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TMI Blog2015 (2) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... has already deducted TDS under section 194C of the Act, the AO is directed not to consider the Appellant to be an assessee in default under Section 201(1) of the Act as there is no short deduction by the Appellant. - Decided in favour of assessee. TDS on Equipment Hire Charges - Held that:- CIT(A) has applied the provisions of the Act and have delved on the same. We also find that the AO termed the payment made for hire charges as FTS, which the CIT(A) has categorically demolished. We find that similar issue was dealt with by the coordinate Bench at Mumbai in the case of ACIT (TDS) vs Sahara One Media & Entertainment Ltd., [2014 (4) TMI 113 - ITAT MUMBAI] wherein it was held that payment made by assessee under a contract, which is a part of production of programme, TDS is required to be deducted u/s 194C. No mistake in the order of the CIT(A), which we sustain on the issue, thereby rejecting the ground as raised by the department.- Decided in favour of assessee. TDS on reimbursement of commission expenses - CIT(A) deleted the tax charged on the assessee. - Held that:- In the instant case, the assessee had only made good the payments made by Zee Turner Ltd., which it had paid on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f convenience and brevity are disposing off the above appeals through this common and consolidated order. 3. Facts, common in all the years under consideration are that the assessee is engaged in the business of broadcast and distribution of TV Channels production/commissioning/distribution/purchase/export sale of TV programmes, films, news and acts as a canvassing agent for space selling on TV channels. On 25.02.2009, the department undertook survey operations u/s 133A of the Income Tax Act, 1961 on the assessee. In the course of survey operations, the revenue authorities sought verification of records to ascertain the deduction of TAS as per law. In the course of verification, the revenue officers came to the view that the assessee was either deducting TAS at a lower rate or was not deducting any TAS at all on various payments being made by the assessee. The AO called for a detailed explanation from the assessee in this regard, which did not find favour with the AO, who raised demands in various years in the order under provisions section(s) 201/201(1A) of the Act. 4. Since some of the issues raised are common in all the years, we are taking up ITA No. 3931/Mum/2011 for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same was not professional service u/s 194J especially when the assessee did not bring any evidence to justify the service was not in the nature of professional services within the meaning of section 194J. 7. On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the notification no F No. 275/43/2008-IT(B) dated 21.08.2008 was clarificatory in nature and the event management fee was always in the nature of professional services u/s 194J. 8. On the facts and circumstance of the case and in law, the CIT(A) erred by holding the equipment hire charges u/s 194C and failed to appreciate that the evidences available on records clearly show that the equipment hire charges were paid for services which were technical service within the meaning of section 194J. 9. On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short deduction and interest u/s 201(1A) in respect of equipment hire charges without appreciating the facts brought on records by the assessing officer. 10. On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the purported reimbursement of expenses was in fact com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid for putting a channel on a particular bandwidth c) Further, transmission of channel on a desired band for a fee shall not amount to 'work' as defined u/s 194C of the Act". Accordingly, the assessee committed a default u/s 201(1) of the Income Tax Act, 1961. 7. The assessee raised the issue before the CIT(A) and reiterated the submissions. The CIT(A), after examining the entire issue, held, "I have considered the facts of the case, the submissions and the arguments of the Ld. ARs as well as the order passed by the AO. The Appellant has made payment of placement charges to cable operators. It is evidenced from the placement Agreement that the cable operators agree with the Appellant to place the channels on certain preferred frequencies for a consideration which is termed as 'carriage or placement fee'. It s seen that the cable operators are as such required to place the channels on some frequency. Hence in my view, by agreeing to place the channel on any preferred band, the cable operator does not render any technical service to the distributor I TV channel. In terms of the provisions of section 194C of the Act, it is provided that expression work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e activities and he is required to do so as part of the business he is carrying on i.e. of carrying channels to make them available to viewers! subscribers. If as per the AO, the payment of standard fee falls under section 194C of the Act then there is no reason as to why placement fee should not fall under section 194C of the Act since activities involved in both the cases are same. The placement of channel is part of the process of broadcasting/telecasting the channel and hence, payment of placement fee is for doing 'work' involving broadcasting of channels. Therefore, the same is liable for TDS under Section 194C in view of the specific definition of 'work' contained therein. 3.15 The Appellant has cited other decisions also in support of its contention as to why the payments cannot be treated as fees for technical services under Section 194J. The placement fee is a consideration for providing choice of the desired placement of the channels and it is not in the nature of 'fees for technical services'. Hence, I am of the view that provisions of Section 194J cannot apply to the payment of placement charges/ carriage fees. In view of the facts of the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng broadcaster regularly purchases commissioned programs produced as per the agreement with Production House as per the script/concept approved by it. The production house produces the program for the assessee. The production house does not have or retain any right on the program but it delivers the source material of the program to assessee. The assessee deducted TDS u/s 194C of the Act on the said payment made to Production House for purchase of programme. 