S. Kalpana, Hyderabad V. ITO,Ward-1, Chttoor District

ITA 1162/HYD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6262 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 09-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: S RAMA RAO
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1162/HYD/2014 ASSESSMENT YEAR : 2010-11 S. KALPANA, MADANAPALLE VS. INCOME TAX OFFICER, WARD-1, MADANAPALLE. PAN: AMVPS 0330 E APPELLANT RESPONDENT FOR ASSESSEE: SHRI S. RAMA RAO (AR) FOR REVENUE: SHRI K.E. SUNIL BABU (D.R.) DATE OF HEARING: 20/07/2016 DATE OF PRONOUNCEMENT: 27/07/2016 O R D E R PER LALIET KUMAR, J.M. : THIS IS THE APPEAL FILED BY THE ASSESSEE ARI SES AGAINST THE ORDER DATED 28/02/2014 PASSED BY THE LD. CIT(A), GU NTUR FOR THE A.Y. 2010-11. THE EFFECTIVE GROUNDS TAKEN BY THE ASSES SEE IS REPRODUCED AS UNDER:- 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS BO TH ON FACTS AND IN LAW. 2(A) THE LEARNED CIT(A) ERRED IN HOLD.ING THAT THE AMOUNTS PAID TO PAY CHANNELS OF RS. 60,08,000/- ARE GOVERNE D BY THE PROVISIONS OF SEC. 194C OF THE IT ACT AND THAT THE APPELLANT IS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE UNDER THE SAID S ECTION. I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 2 -: (B) THE LD. CIT(A) ERRED IN HOLD.ING THAT HE PROVI SIONS OF SEC. 40(A)(IA) OF THE IT ACT ARE APPLICABLE TO THE FACTS OF THE CASE WHEN THE APPELLANT CANNOT BE TREATED AS THE PERSON IN DE FAULT; WHEN THE AMOUNTS WERE ALREADY PAID DURING THE PREVIOUS YEAR AND WHEN NO DEDUCTION U/S 194C NEEDS TO BE MADE. (C) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIO N MADE OF RS. 60,08,000/- U/S 40(A)(IA) OF THE IT ACT. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOW ANCE OF RS. 1,50,880/- PAID TO MR. SEENA BY APPLYING THE PR OVISIONS OF SEC. 40(A)(IA) OF THE IT ACT WITHOUT PROPERLY CONSIDERIN G THE DETAILED EXPLANATION SUBMITTED. 2. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AFTER THE DELAY OF 8 DAYS, FOR WHICH THE ASSESSEE HAS FILED AN AFFIDAV IT AND STATED THE FACTS ABOUT THE DELAY FILING OF THE APPEAL AND PRAYED TO CONDONE THE DELAY. 3. THE LD. DR HAS RAISED OBJECTION AND PRAYED NOT TO C ONDONE THE DELAY IN FILING THE APPEAL. 4. WE HAVE PERUSED THE CONDONATION APPLICATION FILED B Y THE ASSESSEE. SHE HAS STATED ABOUT THE FACTS IN DELAY FILING THE APPEAL. FOR THE REASONS MENTIONED IN THE AFFIDAVIT FILED FOR C ONDONATION OF DELAY, THERE IS PLAUSIBLE REASON TO CONDONE THE DELAY. THEREFORE, THE DELAY OF 8 DAYS IN FILING THE APPEAL BY THE ASSESS EE IS CONDONED. I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 3 -: 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGA GED IN PROVIDING OF CABLE TV CONNECTIONS IN THE TOWN OF MADAM APALLE AND FILED HER RETURN OF INCOME FOR THE YEAR UNDER CO NSIDERATION THROUGH E-FILING ON 15/10/2010 DECLARING A NET LOSS O F RS. 2,30,460/-. IN THE SCRUTINY ASSESSMENT, THE ASSESSEE A PPEARED BEFORE THE LD. A.O., HE RAISED A DEMAND OF RS. 23,14 ,450/- AFTER COMPLETING ASSESSMENT U/S 143(3) OF THE ACT. 6. BEING AGGRIEVED BY THE ORDER OF THE LD. A.O., THE A SSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). BEFORE THE LD . CIT(A), THE ASSESSEE HAD MADE FOLLOWING SUBMISSION: (I) THE ASSESSEE HAS VOLUNTARILY MADE PAYMENT OF RS. 1,20,167/- ON 30/03/2012 I.E. PRIOR TO RECEIPT OF THE NOTICE FROM THE DEPARTMENT. IT WAS FURTHER SUBMITTED THAT THE DELAY IN DEPOSITING THE TDS WAS ON ACCOUNT OF FAMILY PROBLEM AND LOSS ACCRUED TO THE BUSINESS. (II) IT WAS FURTHER CONTENDED THAT THERE WAS NO RE LOSS TO THE DEPARTMENT AS THE TDS HAS BEEN DEPOSITED BY THE ASSES SEE. (III) THE ASSESSEE FURTHER SUBMITTED THAT IN VIEW OF TH E JUDGMENT OF THE SPECIAL BENCH OF VISHAKHAPATNAM BENCH OF THE ITAT IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD. 136 ITD 23 (SB), THE AMOUNT HAS ALREADY BEEN PAID TO THE CHANNEL SERVICE I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 4 -: PROVIDER AND NOTHING IS DUE AND PAYABLE. THEREFORE, THE PROVISION IS NOT ATTRACTIVE. (IV) THE ASSESSEE FURTHER SUBMITTED BEFORE THE LD. CIT (A) THAT THE PROVISIONS OF SECTION 194C OF THE INCOME TAX AC T, 1961 (IN SHORT THE ACT) ARE NOT ATTRACTED AS THE ASSESSEE HAD B EEN FALL IN THE CATEGORY OF WORK DONE U/S 194C OF THE ACT. IT WAS C ONTENDED THAT THE WORK HAS BEEN DEFINED UNDER THE EXPLANATION TO TH E SECTION, WHICH INCLUDES ADVERTISING, BROADCASTING AND TELECASTING INCLUDING BROAD PRODUCTION OF THE PROGRAMME FOR SUCH BROADCASTING OR TELECASTING. IT IS THE CASE OF THE APPE LLANT BEFORE THE