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TMI Blog2019 (6) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... s were held by Hon‟ble Bombay High Court to be standard fees paid for broadcasting channel on certain frequency. We have also observed that Hon‟ble Jurisdictional High Court has consistently held that payments of Carriage Fees/ Channel Placement Fees are covered under the definition of work‟ under sub-clause (b) to clause(iv) to Explanation to Section 194C and income-tax is deductible at source u/s 194C. Reference is drawn to decision of Hon‟ble Bombay High Court in the case of CIT v. Zee Entertainment Enterprises Limited [ 2018 (3) TMI 317 - BOMBAY HIGH COURT] - Decided in favour of the assessee - I.T.A. No.5958/Mum/2017 - - - Dated:- 6-6-2019 - Shri C.N Prasad, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Shri. Abhishek Tilak For the Revenue : Shri. Charanjeet Singh Gulati (CIT-DR) ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by revenue, being ITA No. 5958/Mum/2017, is directed against appellate order dated 16.06.2017, passed by learned Commissioner of Income Tax (Appeals)-4, Mumbai (hereinafter called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd operate four channels namely UTV Movies, UTV World Movies, UTV Stars and UTV Action Telugu. The assessee has paid channel placement/carriage fees of ₹ 88,08,20,017/- during the previous year relevant to impugned assessment year , on which the assessee has deducted income-tax at source u/s. 194C of the Act on such payment at the rate of 2% , while the AO was of the view that the income-tax ought to have been deducted at source @ 10% under the provisions of Section 194J of the 1961 Act. The assessee was asked by the AO to explain reasons for short deduction of income-tax at source @2% by invoking provisions of Section 194C instead of deducting income-tax at source @10% u/s 194J of the 1961 Act. 3.2 The assessee submitted that the assessee did deducted income-tax at source @2% u/s 194C of the 1961 Act on payments made towards Channel Placement/Carriage Fees. It was submitted that Section 40(a)(ia) of the 1961 Act can be invoked for making disallowance of expenses only when there is no deduction of income-tax at source. It was claimed that in case there is a shortfall in deduction of income-tax at source, Section 40(a)(ia) of the 1961 Act has no applicability. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to put the channel in prime band so that viewership as well as quality of channel can be increased. The carriage fee is a fee charged by broadcaster to carry the channel. As the channel capacity of MSO/LSO is limited whereas the channels are more, channels pay the charge to carry the signals. 8.4.2. Placing the particulars channel on a particular frequency or carrying a channel is INTEGRAL part of Transmission or Broadcasting PROCEES. The Pictorial representation of the PROCESS involved is depicted below 8.4.3. From the above pictorial representation, it is evidently clear that placing or carrying a channel on a particular frequency is an INTEGRAL PART of Broadcasting PROCESS. Neither the Broadcaster nor the MSO can INDEPENDENTLY place a channel without the intervention of the entire Process involved. So, Placement or Carriage is nothing but a PROCESS by which Broadcaster gets their channel placed at PRIME BAND OF FREQUENCY and for this Process they pay Channel Placement Fee or Carriage Fee. 8.4.4. Taxability of Carriage Fees: In order to examine the Taxability of Placement Fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, optic fiber or by any other similar technology, whether or not such process is a secret constituted and it embedded in the very definition of term ROYALTY . This is further fortified by the insertion of clarification by virtue of Explanation 6 in Section 9(1)(vi) w.e.f. 01.06.1976. It is reproduced as under:- For removal OF doubts, it is hereby clarified that the expression process includes and shall by deemed to have always included transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by other similar technology, whether or not such process is secret. It is highlighted here that it is an explicit CLARIFICATION provided w.r.t. to the interpretation of the term Process as it was meant to be understood since inception. It is therefore, by no means any retrospective amendment. It is only clarificatory in nature by which the legislature has once again reiterated correct in respiration of the term. Royalty, the language of the Explanation 6 very clearly and unambiguously states that it is clarificatory insertion. It is not a retrospective amendment as stated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.5 The assesses has taken the plea that Section 40(a)(ia) of the Income Tax Act, 1961 cannot be invoked at all even if it is assumed (without admitting) that there is a short deduction of tax. In regards to this, it is necessary to mention the following. 