ACIT-16(1), MUMBAI V. M/S.UBJ BROADCASTING PRIVATE LIMITED, MUMBAI

ITA 1205/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1463 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA LD
• Assessee Lawyers: NIKUNJ GADA LD
• Keywords: Difference of opinion; TDS; Set aside
• Section: 143(3); 40(a)(ia)

Judgement Text

1 ITA NO.1205/MUM/2018 M/S. UBJ BROADCASTING P. LIMITED ASSESSMENT YEAR-2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI - , 2 - 5 , 2 8 BEFORE HONBLE SHRI SANDEEP GOSAIN, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1205/MUM/2018 ( / ASSESSMENT YEAR: 2012-13) ACIT - 16(1) ROOM NO.439, 4 TH FLOOR AAYKAR BHAVAN, M.K. MARG CHURCHGATE,MUMBAI-400 020 / VS. M/S. UBJ BROADCASTING P RIVATE LTD. 6 TH FLOOR, ADHIKARI CHAMBERS OBEROI COMPLEX, NEW LINK ROAD ANDHERI (W), MUMBAI-400 053. ./ ./PAN/GIR NO. AABCU-1341-G ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAJIV GUBGOTRA, LD.DR / RESPONDENT BY : SHRI NIKUNJ GADA, LD. AR !' / DATE OF HEARING : 26/02/2019 #$!' / DATE OF PRONOUNCEMENT : 19/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER):- 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2012-13 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-4, MUMBAI, 2 ITA NO.1205/MUM/2018 M/S. UBJ BROADCASTING P. LIMITED ASSESSMENT YEAR-2012-13 [CIT(A)], APPEAL NO. CIT(A)-4/IT-22/AC-16(1)/2014-15 DATED 18/12/2017 ON FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD.CIT(A) HAS ERRED IN DIRECTING TO DELETE THE DISA LLOWANCE U/S. 40(A)(IA) AND THEREBY HOLDING THAT THE SHORT DEDUCTION OF TAX WIL L NOT RESULT INTO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT, WITHOUT APPRECIATING THA T THE HON'BLE KERALA HIGH COURT IN ITS JUDGMENT DATED 20.07.2015 IN THE CASE OF CIT-1, KOCHI VS. PVS MEMORIAL HOSPITAL LTD. [2015] 60 TAXMANN.COM 69 (KE RALA) HAS CLEARLY LAID DOWN THAT THE DISALLOWANCE U/S. 40(A)(IA) WOULD BE MADE EVEN IN THE CASES OF SHORT DEDUCTION OF TAX. 2. WHETHER ON THE FACTS, IN THE CIRCUMSTAN CES OF THE CASE AND AS PER LAW, THE LD.CIT(A) HAS ERRED IN DIRECTING TO DELETE THE DISA LLOWANCE U/S. 40(A)(IA) WITHOUT APPRECIATING THAT SECTION 40(A)(IA) IS INTO A CHARGING SECTION BUT IS A MACHINERY SECTION AND THUS THE EXPRESSION 'TAX DEDU CTIBLE AT SOURCE UNDER CHAPTER XVII-B' OCCURRING IN THE SAID SECTION HAS T O BE UNDERSTOOD AS TAX DEDUCTIBLE AT SOURCE UNDER THE APPROPRIATE PROVISIO N OF CHAPTER XVII-B AND HENCE, TAX DEDUCTIBLE UNDER WRONG SECTION OF CHAPTE R XVII-B WOULD RESULT INTO INVOKING OF SECTION 40(A)(IA) OF THE ACT. 3.THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON T HE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2.1 THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD . LD. ASSISTANT COMMISSIONER OF INCOME TAX-16(1), MUMBAI [AO] U/S. 143(3) ON 31/12/2014 WHEREIN THE LOSS OF THE ASSESSEE WAS DET ERMINED AT RS.709.13 LACS AS AGAINST RETURNED LOSS OF RS.898.52 LACS E-F ILED BY THE ASSESSEE ON 28/09/2012. THE ASSESSEE BEING RESIDENT CORPORATE ENTITY IS STATED TO BE ENGAGED IN BROADCASTING TELEVISION CHANNELS . 2.2 IN THE QUANTUM ASSESSMENT ORDER THE ASSESSEE HA S BEEN SADDLED WITH DISALLOWANCE U/S. 40(A)(IA) FOR WANT OF DEDUCT ION OF TAX AT SOURCE AS PER STATUTORY PROVISIONS, WHICH IS THE SOLE SUBJECT MAT TER OF PRESENT APPEAL 3 ITA NO.1205/MUM/2018 M/S. UBJ BROADCASTING P. LIMITED ASSESSMENT YEAR-2012-13 BEFORE US. THE NATURE AND QUANTUM OF DISALLOWANCE I S AS PER THE FOLLOWING DETAILS: - NO. NATURE OF PAYMENT DISALLOWANCE RS. (ROUNDED OFF) 1. PAYMENT OF CARRIAGE FEES RS.150.33 LACS 2.3 THE FACTS QUA THE ADDITION ARE THAT DURING ASSESSMENT PROCEEDINGS , IT TRANSPIRED THAT THE ASSESSEE DEBITED AN AMOUNT OF R S.150.33 LACS AS CARRIAGE FEES UNDER THE HEAD DISTRIBUTION EXPENSES . THE ASSESSEE HAD DEDUCTED TAX AT SOURCE [TDS] AGAINST THE SAME @ 2% U/S. 194C. HOWEVER, THE LD. AO OPINED THAT THE SAME BEING TECHNICAL SER VICES ATTRACTED HIGHER TDS @ 10% U/S 194J AND THEREFORE, DISALLOWANCE AS ENVISAG ED BY SECTION 40(A)(IA) WAS ATTRACTED TO THE FACTS OF THE CASE. A LTHOUGH THE ASSESSEE DEFENDED HIS STAND VIDE REPLY DATED 02/12/2014 AND SUPPORTED THE SAME WITH VARIOUS JUDICIAL PRONOUNCEMENTS, HOWEVER, LD. AO NOTED THAT CARRIAGE FEE WERE THE CHARGES PAID BY THE BROADCASTER TO M SO (MULTI SYSTEM OPERATORS) TO TRANSMIT THEIR CHANNELS AND HENCE THESE CHARGES CONSTITUTED PROCESS, BEING COVERED IN THE DEFINITION OF ROYALTY AS CONTAINED IN SUB- CLAUSE (V) TO EXPLANATION 2 TO SECTION 9(1) . RESULTANTLY, THE SAID EXPENDITURE WAS DISALLOWED U/S 40(A)(IA) FOR WANT OF DEDUCTION OF HIGHER TAX AT SOURCE U/S 194J. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 18/12/2017 WHEREIN THE ASSESSEE MADE DETAILS SUBMISSIONS, THE RELEVANT PAR T OF WHICH HAVE 4 ITA NO.1205/MUM/2018 M/S. UBJ BROADCASTING P. LIMITED ASSESSMENT YEAR-2012-13 ALREADY BEEN EXTRACTED IN THE IMPUGNED ORDER AT PARA 6.2. THE ASSESSEE, AS IN ALTERNATIVE PLEA, SUBMITTED THAT SHORT DEDUCT ION OF TAX AT SOURCE DO NOT ATTRACT THE RIGORS OF SECTION 40(A)(IA) IN VIEW OF CERTAIN JUDICIAL PRONOUNCEMENTS RENDERED BY THE TRIBUNAL AS WELL AS BY HONBLE KOLKATA HIGH COURT IN DCIT VS. S.K.TEKRIWAL 48 SOT 515. THE LD. FIRST APPELLATE AUTHORITY, CONVINCED WITH ALTERNATIVE PLEA, CONCURR ED WITH THE STAND OF ASSESSEE