LD. CIT(A) THAT THE APPELLANT IS MERELY A FACILITATOR TO THE BROADCASTING BY PROVIDING STATION WHERE THE INFORMATIO N IS RECEIVED AND SENT TO THE LOCAL AREAS. THE APPELLANT IS WORKING FOR THE BROADCASTING COMPANY BUT THE BROADCASTING COMPANY I S NOT WORKING UNDER THE APPELLANT. THEREFORE SECTION 194C O F THE ACT IS NOT APPLICABLE. IT WAS SUBMITTED THAT THE CONTRACT FOR THE APPELLANT IS TO RECEIVE THE BROADCASTING MATERIAL AND F ACILITATE THE PEOPLE OF MADANAPALLE TO RECEIVE GOOD SIGNALS OR CLE AR SIGNALS. THEREFORE, THE RIGOROUS OF SECTION 194 OF THE ACT ARE NOT APPLICABLE. LASTLY, THE ASSESSEE IS RELIED UPON THE JU DGMENT OF THE AGRA BENCH OF THE ITAT IN THE CASE OF ITO VS BAL KISH AN GUPTA (2013) 36 TAXMANN.COM 518 (AGRA TRIB). I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 5 -: 6.1 THE LD. CIT(A) AFTER CONSIDERING THE ENTIRE SUBMIS SIONS OF THE ASSESSEE AND ALSO THE JUDGMENT PASSED BY THE HONBLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF KURUKSHETRA DARPANS (P) LTD. VS. CIT (P&H) 217 CTR 326 WHEREIN IT HAS BEEN HELD. THAT SECTION 194C OF THE ACT ARE APPLICABLE TO THE FACTS OF THE CASE. THE REASONING OF THE LD. CIT(A) IS AS UNDER:- 5.9 I HAVE PERUSED THE SUBMISSIONS MADE BY THE APP ELLANT AS WELL AS THE ORDER OF THE HON'BLE ITAT, AGRA BENCH IN THE C ASE OF SRI BALALKISHAN GUPTA DISCUSSED ABOVE AND THE ORDER OF THE HON'BLE PUNJAB HARYANA HIGH COURT IN THE CASE OF KURUKSHETR A DARPANS P.LTD, RELIED UPON BY THE ASSESSING OFFICER, AND AL SO THE AGREEMENT BETWEEN THE APPELLANT AND STAR DEN MEDIA SERVICES P. LTD, WHICH IS A LICENSOR FOR VARIOUS 'TV CHANNELS. THE POSITION OF THE APPELLANT AND THE AGREEMENT ENTERED INTO BY HER WITH STAR DEN MEDIA SERVICES P. LTD IS EXACTLY SIMILAR TO THAT OF BALAKISHAN GUPTA. PROP.VARUN CABLE NETWORK, THE APPELLANT BEFO RE THE HON'BLE ITAT, AGRA BENCH AS WELL AS, THAT ENTERED I NTO BY KURUKSHETRA DARPANS P. LTD. WHOSE CAASE WAS DECIDED BY THE HONBLE PUNJAB & HARYANA HIGH COURT. SIMILAR TO THE OTHER TWO CASES, THE AGREEMENT ENTERED INTO BY THE APPELLANT DESCRIBES HIM AS AN AFFILIATE. THE APPELLANT IS IN THE BUSINESS OF D ISTRIBUTING CABLE CONNECTIONS TO HER CUSTOMERS AND CHARGES SUBSCRIPTI ON FEE FROM THEM. THE APPELLANT HAS ENTERED INTO A CONTRACT WIT H THE LICENSOR OF VARIOUS TV CHANNELS VIZ., STAR DEN MEDIA P.LTD. THE LICENSOR HAS EXCLUSIVE RIGHTS TO MARKET AND DISTRIBUTE SATELLITE BASED TV SERVICES TO VARIOUS CUSTOMERS. THE APPELLANT BEING AN AFFILIATE COLLECTS SUBSCRIPTION FEE FROM THE USERS AND PAYS I T TO THE LICENSOR BASED ON THE NUMBER OF CUSTOMERS THAT THE APPELLANT HAS ON RECORD. I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 6 -: 5.10 ON SIMILAR FACTS, PUNJAB HARYANA HIGH COURT I N THE CASE OF KURUKSHETRA DARPANS P. LTD HAS HELD. AS UNDER: ''IT IS ALSO RELEVANT TO MENTION HERE THAT IN THE A GREEMENT 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 AND HAS EXCLUSIVE RI GHTS TO MARKET AND DISTRIBUTE THE SERVICES IN INDIA TO VARIOUS CUS TOMERS AND USERS OF THE SERVICE'. FURTHER, THE AGREEMENT REFERS TO T HE ASSESSEE- SUBSCRIBER AS A PARTY, WHICH IS DESIROUS TO SUBSCRI BE FOR AND RECEIVE THE TELECAST SIGNALS OF THE SERVICE FROM THE COMPAN Y IN ORDER TO FURTHER DISTRIBUTE THE SAME TO THE CUSTOMER(S). FROM THE RECITAL OF THE AGREEMENT ITSELF; IT IS CLE AR THAT THE SERVICE THAT THE ASSESSEE-SUBSCRIBER IS AVAILING IS THE RECEIPT OF 'TELECASTING SIGNALS' FROM THE LICENSOR OR THE COMP ANY. 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 LICEN SOR OR COMPANY CERTAINLY INCLUDES WITHIN ITS AMBIT BROADCASTING AN D TELECASTING FACILITY. THE ESSENCE OF THE CONTRACT IS TO OBTAIN BROADCASTING AND TELECASTING OF TV CHANNELS AND THEREAFTER ITS DISTR IBUTION AMONGST ULTIMATE CUSTOMERS THROUGH THE CABLE NETWORK OF THE ASSESSEE. ANOTHER PLEA OF THE ASSESSEE/SUBSCRIBER WAS THAT TH E LICENSOR OR THE PERSON TO WHOM THE ASSESSEE IS MAKING PAYMEN T BY ITSELF DOES NOT DO THE WORK OF BROADCASTING AND TELECASTIN G AND IS THEREFORE OUTSIDE THE PURVIEW OF SECTION 194C OF TH E ACT. THE ARGUMENT DESERVES TO BE NEGATED AT THE THRESHOLD.. AS WE HAVE POINTED OUT EARLIER WHAT THE ASSESSEE-SUBSCRIBER IS LOOKING FOR TO OBTAIN THE TELECAST SIGNALS FROM THE LICENSOR, WHIC H IS ENOUGH TO DEDUCE THAT THE IMPUGNED CONTRACT INVOLVES BROADCAS TING AND I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 7 -: TELECASTING OF TV SIGNALS. MOREOVER, THE LICENSOR O R THE COMPANY, AS IS EVIDENT FROM THE SPECIMEN AGREEMENT ON RECORD , IN THE BUSINESS OF DISTRIBUTION OF SATELLITE BASED TV CHAN NELS AND HAS EXCLUSIVE RIGHTS TO MARKET AND DISTRIBUTE SAID SERV ICES IN INDIA THE SERVICE THAT IS REFERRED TO IN THE AGREEMENT IS THE BROADCASTING AND TELECASTING OF TV SIGNALS. 