1) The very provision of Section 40(a)(ia) refers to the deduction of Tax at source in accordance with the Provisions of Chapter XVII-B. 2) Chapter XVII-B of the Act r.w. the corresponding rules, specify and lay down series of Provisions, Procedures and Compliances including specification of the rates of applicable TDS in respect of different types of expenditure such as Section 192, 194A, 194C, 194J, 195 etc. 3) If the assessee is permitted to short deduct TDS, then the very intended purpose of the Provisions of Chapter XVII-B and the consequence prescribed u/s. 40(a)(i)/ 40(a)(ia) stand defeated. Further, if this be the case, an assessee who is liable to deduct TDS, say at 20% shall go scot free by applying a token rate of 1% TDS, and get away from True and Correct Compliance. This surely cannot be the intention of the legislators. 4) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnel placement charges of ₹ 88,08,20,017/- on which TDS was not deducted under proper applicable provisions i.e., Section 194J is disallowed u/s. 40(a)(ia) of the Income Tax Act, 1961 and added back to the total income of the assessee. Penalty proceedings u/s. 271(1)(c) of the Income Tax Act, 1961 are being initiated separately for filing inaccurate particulars of income. 4. Aggrieved by an assessment framed by the AO vide assessment order dated 15.03.2016 passed u/s 143(3) read with Section 144C(3) of the 1961 Act, the assessee filed first appeal with learned CIT(A) who was pleased to allow appeal of the assessee by following decision of ITAT-Mumbai in assessee‟s own case for earlier years wherein tribunal has held that Carriage Fees/Channel Placement Fees comes under ambit of provisions of Section 194C for deduction of income-tax at source and not under Section 194H of the 1961 Act. The learned CIT(A) also relied upon decision of his predecessor in AY 2010-11 and 2011-12 and decided the issue in favour of the assessee. The tribunal in ITA no. 2699/Mum/2012 for AY 2008-09 in assessee‟s own case, vide appellate orders dated 29.10.2014 held as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e telecast signals of the service from the company in order to further distribute the same to the customer(s). 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 making payment by itself does not do the work of broadcasting and telecasting and is therefore outside the purview of Section 194C of the Act. This argument deserves to be negated at the threshold. As we have pointed out earlier what the assessee subscriber is looking for is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation 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 ITAT 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 falls under the ambit of provisions of section 194C, then In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee based on earlier year order of ITAT,Mumbai Benches. Our attention was drawn to circular issued by CBDT no. 4/2016 File no. 275/07/2016-IT(B) dated 29.02.2016. Our attention was also drawn to decision of tribunal in ITA no. 1584/Mum/2010 for AY 2009-10 in the case of Viacom 18 Media Private Limited v. ADIT(E), wherein tribunal decided the issue of transponder fees in favour of Revenue by holding the same to be Royalty u/s 9(1)(vi) of the 1961 Act. 5.2. The learned counsel for the assessee on the other hand relied upon the decision in assessee‟s own case for AY 2011-12 of Hon‟ble Bombay High Court in CIT v. UTV Entertainment Television Limited reported in (2017) 88 taxmann.com 214 (Bom) , dated 11.10.2017 wherein Hon‟ble Bombay High Court held that carriage fee/Channel Placement Fees are paid for standard fee or Channel Placement Fee for broadcasting of channel on any frequency and the same cannot be held to be in the nature of Commission or Royalty. The learned counsel for the assessee also relied upon decision of Hon‟ble Bombay High Court in the case of CIT v. Zee Entertainment Enterprises Limited reported in (2018) 92 taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2012 w.e.f. 01.06.1976. Thus it was contended by learned CIT-DR that in all the aforesaid decisions of Hon‟ble Bombay High Court relied upon by learned counsel for the assessee , the aforesaid amendment to Section 9(1)(vi) of the 1961 Act by insertion of Explanation 6 was not discussed . The Ld. CIT-DR relied upon the decision of Mumbai tribunal in ITA no. 1584/Mum/2010 for AY 2009-10 in the case of Viacom 18 Media Private Limited v. ADIT(Int. Tax) , wherein transponder fees were held to be Royalty keeping in view Explanation 6 to section 9(1)(vi). The learned CIT DR also placed reliance on the decision of Hon‟ble Kerala High Court in the case of CIT v. PVS Memorial Hospital Limited in ITA no. 2 of 2012 and 16 of 2014 judgment dated 20/07/2015 reported in (2015) 60 taxmann.com 69 (Ker. HC) and it was submitted that if income-tax is deducted at source under Chapter XVII-B by invoking wrong provisions of the 1961 Act leading to short deduction of income-tax at source, the additions are required to be made by invoking provisions of Section 40(a)(ia) of the 1961 Act . It was submitted by learned CIT DR that these payments are royalty payments keeping in view E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t deduction of income-tax deducted at source by invoking provisions of Section 40(a)(ia) of the 1961 Act read with Section 194J of the 1961 Act. The tribunal has decided this issue in favour of the assessee for AY 2008-09 to 2011-12 by holding that Carriage Fees/Channel Placement Fees are covered under the definition of work‟ as specified u/s. 194C and the assessee rightly deducted income-tax at source u/s. 194C of the Act. We also note that those decisions were rendered in context of provisions of Section 201(1) and 201(1A) of the 1961 Act . The tribunal in ITA no. 2699/Mum/2012 for AY 2008-09 in assessee‟s own case ( common order passed by tribunal for AY 2008-09 to 2011-12) , vide appellate orders dated 29.10.2014 held as under:- '6. We have considered the rival submissions and relevant material on record, There is no dispute that the payment in question was made by the assessee to the cable operators/ MSOs for placing the TV channels in the prime band in order to enhance the viewership and better advertisement revenue. In the case of Kurukshetra Durpans (P) Ltd. Vs. CIT (supra}, the Hon'ble High Court of Punjab Haryana while dealing wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 making payment by itself does not do the work of broadcasting and telecasting and is therefore outside the purview of Section 194C of the Act. This argument deserves to be negated at the threshold. As we have pointed out earlier what the assessee subscriber is looking for is to obtain the telecast signals from the licensor, which is enough to deduce that the impugned contract involves broadcasting and telecasting of TV signals. Moreover, the licensor or the company, as is evident from the specimen agreement on record, in the business of distribution of satellite based TV channels and has exclusive rights to market and distribute said services in India, the service that is referred to in the agreement is the broadcasting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 ITAT 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 falls under the ambit of provisions of section 194C, then In view of the decision of Hon ble Delhi High Court (supra), the provisions of section 194J con not be applied on such payments. The CBDT Circular No. 720 dated 30.08.1995.also supports this view as it was clarified in the said circular as under- 1261.Payment of any sum shall be liable for deduction of tax only under one section. It has been brought to the notice of the board that in some case persons responsible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order reads thus : 3. During the Survey, on perusal of the books of accounts of the assessee company, it was found that for Financial Years 201011, the year under consideration the assessee company has debited an amount of ₹ 33,24,56,189/on account of carriage fees , ₹ 8,20,650/on account of Editing expenses and ₹ 12,95,400/on account of Dubbing Charges. The assessee was asked to give the details of the Carriage Fees, Editing Expenses and Dubbing Charges paid by the company and the services rendered to them along with copies of Agreements made in this regard. The assessee has deducted TDS as per the provisions of section 194C of the I.T.Act on such payment. On further perusal of the Agreements submitted by the assessee it is seen that these payments are given to MSO/Cable Operators to retransmit and/or carry the service of the channels on 'S' Band in their respective territories. The services provided by these MSOs / Cable Operators does not come within the purview of section 194C of the I. T. Act, as placing the service of the channel on 'S' Band is a Technical Service for which the TDS is required to be deducted as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the cable operators for placement of channels on agreed frequencies on which the respondent wishes to place a particular channel. The placement fee is the consideration for providing choice of the desired placement of the channels. That is how, channel placement charges are paid to the cable operators under the agreement. Under the agreement, the cable operators agree for placing a particular channel on agreed frequency band. As stated earlier, the respondent has deducted tax at the rate of 2% at source by invoking Section 194C of the Income Tax Act while making payment towards placement fees to the cable operators/ MSOs. If Section 194J is to be applied, the deduction would be of 10%. The Commissioner (Appeals) has also gone through the method followed by the cable operators/ MSOs. The Commissioner (Appeals) has also gone into the submission of the Revenue that, in fact, Section 194J would apply. In substance, the argument is that placement charges are basically for rendering technical service. The Commissioner (Appeals) has recorded a finding of fact on the basis