16. On the contrary, the AO was of the opinion that the payments made by assessee to the Production House, for purchase of programmes, are in the nature of 'fees for technical services' and hence, TDS had to be deducted u/s 194J of the Act. He observed that the production house uses the services of professional artist i.e. actors, scrip-writers, dubbing artists, technicians etc. Since the Production House avails services of such people, therefore, the payments made to Production House would fall u/s 194J of the Act. 17. The AO therefore, invoked the provisions of section 201(1) of the Income tax Act, 1961. 18. Against this order of the AO, the assessee approached the CIT(A), who, after considering the detailed submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ITAT which we hereby affirm. 4.7 Hence, it is evident that the AO was not justified in treating the payment for production of TV programmes as 'fees for technical services'. In any case, as also held in the aforesaid judgment, provisions of section 194C are more specific as compared to those of section 194J (since provisions of section 194C deal with the very payment in question - i.e. production of programmes, and not with a general category of payment like fees for technical services' as in section 194J), and hence, Section 194J, cannot apply to payments for production of programmes. Section 194C clearly states that payment for production of programmes constitutes payments for 'work' under section 194C. Accordingly, applying the said judgment of the Hon'ble Delhi High Court and also relying on the CBDT's circular, it is clear that the provisions of section 194C would prevail over section 194J of the Act in this case. 4.8 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;work contracts'. In the case of the appellant, the event managers have provided to the appellant the security personnel, labour personnel, contractors, men and women required for the events in various capacities. In carrying out such events, the event managers have not imparted any technical knowledge or training to the appellant or its personnel. Hence, in my opinion, the services rendered by the event managers are simply in the nature of works contract'. The AG has held the event management fees to be in the nature of 'fees for technical services' only because of the OBDT notification No. 88/2008 issued vide FNO. 275/43/2008-IT(B), dated 21-08-2008. Since it has been issued later, on 21I'/2008, it cannot be applied to the current year. Earlier to this notification, none of the circulars of the Board covered the 'event management fees' specifically and hence such contracts for event management could not have been classified under any category other than the 'works contract'. The later notification dated 21-08-2008, in my opinion, cannot be applied retrospectively. Even the said notification itself states that 'this notification shall come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any case fall in the category of 'fees for technical services'. The AO has not made out a case against the appellant that such 'equipment hire charges' are in the nature of rent and hence tax was liable to be deducted under section 194J of the Act. However, even for the said 'equipment hire charges' to be termed as rent, it was necessary that the equipment is taken on hire by the appellant and used by the appellant itself. The facts in the case of the appellant are not so. It is seen that the equipments have been taken on hire on wet lease basis, which includes equipments along-with operating staff. Further, other services are also provided by the vendor. Therefore, in my opinion the 'equipment hire charges' are squarely covered under the provisions of section 194C of the Act. As rightly pointed out by the appellant, CBDT circular No. 681 dated 08.03.1994 clarifies that 'the provisions of section 194C shall apply to all types of contracts for carrying out any work including transport contract, service contracts, advertisement contracts, broadcasting contracts, telecasting contracts, labour contracts, materials contracts and works contract.' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On reimbursement of dealer commission, the assessee did not deduct TAS. This payment aggregated ₹ 17.56 crores, which included relief by way of certificate issued by the department u/s 197 certificate at ₹ 13.84 crores and the balance ₹ 3.72 crores was reimbursement. 41. The AO was of the view that the payment fell within the ambit of section 194H and since the assessee did not deducted TAS, the assessee committed a default and invoked section 201(1). 42. The assessee took the issue before the CIT(A) and reiterated its submissions before him and submitted that 194H contemplated "income by way of commission" and not any payment. In the case of the assessee, the payment was made as a reimbursement of commission, wherein no income was generated to the payee. The CIT(A), held, "I have considered the above submissions of the appellant as well as the facts of the case. I agree with the appellant that no tax is required to be deducted in respect of reimbursement of commission which has been paid by Zee Turner Ltd to its dealers and distributors. The provisions of section 194H are quite clear and the words used therein are 'any income by way of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ramakrishna Vedenta Math vs ITO, reported in 55 SOT 417 (Kol), wherein it was held that the onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primary liability to pay the tax in accordance with the income. 48. Since in the instant case, the assessee had provided complete details of expenses and taxes paid by the payee, the addition became untenable. 49. On these facts and seeking benefit of the cited case laws, we do not find any reason to interfere in the order of the CIT(A), which we sustain and as a consequence reject the grounds taken by the department on the impugned issue. 50. Ground no. 10 & 11 are therefore rejected. 