5.11 THE HON'BLE ITAT, AGRA BENCH IN THE CASE OF B ALAKISHAN GUPTA, DISCUSSED ABOVE, SOUGHT TO DISTINGUISH THE CASE FRO M THAT OF KURUKSHETRA DARPANS P.LTD ON THE GROUND THAT KURUKS HETRA DARPANS P.LTD WAS A CABLE OPERATOR ENGAGED FOR BROA DCASTING AND TELECASTING SIGNALS WHEREAS IN THE CASE OF BALAKISH AN GUPTA THE APPELLANT RECEIVED PACKAGED SIGNALS WHICH WERE GIVE N TO OTHER CABLE OPERATOR WITHOUT MODIFICATION. 5.12 A PERUSAL OF THE AGREEMENT SIGNED BY THE APPE LLANT SHOWS THAT SHE IS DISTRIBUTING SIGNALS DIRECTLY TO HER CUSTOMERS S INCE ANNEXURE-F OF THE AGREEMENT DT 15.9.10 ENTERED INTO WITH STAR DEN MEDIA P.LTD CLEARLY MENTIONS THAT THE AFFILIATE DOES NOT HAVE A NY LCO OR LOCAL CABLE OPERATOR. THIS INDICATED THAT SHE IS DISTRIBU TING THE SIGNALS DIRECTLY TO CUSTOMERS. THUS ON READING OF THE DECIS ION OF THE HON'BLE PUNJAB HARYANA HIGH COURT AS WELL AS THE DE CISION OF ITAT, AGRA BENCH, THE APPELLANT IS CLEARLY ENGAGED IN BROADCASTING AND TELECASTING SIGNALS WHICH AMOUNTS TO 'WORK' AS DEFINED IN EXPLANATION III TO THE PROVISO TO SEC. 1 94C(2). 5.13 THE SECOND ISSUE THAT ARISES IS WHETHER THE A PPELLANT HAS ENTERED INTO A CONTRACT TO RECEIVE OR PROVIDE SERVICES OR A S WAS HELD. BY CIT(A), AGRA IN THE CASE OF BALAKISHAN GUPTA, THE R ELATIONSHIP BETWEEN THE APPELLANT AND CHANNEL PROVIDER IS AKIN TO MANUFACTURER AND DISTRIBUTOR. THE TEST TO DETERMINE WHETHER A CO NTRACT IS FOR PROVIDING SERVICES OR FOR SALE OF GOODS IS WHETHER THE TRANSACTION IS I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 8 -: LIABLE FOR LEVY OF VAT OR SERVICE TAX. IN THE INSTA NT CASE THE SERVICE BEING PROVIDED BY THE APPELLANT AS WELL AS BY THE LICENSOR CARRIES AN ELEMENT OF SERVICE TAX AND NOT VAT. 'THU S, IT CLEARLY IS A CONTRACT FOR PROVISION OF SERVICES AND NOT FOR SALE OF GOODS. FURTHER, AS MENTIONED IN THE ORDER OF THE HON'BLE P UNJAB HARYANA HIGH COURT THE AGREEMENT BETWEEN THE APPELLANT AND LICENSOR REFERS TO THE LICENSOR AS A COMPANY ENGAGED IN THE BUSINESS OF DISTRIBUTION OF SATELLITE BASED TV CHANNEL SERVICES AND HAS EXCLUSIVE RIGHTS TO MARKET AND DISTRIBUTE CERTAIN C HANNEL SERVICES IN INDIA. FURTHER THE AGREEMENT ALSO STATES THAT THE A PPELLANT BEING THE AFFILIATE IS DESIROUS OF DISTRIBUTING THE SUBSCRIBE D CHANNELS IN THE AREA TO THE SUBSCRIBERS. THUS, IT IS CLEAR THAT THE LICENSOR AND THE AFFILIATE I.E. THE APPELLANT ARE IN THE BUSINESS OF PROVIDING SERVICES. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR OF THE ASSESSEE BRING TO OUR NOTICE ABOUT OFFICE ORDER DATED 29/2/2016 TO THE FOLLOWING EFFECT: SECTION 194C, READ WITH SECTION 194J, OF THE INCOME.TAXACT, 1961. DEDUCTION OF TAX AT SOURCE. CONTRACTORS/SUB.CONTRACTORS, PAYMENTS TO TAX DEDUCTION AT SOURCE (TDS) ON PAYMENTS BY BROADCASTE RS OR TELEVISION CHANNELS TO PRODUCTION HOUSES FOR PRODUCTION OF CONTENT OR PROGRAMME FOR TELECASTING CIRCULAR NO.4/2016 [F.NO.275/07/2016-IT(B)], DATED 29-2-2016 THE ISSUE OF APPLICABILITY OF TDS PROVISIONS ON PAY MENTS MADE BY BROADCASTERS/TELECASTERS TO PRODUCTION HOUSES FOR P RODUCTION OF CONTENT OR PROGRAMME FOR BROADCASTING/TELECASTING BAS BEEN EXAMINED BY CBDT IN VIEW OF REPRESENTATIONS RECEIVED IN THIS REGARD. 2. IT HAS BEEN NOTED THAT DISPUTES HAVE ARISEN ON THE ISSUE AS TO WHETHER PAYMENTS MADE BY THE BROADCASTER/TELECASTER TO PRODUCTION HOUSES FOR PRODUCTION OF CONTENT/PROGRAM ME ARE I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 9 -: PAYMENTS UNDER A 'WORK CONTRACT' OR A CONTRACT FOR 'PROFESSIONAL OR TECHNICAL SERVICES' AND, THEREFORE, LIABLE FOR TDS U1S 194C OR U/S 1941 OF THE INCOME-TAX ACT, 1961 (THE ACT. 3. WHILE APPLYING THE RELEVANT PROVISION OF TDS ON A CONTRACT FOR CONTENT PRODUCTION, A DISTINCTION IS REQUIRED TO BE MADE BETWEEN (I) A PAYMENT FOR PRODUCTION OF CONTENT/PROGRAMME A S PER THE SPECIFICATIONS OF THE BROADCASTER/TELECASTER AND (I I) A PAYMENT FOR ACQUISITION OF BROADCASTING/TELECASTING RIGHTS OF T HE CONTENT ALREADY PRODUCED BY THE PRODUCTION HOUSE. 4. IN THE FIRST SITUATION WHERE THE CONTENT IS PRO DUCED AS PER THE SPECIFICATIONS PROVIDED BY THE BROADCASTER/TELECAST ER AND THE COPYRIGHT OF THE CONTENT/PROGRAMME ALSO GETS TRANSF ERRED TO THE TELECASTER/BROADCASTER, IT IS HEREBY CLARIFIED THAT SUCH CONTRACT IS COVERED BY THE DEFINITION OF THE TERM 'WORK' IN SEC TION 194C OF THE ACT AND, THEREFORE, SUBJECT TO TDS UNDER THAT SECTI ON. THIS POSITION CLEARLY FLOWS FROM THE DEFINITION OF 'WORK' GIVEN I N CLAUSE (IV)(B) OF THE EXPLANATION TO SECTION 194C AND THE SAME HAS BE EN CLARIFIED VIDE QN .NO. 3 OF CIRCULAR NO. 715 DATED 8.8.1995. 