ASST CIT (TDS) 2(2), MUMBAI V. ALLIED MEDIA NETWORK P.LTD, MUMBAI

ITA 3017/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2762 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 16-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 01-05-2014
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Assessee Lawyers: SHRI
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO.3017/M/2014 (ASSESSMENT YEAR: 2010 - 2011 ) ACIT (TDS) - 2(2), R.NO. 703, 7 TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOSPITAL BLDG, CHARNI ROAD, MUMBAI - 400002. / VS. M/S. ALLIED MEDIA NETWORK PVT LTD., P2, 2 ND FLOOR, PERCEPT HOUSE, 22 RAGHUVANSHI ESTATES, 11/12 SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI 400 013. ./ PAN : AADCP9975H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI A. RAMACHANDRAN / RESPONDENT BY : SHRI PANKAJ JAIN, DR / DATE OF HEARING : 29.08.2016 / DATE OF PRONOUNCEMENT : 23 .09.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 1.5.2014 IS AGAINST THE ORDER OF THE CIT (A) - 14, MUMBAI DATED 19.2.2014 FOR THE ASSESSMENT YEAR 2010 - 2011. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) FAILED TO APPRECIATE THAT THE SERVICES PROVIDED BY SEARCH LIGHT MOVIES IS FAR BEYOND THE MERE SUPPLY OF LABOUR AND THE VERY NATURE OF SERVICES RENDERED SUGGEST THAT THEY ARE TECHNICAL, AS ENVISAGED IN THE EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT AND OUGHT TO BE SUBJECTED TO TDS U/S 194J OF THE ACT. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN DELETING THE INTEREST U/S 201(1A) OF THE ACT, 1961 AS INTEREST DELETION IS CONSEQUENTIAL TO THE QUANTUM DELETION FOR WHICH FURTHER APPEAL HAS BEEN RECOMMENDED VIDE GROUND NO.1. 2. IN THIS APPEAL, REVENUE IS AGGRIEVED WITH THE ORDER OF THE CIT (A) TO THE EXTENT THAT THE PAYMENTS MADE TO SEARCH LIGHT MOVIES CONSTITUTES TECHNICAL SERVICES WITHIN THE MEANING OF EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT. THEREFORE, THESE 2 PAYMENTS ATTRACT PROVISIONS OF SE CTION 194J AND NOT 194C OF THE ACT AS APPLIED BY THE ASSESSEE. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE WAS SURVEYED BY THE TDS TEAM U/S 133A OF THE ACT. DURING THE SURVEY ACTION, IT IS NOTICED THAT THE ASSESSEE PRE - PAID A SUM OF RS. 2 ,55,88,000/ - TO SEARCH LIGHT MOVIES. THESE PAYMENTS ARE IN THE NATURE OF MEDIA PLAN PRESENTATION CUM COORDINATION FOR BSNL CLIENT 3 YEARS. ASSESSEE AFFECTED THE TDS ON THE SAID PAYMENT AS PER THE PROVISIONS OF SECTION 194 C OF THE ACT WHEREAS THE ASSESSI NG OFFICER IS OF THE OPINION THAT THE PROVISIONS OF SECTION 194J OF THE ACT ARE APPLICABLE. ACCORDINGLY, HE INVOKED THE PROVISIONS OF SECTION 201(1) OF ACT FOR DEFAULT AND LEVIED A SUM OF RS. 23,87,360/ - . FURTHER, AN AMOUNT OF RS. 8,59,450/ - WAS ALSO RAI SED ON THE ASSESSEE U/S 201(1A) OF THE ACT. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE RAISED THE ARGUMENT THAT THE SAID AMOUNT IS AIMED AT VARIOUS SERVICES FROM THE SEARCH LI GHT MOVIES AND THE AMOUNT PAID AS PER VARIOUS CLAUSES OF COMPOSITE CONTRACT. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, AS PER THE CONTENTS OF PARA 3.3.1, CIT (A) GRANTED RELIEF AND THE DEMAND RAISED BY THE AO WAS DELETED. IN THE SAID PARA, CIT (A ) MENTIONED THAT THE AO CANNOT SPLIT THE COMPOSITE CONTRACT AND APPLIED THE TDS PROVISIONS. FOR THIS PROPOSITION, CIT (A) RELIED ON THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF MOTROLA INC. VS. DCIT (95 ITD 269) (DEL.) (SB). CIT (A) ACCEPTED THE ASSESSEES ARGUMENT THAT THE CONTRACT IS INDIVISIBLE. 5. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO. 6. ON HEARING BOTH THE PARTIES AND ON PERUSING THE SAID ORDER OF THE CIT (A), WE FIND, PARA 3.3.1 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD AND THE SAME IS EXTRACTED FOR THE SAKE COMPLETENESS OF THIS ORDER. 3.3.1. FROM THE PREAMBLE IT IS EVIDENT THAT THE VENDOR IE M/S. SEARCH LIGHT & MOVIES HAVE TO WORK UNDER THE DIRECTION OF THE APPELLANT. ON PERUSAL OF TERMS OF CON TRACT PRODUCED IN APPELLANTS SUBMISSION, IT IS SEEN THAT IT IS A COMPOSITE CONTRACT IE THEY WILL PROVIDE LABOUR, LIAISON WITH BSNL AND EXECUTE THE PLAN AS PER THEIR GUIDELINES. THE ISSUE THAT ARISES HERE IS THAT WHETHER ONE COMPOSITE AGREEMENT CAN BE SPL IT INTO COMPONENTS FOR TDS PURPOSE. 7. CONSIDERING THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY THE CIT (A) REGARDING THE SPLITTING OF THE COMPOSITE CONTRACT FOR THE PURPOSE OF 3 INVOKING THE TDS PROVISIONS OF THE ACT IS FAIR AND REAS ONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT ON 2 3 R D SEPTEMBER, 2016. S D / - S D / - ( SAKTIJIT DEY ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 2 3 .09.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI