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TMI Blog2015 (4) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by assessee were liable for deduction of tax u/s 194C of the Act and the assessee has correctly deducted tax at source u/s 194C of the Act, therefore, there is no liability u/s 201(1) and 201(1A) of the I.T. Act. - Decided in favour of assessee. - I.T.A. No.669/Mum/2012, C.O. No. 16/Mum/2013, I .T.A. No.670/Mum/2012, /C.O. No. 17/Mum/2013 - - - Dated:- 27-3-2015 - Shri R.C. Sharma And Shri Sanjay Garg JJ. For the Appellant : Shri Neil Philip Fore the Respondent : Shri Porus Kaka ORDER Per R.C. Sharma, AM : These are the two appeals filed by the Revenue are directed against two separate orders passed by the ld. CIT(A), Mumbai both dated 30-11-2011 for the assessment years 2008-09 2009-10 and the Cross Objection by the assessee in the matter of order passed u/s 201(1) 201(1A) of the Income Tax Act, 1961. 2. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a company engaged in the business of distribution of television channels. A survey operation u/s 133A of the Act was conducted in the premises of the assessee on 04.03.2011 to verify the compliance of TDS provisions by the assessee. Thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same shall be subject to deduction of tax at source in terms of section 194C of the Act. 3.16 It is not in dispute that cable operators disseminate signals received from the broadcaster through cables to various subscribers. Thus, carriage of channels through cables, which also involves placing them at certain bands/frequencies, is an integral part of the broadcasting process, which work is contracted to cable operators. Thus, payment made to cable operators for placement charges should be regarded to be in the nature of carrying out work of broadcasting and telecasting and hence, subjected to TDS under section 194C of the Act. Similar vie,,:, has been taken by the Hon'ble Punjab Haryana High Court's decision in the case of Kurukshetra Darpans (P) Ltd. Vs. CIT, 169 Taxman 344. In the case of Prasar Bharti (Broadcasting Corpn. of India) 158 Taxman 470 cited by the appellant, even the production of television programs has been held to be in the nature of a 'work contract'. In this case, the Hon'ble Court held that there is no applicability of section 194J and the assessee had rightly deducted tax u/s 194C. Therefore, I am of the view that payment of placement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course of buying or selling of goods or transactions relating to any asset, valuable article or thing as defined in Explanation to section 194H. Although the meaning of these terms as per explanation to section 194H is inclusive, largely the 'commission on brokerage' is understood as elaborated above. The cable operators/MSOs carry out independent business with the help of their own resources, assets and independent establishment. Their activity, as explained above, amounts to the activity of broadcasting and telecasting. They are also not engaged in providing services in the course of buying and selling of goods etc. Hence the channel placement fee received by them cannot in any manner, be categorised as 'commission or brokerage'. The case laws cited by the appellant which are directly on this issue also support this view. Therefore, in my opinion, this argument of the AO is also devoid of merits, and deserves to be rejected. 3.19. Since the appellant has already deducted TDS under section 194C of the Act on the placement fee, the TDS officer is directed not to consider the Appellant as assessee in default under section 201(1) of the Act as there is no sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tellite 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 and thereafter its distribution amongst ultimate customers through the cable network of the assessee. 17. Another plea of the assessee/subscriber was that the licensor or the person to whom the assessee is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Act., one is specific and another is more general in terms then the resort must be to the specific provision. Therefore, when the work of broadcasting and telecasting of the programmes specifically fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee 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 booked and dubbing work is undertaken using studio equipment, staff etc. The word Studio Hire is a term generally used by industry to denote the various services rendered by the dubbing studio. But the real nature of work is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 15. Since we have dismissed the appeal of the revenue and, therefore, in view of our finding in the revenue s appeal, the cross objections filed by the assessee becomes academic in nature and, therefore, dismissed as infr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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