5. HOWEVER, IN A CASE WHERE THE TELECASTER/BROADCA STER ACQUIRES ONLY THE TELECASTING/BROADCASTING RIGHTS OF / THE CONTEN T ALREADY PRODUCED BY THE PRODUCTION HOUSE, THERE IS NO CONTR ACT FOR 'CARRYING OUT ANY WORK', AS REQUIRED IN SUB-SECTION (1) OF SECTION 194C. THEREFORE, SUCH PAYMENTS ARE NOT LIABLE FOR T DS UNDER SECTION 194C. HOWEVER, PAYMENTS OF THIS NATURE MAY BE LIABLE FOR TDS UNDER OTHER SECTIONS UNDER CHAPTER XVII -C OF T HE ACT. ON THE BASIS OF THE CIRCULAR, IT WAS CONTENDED BY THE L D. AR OF THE ASSESSEE THAT THE A.O. HAS MADE THE ADDITION ON THE ASSE SSEE BY APPLYING THE PROVISIONS OF SECTION 194C AND TREATING THE ASSESSEE I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 10 -: AS A BROADCASTER OF THE PROGRAMS OF THE BROADCASTING CO MPANY/TV CHANNELS. FURTHER IT WAS SUBMITTED THAT THE CASE OF THE ASS ESSEE IS SIMILAR TO THE FACTS IN THE ORDER PASSED BY THE AGR A TRIBUNAL IN THE CASE OF ITO VS BAL KISHAN GUPTA WHEREIN THE TRIBU NAL AFTER DETAIL EXAMINATION OF THE FACTS HAS HELD. THAT SECTION 194 C IS NOT ATTRACTED TO THE BUSINESS OF THE ASSESSEE. THE LD. AR HAS ALSO BROUGHT TO OUR NOTICE THE VARIOUS PROVISIONS OF AGREE MENT ENTERED BETWEEN THE ASSESSEE AND STAR DEN DATED 13/4/2010 (MCT V COOMUNICATIONS) THROUGH SHRI S. RAVI KANTH. MORE PA RTICULARLY, THE CLAUSE PERTAINING TO THE RIGHTS GRANTED, THE SUBSCRI PTION FEES, OBLIGATION OF THE AFFILIATE, EVENT/PROGRAMME OPTION ON THE BASIS OF THE ABOVE SAID PROVISIONS, IT WAS POINTED OUT THAT THE ASS ESSEE HAS NO RIGHT TO CUT, ADDED, SCROLL ANY OF THE PROGRAMS DISTRIBUTED BY THE ASSESSEE TO ITS SUBSCRIBER. IT WAS CONTENDED THA T THE ASSESSEE MERELY TELECASTING/BROADCASTING THE ALREADY P RODUCED PROGRAMS TO THE SUBSCRIBER AND THEREFORE, IT WAS SUBMI TTED THAT THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE. 8. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE PROVISIONS OF SECTION 194C ARE ATTRACTED AND HE RELIES UPON THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT AND MORE PARTICULARLY IN PARAGRAPH NO. 5.10 OF THE LD. CIT(A) S ORDER AND TO SAY THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE S TAR I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 11 -: DEN/CHANNEL IS OF THE PRINCIPAL AND AGENT. THE PRINCI PAL IS THE ASSESSEE AND IT ENGAGES THE CHANNEL TO PROVIDE BOUQUET OF CHANNELS THROUGH THE EQUIPMENT OF THE STAR DEN. HE ALSO RELIED UPON THE CLAUSE-8 OF THE AGREEMENT OF THE STAR DEN TO TH E GENERAL TERMS AND CONDITIONS. PARAGRAPH NO. 8 OF THE SCHEDUL E-2 OF THE AGREEMENT SAYS THAT THE EQUIPMENT/DEVICES/VIEW CARD/DSR IS TO BE ISSUED BY THE STAR DEN AND THEREFORE, THE ASSESSEE C OMES WITHIN THE DEFINITION OF THE WORK DEFINED IN SECTION 19 4C OF THE ACT. IT WAS FURTHER CONTENDED THAT THE ASSESSEE ON THE ONE HAND IS CLAIMING HIMSELF TO BE MERELY A FACILITATOR AND ON THE OTHER HAND IS CLAIMING THE BENEFIT UNDER THE CBDT CIRCULAR DATED 29/02/2016 BY CLAIMING HIMSELF TO BE BROADCASTER. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS PER CASE OF THE ASSESSEE, HE IS NEITHER THE BROADCASTER NOR IS IN TELEC ASTING OF THE TV PROGRAMS. IN FACT THE CHANNEL LIKE STAR-DEN ARE BRO ADCASTING THE TV PROGRAMME IRRESPECTIVE OF THE ARRANGEMENT WITH T HE ASSESSEE, OR THE ARRANGEMENT THE ASSESSEE IS HAVING W ITH ITS CONSUMER. IN FACT, THE TV CHANNELS ARE NOT BROADCASTING THE PROGRAMS ON THE REQUEST OF THE ASSESSEE OR ON THE REQ UEST OF CONSUMERS. IN OUR VIEW, THE ASSESSEE IS PROVIDING AN D FACILITATING THE DISTRIBUTION OF THE VIEWERSHIP/TV CHANNEL THROUGH I TS EQUIPMENT/CABLE LINE/NETWORK. FOR THE PURPOSES OF ATTR ACTING THE I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 12 -: CBDT CIRCULAR DATED 29/02/2016, THE ASSESSEE IS EITHE R REQUIRED TO BE BROADCASTER OR TELECASTER. IN OUR VIEW, THE ASSES SEE WAS NEITHER A BROADCASTER NOR IN TELECASTING OF THE TV PRO GRAMS. IN FACT AGRA BENCH IN THE SIMILAR FACTS IN THE MATTER OF INCOME-TAX OFFICER (A.O.) WARD-1(4) VS BAL KISHAN GUPTA [2013] 36 TAXMANN.COM 518 (AGRA - TRIB.) HAD EXAMINED THE MEANING OF BROADCASTING OR TELECASTING OF PROGRAMMES . WE ARE REPRODUCING THE FI NDING OF THE TRIBUNAL FOR THE PURPOSES OF CLARITY AND UNDERSTANDING : 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PARTI ES AND RECORDS PERUSED. THE CRUX OF THE MATTER