of material on record that the placement charges are consideration for placing the channels on agreed frequency ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subtitles are textual versions of the dialogs in the films and television programmes which are normally displayed at the bottom of the screen. Sometimes, it is a textual version of the dialogs in the same language. It can also be a textual version of the dialogs in a particular language other than the language of the film or the TV programme. Again the stand of the Revenue was that this will be covered by Section 194J and not by Section 194C. We must note here that in this appeal, the Revenue has not made any grievance regarding applicability of Section 194C to dubbing charges. The finding of fact recorded by the Commissioner (Appeals), which is confirmed by the Appellate Tribunal, is that work of subtitling will be covered by the definition of work in clause (iv) of explanation to Section 194C. Reliance is placed by the Commissioner (Appeals) on the CBDT notification dated 12th January 1977. The said notification includes editing in the profession of film artists for the purpose of Section 44AA of the Income Tax Act. However, the service of subtitling is not included in the category of film artists. As noted earlier, subclause (b) of clause (iv) of the explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same are dismissed with no order as to costs. 9.3 Thus, in assessee‟s own case Hon‟ble Bombay High Court for AY 2008-09 to 2011-12 has held Carriage Fee/Channel Placement Fees to be covered within scope of Work‟ defined under sub-clause (b) to clause (iv) of the Explanation to Section 194C of the 1961 Act. We have also observed that Hon‟ble Bombay High Court in the case of CIT v. Times Global Broadcasting Co. Ltd., (2019) 105 Taxmann.com 313 (Bom) has held Carriage Fees/ Channel Placement Fees paid to cable operators /MSO/DTH operators being payment for work contract covered u/s 194C of the 1961 Act by relying on the decision of Hon‟ble Bombay High Court in the case CIT v. UTV Entertainment Television Ltd. (supra) wherein Hon‟ble Bombay High Court held that no substantial question of law arose in the said appeal of Times Global(supra), by holding as under:- 1. This Appeal under Section 260A of the Income Tax Act, 1961 (the Act) challenges the common order dated 27th March, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is a common order for Assessment Years 200809 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act before us to contend that the Carriage Fees/Channel Placement fees are towards a Process‟ as defined in Explanation 6 and hence is Royalty on which income-tax ought to have been deducted at source u/s 194J of the 1961 Act @10%. The learned CIT-DR has placed heavy reliance on the decision of Mumbai-tribunal in the case of Viacom 18 Media Private Limited v. ADIT(Int. Tax) in ITA no. 1584/Mum/2010 for AY 2009-10 vide orders dated 28.03.2014(common order for AY 2009-10 to 2011-12 passed by tribunal) wherein tribunal held that transponder fee payable by the tax-payer to be Royalty within definition of Section 9(1)(vi) of the 1961 Act read with Explanation 2 and 6 of the 1961 Act. We have observed that tribunal in the case of Viacom 18 Media Private Limited for AY 2013-14 to 2015-16 vide orders dated 09.07.2018 held that no income-tax was required to be deducted at source on transponder fees paid by Viacom to Intelsat Corporation as the said sum was found not to be exigible to income-tax in India in the hands of Intelsat by Hon‟ble Delhi High Court in the case of DIT(international Taxation) v. Intelsat Corporation in ITA no. 977/2011 dated 19.08.2011. We are presently no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levision Ltd. (supra) had preferred an appeal to this Court being CIT v. UTV Entertainment Television Ltd. [2017] 88 taxmann.com 214/399 ITR 443 (Bom.) and by its order the appeal of the Revenue was dismissed. (b) In the above view, the question (i) as proposed does not give rise to any substantial question of law. Thus, not entertained. 9.5 Similarly, in the case of CIT v. UTV News Limited in ITA no. 1384, 1437, 1446 and 1448 of 2016, vide judgment dated 18.01.2019 dismissed the tax-appeals filed by Revenue by holding that no substantial question of law arises in those appeal by following the decision of Hon‟ble Bombay High Court in the case of CIT v. UTV Entertainment Television Limited(supra) wherein it was held that payments towards Carriage Fees/Channel Placement Fees are subject to income-tax deduction at source u/s 194C of the 1961 Act. Similar view was taken by Hon‟ble Bombay High Court in the case of CIT v. Genx Entertainment Limited in ITA no. 155 and 156 of 2016 vide judgment dated 26.03.2018 ( judgment later modified vide order dated 13.04.2018). The Hon‟ble Bombay High Court has also upheld deletion of additions t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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