AND CONCLUDED THE MATTER IN ASSESSEES FAV OR IN THE FOLLOWING MANNER: - 6.4 IT IS FURTHER SEEN THAT HON'BLE MUMBAI ITAT IN THE CASE OF CHANDABHOY & JASSOBHOY VS DCIT 49 SOT 448 HAS HELD THAT IT IS NOT THE CASE THAT AS SESSEE HAS NOT DEDUCTED ANY AMOUNT. ASSESSEE HAD DEDUCTED TAX U/S 192 OF THE ITA AND TH EREFORE PROVISIONS OF SECTION 40(A)(IA) OF THE ITA DO NOT APPLY AS THE SAID PROVISION CAN BE INVOK ED ONLY IN THE EVENT OF NON DEDUCTION OF TAX BUT NOT FOR LESSER DEDUCTION OF TAX. FURTHER THE HO N'BLE CALCUTTA HIGH COURT VIDE ITS ORDER DATED 03.12.2012 ITA NO. 183 OF 2012 HAS UPHELD THE DECIS ION OF KOLKATA ITAT IN CASE OF DCIT VS S. K. TEKRIWAL 48 SOT 515, WHICH HAS HELD SIMILARLY TH AT PROVISIONS OF SECTION 40(A)(IA) WOULD NOT APPLY IN CASE SHORT DEDUCTION. THE HON'BLE MUMBAI I TAT HAS IN CASE OF ACIT VS. NGC NETWORKS PVT LTD. ITA NO.: 1382/M/2014, RELYING ON THE DECIS ION OF HON'BLE CALCUTTA HIGH COURT IN CASE OF S. K. TEKRIWAL HELD THAT SECTION 40(A)(IA) OF THE I TA APPLIES ONLY IN THE EVENT OF NON DEDUCTION OF TAX BUT NOT FOR LESSER DEDUCTION OF TAX. IT IS FURT HER SEEN THAT IN THEIR DECISION, THE HON'BLE TRIBUN AL IN THE CASE OF M/S HINDUSTAN THOMPSON ASSOCIATES PV T. LTD. FOR A.YR. 2010-11 IN ITA NO. 6729/MUM/2014 AT PARA 5 HAVE HELD AS UNDER: 'WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF THE CO-ORDINATE BENCH IN ASSESS EE'S OWN CASE FOR A.YR. 2008-09 AND 2009-10. THE COORDINATE BENCH FOR THE A.YR. 2009-10 IN OF THE I.T, ACT, 1961 NO. 746/M/2014 DATED 19.02.2016 CONSIDERED SIMILAR ISSU E AND HELD THAT PROVISIONS OF SEC. 40(A)(IA) HAVE NO APPLICATION WHEN THERE IS SHORT D EDUCTION OF TAX OBSERVING AS UNDER : 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL BEFORE US. WE FIND THATT THE HON'BLE KERALA HIGH COURT IN THE CASE OF V.S ME MORIAL HOSPITAL (SUPRA), HAS HELD THAT DEDUCTION OF TDS UNDER WRONG PROVISION OF LAW WILL NOT SAVE ASSESSEE FROM DISALLOWANCE U/S 40(A)(IA) OF THE ACT. HOWEVER, THE KOLKATA HIGH COURT IN THE MATTER OF SA MIR TEKRIWAL (SUPRA), HAS HELD THAT EXPENSES ARE NOT LIABLE TO BE DISALLOWED U/S 40(A)( IA) ON ACCOUNT OF SHORT DEDUCTION OF TAX. THE HON'BLE JURISDICTIONAL HIGH COURT HAS NOT DECID ED THE ISSUE. THUS, WE ARE FACED WITH TWO DIAGONALLY OPPOSITE VIEWS ABOUT APPLICABILITY O F THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. WE FIND THAT THE HON'BLE BOMBAY HIGH COURT HAS IN THE CASE OF ASHOK KUMAR PAREKH (186 IT R212) HAS DEALT WITH THE BINDING PRECEDENCE OF THE HIGH COURT JUDGEMENTS. HERE, 5 ITA NO.1205/MUM/2018 M/S. UBJ BROADCASTING P. LIMITED ASSESSMENT YEAR-2012-13 WE WOULD ALSO LIKE TO REPRODUCE THE