UNDER CONSIDERATION WHETHER UNDER THE FACTS AND CIRCUMSTANCES EXPLANATION-(IV)(B) OF SECTION 194C O F THE ACT IS APPLICABLE OR NOT. THE SAID EXPLANATION-(IV)(B) READS AS UNDER :- (AS APPLICABLE FROM 01.06.2008. BEFORE 01.06.2008, THE MEANING OF 'WORKS' IS COVERE D BY EXPLANATION (III)(B) OF THE ACT.): '(IV) 'WORK' SHALL INCLUDE (A) ** ** ** (B ) BROADCASTING AND TELEC ASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING;' 8. THE MEANING 'WORKS' FOR THE PURPOSE SECTION 194C O F THE ACT IS APPLICABLE UNDER FOLLOWING CIRCUMSTANCES :- (1) BROADCASTING AND (2) TELECASTING (3) INCLUDING PRODUCTION OF (I) BROADCASTING (II) TELECASTING 9. NOW, TO EXAMINE THE ISSUE UNDER CONSIDERATION, WE WOULD LIKE TO SEE WHAT IS THE DICTIONARY MEANING OF 'BROADCASTING' AND 'TELEC ASTING'. THE DICTIONARY MEANING AS PER DIFFERENT DICTIONARIES ARE AS UNDER : '(I) AS PER HINKHOJ.COM :- I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 13 -: MEANING OF BROADCAST IN ENGLISH: - MESSAGE THAT IS TRANSMITTED BY RADIO OR TELEVISION - A RADIO OR TELEVISION SHOW; 'DID YOU SEE HIS PROGRA M LAST NIGHT ?' - BROADCAST OVER THE AIRWAVES, AS IN RADIO OR TELEVIS ION; 'WE CANNOT AIR THIS X-RATED SONG' MEANING OF TELECAST IN ENGLISH: - A TELEVISION BROADCAST - BROADCAST VIA TELEVISION; 'THE ROYAL WEDDING WAS TE LEVISED' (II) AS PER ' ANGREZY - HINDI KOSH (AN ENGLISH - HINDI DICTIONARY )' , I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 14 -: (III) AS PER 'THE NEW INTERNATIONAL WEBSTER'S COMPREHENSI VE DICTIONARY OF THE ENGLISH LANGUAGE' BROADCAST : (1) TO SEND OR TRANSMIT (MUSIC, NEWSCASTS, ETC.) BY RADIO OR TELEVISION. (2) TO SCATTER OR CAST, AS SEED, OVER A WIDE AREA; SOW. (3) TO DISSEMINATE; MAKE PUBLIC, AS GOSSIP. (4 ) TO SPEAK, SING, ETC., FOR BROADCASTING PROPOSES - ADJ. (1) TRANSMITTED BY RADIO. (2) CAST OR SCATTERED ABROAD, AS SEEDS - N. (1) TELECOM (A) THE PROCESS OF TRANSMITT ING A PROG RAM BY RADIO. (B) A RADIO PROGRAM. (C) THE TIME PER IOD OF A BROADCAST. 2 A CASTING OR SCATTERING OF SEED, ETC. OVER THE GROUND - ADV. BY SCATTERING ABROAD, OR SO AS TO SCATTER ABROAD OR DISSEMINATE. BROADCASTER : (1) ONE WHO OWNS OR OPERATES A BROADCASTI NG STATION. (2) ONE WHO MAKES BROADCASTS. TELECAST : TO BROADCAST BY TELEVISION - N. A PROGRAM BROADCAST BY TELEVISION. TELECOMMUNICATION : (1) THE ART AND SCIENCE OF COMMUNICATING AT A DISTA NCE, ESPECIALLY BY MEANS OF ELECTROMAGNETIC IMPULSES, WI TH OR WITHOUT WIRES, AS IN RADIO, RADAR, TELEVISION, TELE GRAPHY, TELEPHONY, ETC. ALSO TELECOMMUNICATIONS. (2) ANY MA SSAGE SO TRANSMITTED. (IV) AS PER 'JUDICIAL DICTIONARY (THIRTEENTH EDITION) BY SHRI K.J. AIYAR' BROADCAST: THE VIDEO FILM MAY BE WATCHED BY A LARGE SECTION OF THE PUBLIC IN I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 15 -: THE PRIVACY OF ITS HOME. BUT THIS DOES NOT MAKE IT A PRIVATE COMMUNICATION SO AS TO TAKE IT OUT OF THE DEFINITION OF 'BROADCAST' UNDER THE COPYRIGHT ACT 1957. A BROADCAST IS HEARD IN MILLIONS OF PRIVATE HOMES. IT IS NEVE RTHELESS A BROADCAST TO THE PUBLIC. FOR EXAMPLES, IF THE PRESI DENT OF INDIA GIVES A REPUBLIC DAY ADDRESS OVER DOORDARSHAN, IT MAY BE RE CEIVED BY MILLIONS OF VIEWERS OVER THEIR TV SETS IN THEIR HOMES. BUT THIS TV DOES NOT MAKE IT A PRIVATE COMMUNICATION. IT IS VERY MUCH A COMMUNICATION TO THE PUBLIC. THE PRESIDENT IS NOT MAKING A PRIVATE BROADCAST TO EACH VIEWER OR LISTENER. THE AUDIENCE MAY BE SITTING IN THE PRIVACY OF THEIR HOM ES. BUT THIS MAKES NO DIFFERENCE TO THE CHARACTER OF THE AUDIENCE. BROADCASTING : AURAL OR VISUAL COMMUNICATION BY WIRELESS TELEGRA PHY.' 10. IN THE LIGHT OF THE ABOVE MEANING OF WORDS BROADCA STING AND TELECASTING, WE WOULD EXAMINE THE NATURE OF PAYMENT MADE IN THE YEAR UNDE R CONSIDERATION. ON PERUSAL OF COPY OF AGREEMENT DATED 06.02.2007 BETWEEN STAR IND IA PVT. LTD. AND THE ASSESSEE OF WHICH COPY HAS BEEN PLACED AT PAGE NO.23 TO 24 OF T HE ASSESSEE'S PAPER BOOK, IT IS SEEN THAT THE AGREEMENT IS UNDER THE TITLE OF 'SUBSCRIPT ION AGREEMENT'. THE ASSESSEE IS CALLED AFFILIATE IN THE SAID AGREEMENT. THE OTHER PARTY IS STAR INDIA PVT. LTD. IN THE AGREEMENT IT IS STATED THAT THE AFFILIATE, THE ASSESSEE IS EN GAGED IN THE BUSINESS OF DISTRIBUTION OF TELEVISION CHANNELS THROUGH THE DISTRIBUTION SYSTEM . FOR THE PURPOSE OF DISTRIBUTING SUBSCRIBED CHANNELS, THE ASSESSEE APPROACHED STAR I NDIA (P.) LTD. THE DISTRIBUTION SYSTEM AS STATED IN SCHEDULE-I IS AS UNDER : (PAGE NO.26 OF PAPER BOOK) 'SHALL MEAN THE LOCAL GROUND CABLE DISTRIBUTION SYS TEM USED BY THE AFFILIATE TO DISTRIBUTE THE SUBSCRIBED CHANNELS IN THE AREA AND EXCLUDES DISTRIBUTION THROUGH DIGITAL CABLE TELEVISION NETWORKS, CONDITIO NAL ACCESS SYSTEM. DIRECT TO HOME (KU BAND), HEADENDS-IN-THE-SKY, MULTIPOINT MICROWAVE DISTRIBUTION SYSTEM/MULTI-CHANNEL MULTI-POINT DISTRIBUTION SYSTE M ('MMDS'), DIGITAL TERRESTRIAL TRANSMISSION,, DIRECT-TO-HOME ('C' BAND ), BROADBAND, IP TV, TERRESTRIAL TRANSMISSION, OR ANY OTHER MEDIUM OR TE CHNOLOGY OR DEVICE NOW KNOWN AND/OR INVENTED OR THAT MAY BE INVENTED, AND THE USE OF WHICH IS PERMITTED BY STAR, IN THE FUTURE'. 