor was to get part of the amount collected by the respondent by way of sale of tickets for these movies. The Assessing Officer observed that the said payment would require deduction of tax at source as per section 194C of the Act. Since the same was not deducted it was treated to be in default of section 201(1) and 201(1A) of the Act. On appeal, the CIT (Appeals) held that since the ownership of the print never rests with the exhibitor it cannot be considered as 'any work' as stipulated in section 194C and thereby set aside the orders. 4. On appeal before the ITAT, by impugned order, ITAT has held that no work was carried out by the distributor. Being aggrieved and dissatisfied with the impugned order passed by the ITAT, the revenue has preferred the present Tax Appeals for consideration of the aforesaid substantial question of law. 5. Mr. Manish Bhatt, learned Senior Counsel has appeared with Ms. Mauna Bhatt, learned advocate on behalf of the Department. He submitted that the Tribunal has overlooked that a clarification the fact that section 194C of the Act would apply in relation to payment to a person to arrang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intendment for professional services or service simplicitor which do not involve contract for carrying out any work itself or a contract for a labour for carrying out such services are not within the purview of section 194C of the Act as it existed at the relevant time. As mentioned earlier, the activity carried on by the assessee is exhibition of film in its theatre which has been supplied by the distributor. The said activity cannot fall within the category of "work" within the ambit of section 194C, as per the decision of jurisdictional High Court in the case of All Gujarat Federation of Tax Consultants v. CBDT (supra). Now the question will remain that whether such activity falls under the Explanation III to section 194C. The Explanation 171 reads as under: 'Explanation III.-For the purposes of this section, the expression "work" shall also include- (a) advertising; (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) carriage of goods and passengers by any mode of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity mentioned in the Explanation III only can be considered to be as a "work" within the extended meaning of "work". The exhibition of film in the theatre has not been described in the above Explanation, therefore also, there is no case of the revenue, by which it can be held that the assessee was required to deduct tax at source from the payments made by it to the distributor of films. In view of above discussion on facts and laws, we find no merits in the appeals filed by the department and the same are dismissed." 6.1 Sections 201(1) and 201(1A) and 19(C) of the Act and the explanation thereof are reproduced hereunder: 201. Consequences of failure to deduct or pay (1) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax: Provided that no penalty shall be charged under section 221 from such person, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (k) any firm; shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to- (i) one per cent in case of advertising, (ii) in any other case two per cent, of such sum as income-tax on income comprised therein.] [Explanation III - For the purpose of this section, the expression "work" shall also include - (a) advertising; (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) carriage of goods or passengers by any mode of transport other than by railways; &n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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