51. Grounds no. 12 & 13 pertain to short deduction of TAS. 52. According to the AO, the assessee had committed a breach by short deduction of TAS as per Tax Audit Report, whereas the CIT(A) noted that the details had been provided by way of the challans of payment of tax deducted at source, hence the provisions of section 201(1)/201(A) cannot be attracted. Before the CIT(A), the assessee submitted that the AO did not consider the details completely, therefore he concluded that the assessee was in def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of section 194C. d) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the facts brought on records by the Assessing officer that the acquisition of programme software involves transfer of rights of that programme to the assessee and such payments made by the assessee are clearly covered under the definition of Royalty within the meaning of royalty in Explanation 2 to clause (vii) to Section 9. e) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee did not produce any agreement with event manager to justify that the payment was in the nature of work contract and also failed to appreciate that the onus was on the assessee to establish the nature of services were not in the nature of professional services. f) On the facts and circumstance of the case and in law, the CIT(A) erred in holding that that the event management service was in the nature of work contract u/s. 194C and the same was not professional service u/s 194J especially when the assessee did not bring any evidence to justify the service was not in the nature of professional services within the meaning of section 194J. g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o amend or alter any ground or add a new ground which may be necessary at the time of the hearing of the case or thereafter. 16. The order of the CIT(A) being erroneous be set aside and the A.O's order be restored". 62. We find that grounds 1(a) to (i) are similar and identical to grounds no. 1 to 9 in ITA No. 3931/Mum/2013, wherein we have rejected the grounds as raised by the department. Similarly we reject grounds no. 1(a) to 1(i) in this appeal as well. 63. Similarly grounds no. 1(l) and 1(m) are similar to grounds no. 12 & 13 in ITA No. 3931/Mum/2013, wherein we have rejected the grounds as raised by the department. Since the grounds are similar and identical, we reject the grounds in this appeal as well. 64. Grounds no. 1(j) & 1(1k) pertain to payment of commission to non-executive/independent directors. The facts are that in the year under consideration, the assessee paid commission of ₹ 55.17 lacs to its Non Executive Directors/Independent Directors, which was duly approved by the Board of Directors. The AO came to the conclusion that these directors were actually employees of the company and were paid salary, which was shown as commission to avoid withho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in law, the CIT(A) failed to appreciate that the assessee was in fact author of all the programme purchased by it and was fully in command of making such programme and therefore the payments made by it for production of such programme was in the nature of Technical fee within the meaning of section 194J and therefore erred in deleting the short deduction and interest u/s 201(1A) determined on this account and holding the same within the meaning of provisions of section 194C. d) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the facts brought on records by the Assessing officer that the acquisition of programme software involves transfer of rights of that programme to the assessee and such payments made by the assessee are clearly covered under the definition of Royalty within the meaning of royalty in Explanation 2 to clause (vii) to Section 9. e) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee did not produce any agreement with event manager to justify that the payment was in the nature of work contract and also failed to appreciate that the onus was on the assessee to establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the assessing officer whereas the CIT(A) claimed that the assessee paid the unpaid TDS before the completion of proceedings u/s. 201(1)/201(1A). n) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the demand of ₹ 24,59,12,548/- without properly appreciating the factual & legal matrix of the case as clearly brought out by the A.O. in order u/s. 201(1) of the IT. Act, 1961. 2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary at the time of the hearing of the case or thereafter. 3. The order of the CIT(A) being erroneous be set aside and the A.O's order be restored". 73. We find that grounds 1(a) to (n) are similar and identical to grounds no. 1 to 14 in ITA No. 3931/Mum/2013, wherein we have rejected the grounds as raised by the department. Similar view is taken in this appeal as well. 74. We, therefore, reject the grounds as raised by the department. 75. In the result, appeal as filed by the department is dismissed. ITA no. 3934/Mum/2013 : Asst. year 2009-10 : 76. The following grounds have been raised by the department: "a) On the facts and circumstance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of professional services within the meaning of section 194J. g) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the notification no. F No. 275/43/2008-IT(B) dated 21.08.2008 was clarificatory in nature and the event management fee was always in the nature of professional services u/s 194J. h) On the facts and circumstance of the case and in law, the CIT(A) erred by holding the equipment hire charges u/s. 194C and failed to appreciate that the evidences available on records clearly show that the equipment hire charges were paid for services which were technical service within the meaning of section 194J. i) On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short deduction and interest u/s 201(1A) in respect of equipment hire charges without appreciating the facts brought on records by the assessing officer. j) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the commission paid to directors was salary considering day to day involvement of theses directors to carry out the functions of various committee of which they were members and the commission was ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as fully in command of making such programme and therefore the payments made by it for production of such programme was in the nature of Technical fee within the meaning of section 194J and therefore erred in deleting the short deduction and interest u/s 201(1A) determined on this account and holding the same within the meaning of provisions of section 194C. d) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the facts brought on records by the Assessing officer that the acquisition of programme software involves transfer of rights of that programme to the assessee and such payments made by the assessee are clearly covered under the definition of Royalty within the meaning of royalty in Explanation 2 to clause (vii) to Section 9. e) On the facts and circumstance of the case and in law, the CIT(A) erred in holding the equipment hire charges u/s 194C and failed to appreciate that the evidences available on records clearly show that the equipment hire charges were paid for services which were technical service within the meaning of section 194J. f) On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short ..... 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