11. THE EQUIPMENT WHICH IS TO BE USED BY THE ASSESSEE FOR DISTRIBUTION IS AN EQUIPMENT CALLED AS 'DSR DIGITAL SATELLITE RECEIVER'. THE OBL IGATION OF THE AFFILIATE, ASSESSEE PROVIDED IN CLAUSES-5(B), 5(F) & 5(H) OF THE AGREEM ENT WHICH READ AS UNDER : '5(B) THE AFFILIATE SHALL USE ITS BEST EFFORTS TO M AINTAIN A HIGH QUALITY OF SIGNAL TRANSMISSION FOR THE SUBSCRIBED CHANNELS AND SHALL TAKE ALL OTHER NECESSARY STEPS TO ENSURE THAT; (I) THE SUBSCRIBED CHANNELS A RE RECEIVED ONLY BY THE SUBSCRIBERS WHO PAY THE FULL APPLICABLE FEES FOR SU CH SUBSCRIBED CHANNELS AND (II) THE SUBSCRIBER, WHO HAS NOT PAID THE SUBSCRIPT ION/FEE IS NOT CAPABLE OF VIEWING THE SUBSCRIBED CHANNELS. THE AFFILIATE FURT HER AGREES AND UNDERTAKES THAT IT SHALL CAUSE CONTINUOUS DISTRIBUTION OF THE SUBSCRIBED CHANNELS TO ALL ITS SUBSCRIBERS DURING ITS TELECAST WITHOUT BLACKING IT OUT OR INTERFERING WITH IT IN ANY MANNER WHATSOEVER.' '5(F) THE AFFILIATE SHALL NOT, DISTRIBUTE THE SUBSC RIBED CHANNELS VIA ANY DISTRIBUTION SYSTEM OR ANY MEDIUM NOT COVERED BY TH E AGREEMENT. FURTHER, THE AFFILIATE SHALL NOT DISTRIBUTE THE SUBSCRIBED CHANN ELS TO ANY COMMERCIAL ESTABLISHMENTS LIKE HOTELS, RESTAURANTS, BARS, HOSP ITALS, CINEMA HALLS, THEATERS, I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 16 -: PUBS, GUESTHOUSES, ANY OTHER PUBLIC VIEWING AREAS O R THE LIKE TO THE AREA. THE AFFILIATE FURTHER UNDERTAKES THAT IT SHALL NOT, EIT HER ITSELF OR THROUGH OTHERS, COPY, TAPE OR OTHERWISE REPRODUCE ANY PART OF THE S UBSCRIBED CHANNELS. THE AFFILIATE FURTHER UNDERTAKES THAT IT SHALL NOT COPY OR TAPE PROGRAMMES FOR RESALE OR DEAL IN ANY COPIED PROGRAMMES AND SHALL I MMEDIATELY NOTIFY STAR OF ANY UNAUTHORIZED COPYING, TAPING OR USE OF ANY PART OF THE SUBSCRIBED CHANNELS AND SHALL FULLY COOPERATE WITH ALL REQUEST S BY STAR TO TAKE SUCH STEPS AS ARE REASONABLE AND APPROPRIATE TO CAUSE SU CH ACTIVITIES TO CEASE.' '5(H) I SHALL NOT REMOVE OR SHIFT OR ALLOW TO BE RE MOVED OR SHIFTED, THE EQUIPMENT FROM THE INSTALLATION ADDRESS DETAILED IN ARTICLE II HEREOF OR ALLOW ANYBODY ELSE TO DO THE SAME, WITHOUT THE PRIOR WRIT TEN PERMISSION OF STAR AND SHALL INDEMNIFY STAR AGAINST ANY DAMAGE, DESTRUCTIO N, THEFT OR LOSS OF THE EQUIPMENT.' 12. THE OTHER RELEVANT IMPORTANT CLAUSES ARE 8(A) AND 9(C) WHICH READS AS UNDER : ''8(A) THE AFFILIATE AGREES AND UNDERTAKES TO DISTR IBUTE THE SUBSCRIBED CHANNELS IN ITS ENTIRETY AS AND HOW IT IS DELIVERED BY STAR, WITHOUT (I) ANY CUTTING, EDITING, DUBBING, SCROLLING OR TICKER APE, VOICE-OVER, SUB TITLES, SUBSTITUTING OR ANY OTHER MODIFICATION, ALTERNATION , ADDITION, DELETION OR VARIATION; AND, (II) REPLACING, MODIFYING, DELETING , IMPOSING OR SUPERIMPOSING OF ADVERTISEMENTS OR OTHERWISE TAMPERING WITH THE C ONTENT OF THE SUBSCRIBED CHANNELS. FURTHER, THE AFFILIATE UNDERTAKES NOT TO PLACE THE SUBSCRIBED CHANNELS NEXT TO ANY PORNOGRAPHIC OR GAMBLING CHANN EL. ANY VIOLATION OF THIS CLAUSE SHALL ENTITLES STAR TO TERMINATE THE AGREEME NT IN TERMS OF ARTICLE VII OF THE AGREEMENT AND DEACTIVATE/DISCONNECT THE EXISTIN G SUBSCRIBED CHANNELS OR NEW CHANNEL(S), AS THE CASE MAY BE. THIS IS WITHOUT PREJUDICE TO THE OTHER LEGAL AND EQUITABLE RIGHTS AND REMEDIES AVAILABLE T O STAR.' '9(C) THE AFFILIATE SHALL NOT ACQUIRE ANY PROPRIETA RY OR OTHER RIGHTS IN THE TRADE NAMES AND MARKS TO WHICH STAR OR ITS ASSOCIAT ES OR PRINCIPALS (THE OWNERS/BROADCASTERS OF THE SUBSCRIBED CHANNELS) ASS ERT PROPRIETARY OR OTHER RIGHTS, WHICH STAR MAY NOTIFY THE AFFILIATE FROM TI ME TO TIME IN WRITING ('STAR MARKS'), AND AGREES NOT TO USE THE STAR MARKS IN AN Y CORPORATE OR TRADE NAME. THE AFFILIATE MAY USE THE STAR MARKS SOLELY F OR THE PURPOSE OF ADVERTISING AND PROMOTING THE SUBSCRIBED CHANNELS O NLY WITH THE PRIOR WRITTEN CONSENT OF STAR. MARKETING MATERIALS GENERATED BY T HE AFFILIATE MAY REFER TO THE STAR MARKS ONLY IF IT IS CLEAR THAT SUCH STAR M ARKS REPRESENT TRADEMARKS OR SERVICE MARKS FOR THE SUBSCRIBED