PORTION OF THE JUDGMENT DELIVERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SIEMENS INDIA LTD (156ITR 11)AND SAME READS AS UNDER: 'SO FAR AS THE LEGAL POSITION IS CONCERNED, THE ITO WOULD BE BOUND BY A DECISION OF THE SUPREME COURT AS ALSO BY A DECISION OF THE H IGH COURT OF THE STATE WITHIN WHOSE JURISDICTION HE IS (FUNCTIONING), IRRE SPECTIVE OF THE PENDENCY OF ANY APPEAL OR SPECIAL LEAVE APPLICATION AGAINST THAT JU DGMENT. HE WOULD EQUALLY BE BOUND BY A DECISION OF ANOTHER HIGH COURT ON THE PO INT, BECAUSE NOT TO FOLLOW THAT DECISION WOULD BE TO CAUSE GRAVE PREJUDICE TO THE A SSESSEE. WHERE THERE IS A CONFLICT BETWEEN DIFFERENT HIGH COURTS, HE MUST FOL LOW THE DECISION OF THE HIGH COURT WITHIN WHOSE JURISDICTION HE IS (FUNCTIONING), BUT IF THE CONFLICT IS BETWEEN DECISIONS OF OTHER HIGH COURTS, HE MUST TAKE THE VIEW WHICH I S IN FAVOUR OF THE ASSESSEE AND NOT AGAINST HIM. SIMILARLY, IF THE TRIBUNAL HAS DEC IDED A POINT IN FAVOUR OF THE ASSESSEE, HE CANNOT IGNORE THE DECISION AND TAKE A CONTRARY VIEW, BECAUSE THAT WOULD EQUALLY PREJUDICE THE ASSESSEE'. CONSIDERING THE ABOVE, WE ARE TAKING THE VIEW WHICH IS IN FAVOUR OF THE ASSESSEE. WE, ARE FOLLOWING THE JUDGEMENT OF SAMIR TEKRIWAL (SUPRA) O F THE HON'BLE KOLKATA HIGH COURT AS WELL AS THE ORDERS OF THE MUMBAI TRIBUNAL DELIVERED BY IT FOR THE EARLIER YEARS. EFFECTIVE GROUND OF APPEAL IS DECIDED AGAINST THE AO'. IT CAN ACCORDINGLY BE SEEN THAT ISSUE OF SHORT DEDU CTION OF TAX AND CONSEQUENT NON-APPLICABILITY OF SECTION 40(A)(IA) HAS BEEN COVERED IN FAVOUR OF APP ELLANT IN VIEW OF ABOVE DECISION. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF HON'BLE ITAT, THE DISALLOWANCE MADE BY THE AO OF CARRIAGE FEES AMOUNTING TO RS.1,50,33,608/- U/S.40(A)(IA) OF THE ACT IS DELETED. THE ISSUE PERTAINING TO THE QUESTIONED PAYMENT BEING ROYALTY OR NOT, THEREFORE, BECOMES ACADEMIC IN NATURE AND AS SUCH NEED NOT BE DECIDED. FOR STATISTICAL PURPOSES THE S AME IS TREATED AS REJECTED. THIS GROUND IS ACCORDINGLY PARTLY ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE DECISION OF HONBLE KERALA HIGH COURT RENDERED IN C IT VS. PVS MEMORIAL HOSPITAL [60 TAXMANN.COM 69] TO SUPPORT THE STAND T AKEN BY LD. AO. PER CONTRA, LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR], PL ACED RELIANCE ON THE FAVORABLE DECISION OF THIS TRIBUNAL RENDERED IN ACIT VS. M/S T.V.VISION LTD. [ITA NO.3387/MUM/2016 DATED 28/02/2 018] WHICH HAS CONSIDERED THE DECISION BEING RELIED UPON BY THE RE VENUE. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND MATERIAL ON RECORD INCLUDING THE DECISIONS CITED BEFORE US. THE UNDISP UTED POSITION THAT 6 ITA NO.1205/MUM/2018 M/S. UBJ BROADCASTING P. LIMITED ASSESSMENT YEAR-2012-13 EMERGES IS THAT THE ASSESSEE HAS SUFFERED IMPUGNED DISALLOWANCE U/S 40(A)(IA) FOR WANT OF DEDUCTION OF TAX AT SOURCE AT HIGHER RA TE I.E. 10%. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS DEDUCTED TAX @2% AND THE ADDITIONS HAVE BEEN MADE FOR SHORT-DEDUCTION OF TAX AS PER SE CTION 40(A)(IA). WE FIND THAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COV ERED BY THE CITED DECISION OF THIS TRIBUNAL RENDERED IN ACIT VS. M/S T.V.VISION LTD. [SUPRA] WHEREIN THE CO-ORDINATE BENCH, AFTER CONSIDERING VARIOUS DE CISIONS, DECIDED THE ISSUE IN ASSESSEES FAVOR, IN THE FOLLOWING MANNER: - 7. WE NOTICE THAT THE LD. CIT(A) HAS DELETED THE DI SALLOWANCE IN QUESTION HOLDING THAT CARRIAGE FEES DOES NOT COME WITHIN THE AMBIT OF THE DEFINITION OF ROYALTY. THEREFORE, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX AT SOUR CE U/S 194J. FURTHER THE LD. CIT(A) HAS HELD THAT IT IS NOT THE CASE OF NO TDS BUT TH E CASE OF LESS TDS THEREFORE, THE DISALLOWANCE MADE BY THE AO IS BAD IN LAW. THE LD. CIT(A) HAS RELIED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT RENDERED IN CIT VS S. K. TEKRIWAL 48 SOT 515 AND THE DECISIONS OF COORDINATE BENCH OF THE TRIBUNAL IN TH E CASES OF CIT VS M/S STAR DEN MEDIA SERVICES PVT .LTD( ITA NO 1413/MUM/2014) AND CHANDABHOY & JASSOBHOY VS DCIT 49 SOT 448 (MUMBAI ITAT). AS POINTED OUT BY TH E LD. COUNSEL FOR THE ASSESSEE THIS ISSUE IS COVERED BY THE JUDGMENT OF THE HONBL E BOMBAY HIGH COURT DELIVERED IN CIT VS. M/S UTV ENTERTAINMENT TELEVISION LTD. IN IN COME TAX APPEAL (SUPRA) IN FAVOUR OF THE ASSESSEE. SIMILARLY, THE HONBLE GUJARAT HIG H COURT IN CIT VS. PRAYAS ENGINEERING LTD., (SUPRA) AND THE KARNATAKA HIGH CO URT IN CIT VS. KISHORE RAO & OTHERS (HUF) (SUPRA) HAVE HELD THAT IN CASE OF SHORTFALL D UE TO ANY DIFFERENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENT S FALLING UNDER VARIOUS TDS PROVISIONS, NO DISALLOWANCE CAN BE MADE BY INVOKING PROVISIONS OF 40(A)(IA) OF THE ACT. RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE STA ND OF FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER. 6. THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2019. SD/- SD/- (SANDEEP GOSAIN) (MANOJ KUMAR AGGARWAL) % %% % / JUDICIAL MEMBER % %% % / ACCOUNTANT MEMBER MUMBAI; DATED : 19/03/2019 SR.PS:-JAISY VARGHESE 7 ITA NO.1205/MUM/2018 M/S. UBJ BROADCASTING P. LIMITED ASSESSMENT YEAR-2012-13 AB 5CB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. !'# , # , / DR, ITAT, MUMBAI 6. !%&' / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.