CHANNELS, WHICH ARE DISTRIBUTED BY THE AFFILIATE. SUCH MARKETING MATERIALS SHALL REQUIRE T HE PRIOR WRITTEN APPROVAL OF STAR.'' 13. ON PERUSAL OF VARIOUS CLAUSES OF THE AGREEMENT, WE FIND THAT THE ASSESSEE IS TO DISTRIBUTE THE SUBSCRIBED CHANNELS IN ITS ENTIRETY AS IT IS DELIVERED BY STAR INDIA PVT. LTD. WITHOUT ANY CUTTING, EDITING, DUBBING, SCROLLING OR TICKER TAPE, VOICE-OVER, SUB TITLE, SUBSTITUTING OR ANY OTHER MODIFICATION, ALTERNATION , ADDITION, DELETION OR VARIATION. THE STAR INDIA PVT. LTD. IS THE OWNER/BROADCASTER OF TH E SUBSCRIBED CHANNELS AS IT IS PROVIDED CLEARLY IN CLAUSE 9(C) OF THE AGREEMENT. I N OTHER WORDS, BROADCASTING AND TELECASTING WORK WAS TO BE DONE ONLY BY STAR CHANNE LS AND OTHERS AND NOT BY THE ASSESSEE. THE ASSESSEE IS TO DISTRIBUTE THE SIGNALS WITHOUT ANY ALTERATION AND MODIFICATION. THE ASSESSEE IS NOT AUTHORIZED TO PRO DUCE ANY PROGRAMME AND NOT TO I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 17 -: BROADCAST AND TELECAST ANY PROGRAMME AT THE LEVEL O F THE ASSESSEE. THE ASSESSEE IS NOT AUTHORIZED TO CHANGE EITHER IN PROGRAMME OR CREATE OR PRODUCE ANY PROGRAMME OF HIS OWN. THE A.O. NOTICED THAT THE AGGREGATE PAYMENT MA DE TO VARIOUS CHANNELS BY THE ASSESSEE WAS RS.90,64,093/-. THEREFORE THE ASSESSEE WAS NOT A BROADCASTER. HOWEVER WHAT WAS THE EXACT RELATIONSHIP BETWEEN THE ASSESSEE AND THE TV CHANNELS LIKE STAR-DEN HAD NOT BE EXAMINED BY THE ASSESSING OFFICER AFTER THOROUGH ANALYZING THE ACTUAL IMPORT OF THE ARRANGEMENT/AGREEMENT ENTERED BETWEEN THE PARTIES . MOREOVER THE ASSESSEE HAS ONLY PRODUCED THE AGREEMEN T FOR STAR- DEN. EVEN IF WE EXAMINE THE AGREEMENT OF THE STAR-DEN, THE SAID AGREEMENT EVEN DO NOT SUGGEST THAT THE ASSESSEE IS IN TH E WORK OF BROADCASTING OR TELECASTING THE TV CHANNEL PROGRAMS. I N FACT, THE ASSESSEE IS PROVIDING PLATFORM TO THE TV CHANNELS TH ROUGH ITS NETWORK TO FACILITATE THE EXHIBITION OR DISTRIBUTION OF T V PROGRAMS TO THE CONSUMERS/SUBSCRIBERS OF THE ASSESSEE. THE ASSE SSEE IS PROVIDING BOUQUET OF CHANNELS THROUGH VARIOUS TV CHAN NELS TO THE SUBSCRIBERS. IN OUR VIEW, THE LD A.O. HAS NOT EXAMINE D THE RELATIONSHIP BETWEEN THE TV CHANNEL BROADCASTING ALREA DY PRODUCED PROGRAMS AND THE ASSESSEE. IN THE SIMILAR F ACTS AND CIRCUMSTANCES OF THE CASE, THE DELHI TRIBUNAL IN THE C ASE OF DISH TV INDIA LTD. VS ACIT (2016) 67 TAXMANN.COM 282 HAD EXAMINED THE ISSUE OF THE RELATIONSHIP BETWEEN THE ASSESSEE THERE IN (SIMILAR TO THE PRESENT ASSESSEE) AND WITH THAT OF THE I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 18 -: CHANNEL/BROADCASTER/TELECASTER AND HAS COME TO THE CO NCLUSION THAT THE PAYMENTS MADE BY THE ASSESSEE TO THE CHANNELS IS COVERED BY SECTION 9(1)(VI) OF THE ACT AND AS SUCH DED UCTION OF TAX AT SOURCE WAS REQUIRED U/S 194J OF THE ACT. THE REASON ING OF THE TRIBUNAL IS GIVEN IN PARAGRAPH NO. 13 AND 14 OF THE ORDER AND FOR THE SAKE OF BREVITY, THE SAME IS REPRODUCED HEREINBEL OW:- 13. WE HAVE BRIEFLY DISCUSSED SUPRA TWO BUSINESS MODEL S IN THIS LINE OF BUSINESS AND FOUND THAT WHEREAS UNDER THE FIRST MODEL, TV CHANNEL APPROACHES DTH/CABLE OPERATORS FOR TELECAST ING ITS PROGRAMS ON ITS OWN BEHALF, UNDER THE SECOND MODEL, RIGHT TO USE IN PROGRAMS ARE TRANSFERRED BY TV CHANNEL TO DTH/CA BLE OPERATORS FOR VALUE. IN SUCH LATER CASE, REVENUE FR OM ULTIMATE VIEWERSHIP GOES TO THE DTH/CABLE OPERATORS AND TV C HANNEL ENDS UP BY RECEIVING CONSIDERATION FROM DTH/CABLE OPERAT OR FOR TRANSFER OF RIGHTS IN ITS PROGRAMS. WHILE THE THIRD STEP, NAMELY, TELECASTING AND BROADCASTING OF TV PROGRAMS UNDER T HE FIRST BUSINESS MODEL IS DONE BY DTH/CABLE OPERATORS FOR A ND ON BEHALF OF TV CHANNELS, AND UNDER THE SECOND BUSINESS MODEL IS DONE BY DTH/CABLE OPERATORS FOR AND ON THEIR OWN BEHALF AND NOT THE TV CHANNELS. WHEREAS UNDER THE FIRST BUSINESS MODEL, P AYMENT IS MADE BY TV CHANNEL TO DTH/CABLE OPERATORS FOR 'BROA DCASTING AND TELECASTING' THEIR TV PROGRAMS, WHICH IS COVERED U/ S 194C, UNDER THE SECOND BUSINESS MODEL, PAYMENT IS MADE BY DTH/C ABLE OPERATORS TO TV CHANNEL FOR TRANSFER OF IPRS IN PRO GRAMS TO BE USED BY DTH/CABLE OPERATORS IN 'CONNECTION WITH TEL EVISION', WHICH IS COVERED UNDER CLAUSE (V) OF EXPLANATION 2 TO SEC TION 9(1)(VI) REQUIRING DEDUCTION OF TAX AT SOURCE U/S 194J OF TH E ACT. THE CASE UNDER CONSIDERATION CLEARLY FALLS UNDER THE SECOND BUSINESS MODEL. IN OUR CONSIDERED OPINION, THE AUTHORITIES BELOW WE RE FULLY I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 19 -: JUSTIFIED IN HOLDING THE APPLICABILITY OF THE PROVI SIONS OF SECTION 194J OF THE ACT. 14. NOW, WE WILL ESPOUSE THE CASE LAW RELIED BY THE L D. AR TO CANVASS THE VIEW THAT DEDUCTION OF TAX AT SOURCE WAS REQUIR ED U/S 194C. FIRST IS THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V. PRASAR BHARATI (BROADCASTING) CORPN. OF INDI A [2007] 292 ITR 580/158 TAXMAN 470 (DELHI) . THE ASSESSEE IN THAT CASE MADE CERTAIN PAYMENTS TO OUTSIDE PRODUCERS FOR PROGRAMS UNDER 'COMMISSIONED CATEGORY' FOR WHICH THE ASSESSEE DEDU CTED TAX AT SOURCE U/S 194C BY TREATING THEM AS CONTRACT PAYMEN TS. THE REVENUE TOOK A STAND THAT THE TELEVISION PROGRAMS P RODUCERS SHOULD BE TREATED AS PROFESSIONALS/TECHNICAL PERSON S AND THE PAYMENT MADE TO THEM SHOULD BE SUBJECTED TO TDS U/S 194J. AN ORDER WAS PASSED U/S 201(1)/(1A) OF THE ACT HOLDING THE ASSESSEE IN DEFAULT FOR SHORT DEDUCTION. WHEN THE MATTER WENT B EFORE THE HON'BLE HIGH COURT, THEIR LORDSHIPS OBSERVED THAT E XPLANATION III WHICH WAS INTRODUCED SIMULTANEOUS WITH SECTION 194J IS VERY SPECIFIC IN ITS APPLICATION TO NOT ONLY BROADCASTIN G AND TELECASTING, BUT ALSO INCLUDES 'PRODUCTION OF PROGRAMS FOR SUCH BROADCASTING AND TELECASTING'. THAT IS HOW, THE CASE WAS HELD TO BE FALLING U/S 194C OF THE ACT. WHEN WE PERUSE THE NATURE OF PAYME NT MADE IN THE CASE OF PRASAR BHARATI (BROADCASTING) CORPN. OF INDIA (SUPRA), IT COMES UP THAT THE SAME WAS MADE TO OUTSIDE PRODU CERS FOR MAKING PROGRAMS ON BEHALF OF PRASAR BHARATI. SINCE PAYMENT FOR MAKING PROGRAMS IS DIRECTLY COVERED UNDER EXPLANATI ON (IV)(B) BEING 'PRODUCTION OF PROGRAMS FOR SUCH BROADCASTING OR TELECASTING', THERE REMAINS ABSOLUTELY NO DOUBT THA T PAYMENTS TO PRODUCERS FOR MAKING PROGRAMS FALLS WITHIN THE AMBI T OF SECTION 194C OF THE ACT. WE FIND THAT THE FACTS OF THIS CAS E ARE NOWHERE CLOSE TO THOSE UNDER CONSIDERATION. INSTANTLY, WE A RE EXAMINING THE APPLICABILITY OF TDS PROVISIONS ON PAYMENTS MADE BY THE ASSESSEE I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 20 -: TO THE TV CHANNELS FOR USE OF THEIR PROGRAMS IN CON NECTION WITH TELEVISION, WHICH IS DIRECTLY COVERED UNDER EXPLANA TION 2(V) OF SECTION 9(1)(VI) AND NOT FOR 'PRODUCING ANY PROGRAM S'. AS SUCH, THE DECISION IN PRASAR BHARTI (BROADCASTING) CORPN. OF INDIA (SUPRA), DOES NOT SUPPORT THE CASE OF THE ASSESSEE. 9.1 SINCE THE ISSUE REFERRED HEREIN ABOVE HAS NOT BEE N EXAMINED BY THE AUTHORITIES BELOW, IT WOULD BE IN THE INTEREST OF JUSTICE TO REMAND THE MATTER TO THE FILE OF THE LD. A.O TO EXAMINE THIS ISSUE AFTER GIVING FULL AND FAIR OPPORTUNITY TO THE ASSES SEE. THE ASSESSEE IS IN LIBERTY TO FILE ALL THE DOCUMENTS IN SUPPORT OF TH IS CASE. THEREFORE, THE ISSUE NO. 2 IS ALLOWED FOR STATISTICAL P URPOSES AND THE MATTER IS REMANDED BACK TO THE FILE OF THE LD. A.O. FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF THE ABOVE SAID OBSERVA TION. THE LD. A.O. SHALL NOT BE INFLUENCED BY THE OBSERVATION GIVEN IN THE ORDER AND SHALL DECIDE THE ISSUE ON THE BASIS OF THE MATERIA L AND LAW. 10. THE ISSUE NO. 3 IS WITH RESPECT TO THE DISALLOWANCE OF RS. 1,50,880/- PAID BY THE ASSESSEE AS AN ADVERTISEMENT CO MMISSION TO SHRI SEENA. 10.1. IN THIS REGARD, THE ASSESSEE HAS SUBMITTED THAT TH E INFORMATION AND EVIDENCE WERE PROVIDED TO THE LD. A.O. AS WELL AS TO THE LD. CIT(A) IN THIS REGARD. HOWEVER, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE WAS FAILED TO PROVIDE THE EVIDENCE IN SUPPORT OF THE PAYMENT THAT THE PAYMENT MADE WAS NOT A COMMISSION. I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 21 -: 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS PER THE CASE OF THE ASSESSEE, THE PAYMENT MADE BY THE ASSESSEE TO SHRI S EENA WAS ON ACCOUNT OF THE SALARIES AND WAS NOT A COMMISSI ON. SINCE AS PER THE FINDING OF THE LD. CIT(A), THE EVIDENCE WA S NOT WITH THE A.O., THEREFORE, IN OUR VIEW, IT WILL BE APPROPRIATE, IF THIS ISSUE IS ALSO REMANDED TO THE FILE OF THE LD. A.O. WITH A DIREC TION TO EXAMINE THIS AFRESH AFTER CONSIDERING THE DOCUMENTS/EVI DENCE OF THE ASSESSEE, IF ANY PRODUCED BEFORE HIM. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 27/07/2016. SD/- SD/- ( B. RAMAKOTAIAH ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 27/07/2016. *RANJAN COPY FORWARDED TO: 1. S. KALPANA, C/O-SRI S RAMA RAO, ADVOCATE, FLAT NO. 10 2, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYATNAG AR, HYDERABAD-500029. 2. THE ITO, WARD(1), MADANAPALLE 3. CIT(APPEALS), GUNTUR. 4. THE CIT, TIRUPATI. I.T.A. NO. 1162/HYD/2014 S. KALPANA VS ITO, :- 22 -: 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.