TV Today Networks Ltd., New Delhi V. ITO, New Delhi

ITA 3346/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5835 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 26-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPIKA MITTA
• Keywords: Double taxation relief; Opportunity of being heard; Principle of natural justice; Permanent establishment
• Section: 246

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: E: NEW DELHI) BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO:- 3346 /DEL/2015 ( ASSESSMENT YEAR: 2010-11) M/S TV TODAY NETWORK LTD., NEW DELHI. VS. INCOME TAX OFFICER, WARD 2(2), NEW DELHI. PAN NO: AABCT0424B APPELLANT RESPONDENT ASSESSEE BY : SH. SALIL AGGARWAL (ADV.) & SH. SHAILESH GUPTA (CA) REVENUE BY : MS. DEEPIKA MITTA (CIT DR) DATE OF HEARING : 22.05.2018. DATE OF PRONOUNCEMENT : 07/06/2018. ORDER PER: KULDIP SINGH, JM THE APPELLANT, TV TODAY NETWORK LTD., NEW DELHI (HE REINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL BEARING ITA NO. 3346/DEL/2015 SOUGHT TO SET ASIDE THE IMPUGNED ORDE R DATED 30.12.2014 QUA ASSESSMENT YEAR 2010-11 PASSED BY LD. CIT(A)-43 , NEW DELHI, ON THE GROUNDS THAT:- 2 ITA NO3346/DEL/2015. TV TODAY NETWORKS LTD., NEW DELHI. 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ORDER UNDER SECTION 195 OF THE ACT, PASSED BY ITO TDS WARD - 11(2) INTL. TAX DATED 30.03.2010. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THE BASIC FACT THAT THE PAYMENTS MADE TO M/S EASTERN TV NEWS AND MR. ASAD DURANI (BOTH TAX - RESIDENTS OF P AKISTAN) AND M/S T2 PROMOTIONS FZE (TAX - RESIDENT OF UAE) WERE NOT CHA RGEABLE TO TAX IN INDIA UNDER SECTION 5 (2) R.W.S. 9(1 )(I) OF THE AC T AND AS SUCH, THERE WAS NO REQUIREMENT TO DEDUCT TDS ON THE SAID PAYMENTS, AS HAD BEEN HELD BY LEARNED ITO AND WRONGLY UPHELD BY LEARNED CIT (A ). 2.1 THAT FURTHER, THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THE FACT THAT THE SAID PAYMENTS MADE TO THE NON - RESIDENTS WERE NOT IN THE NATURE OF TECHNICAL SERVICES, AS HAD BEEN HELD BY LEARNED I TO AND AS SUCH, THE SAID TREATMENT ACCORDED BY LEARNED ITO AND SO SUSTA INED BY LEARNED CIT (A) IS MISCONCEIVED AND MISPLACED IN FACTS AND IN L AW. 2.2 THAT IN DOING SO, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED IN HIS ONEROUS DUTY BY NOT RECORDING ANY FIN DING ON MERITS OF THE CASE, AS THE LEARNED CIT (A) DISMISSED THE APPEAL O F THE ASSESSEE - APPELLANT ON TECHNICAL GROUND AND THAT TOO WITHOUT PROVIDING ANY OPPORTUNITY OF BEING HEARD, THEREBY, VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN LAW AND ON FACTS IN DISMISSING THE APPEAL OF THE ASSESS EE - APPELLANT ON TECHNICAL GROUND I.E. NON - DEPOSIT OF TDS TO THE C REDIT OF CENTRAL GOVERNMENT AND IN DOING SO, THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THE BASIC FACT THAT PROVISIONS OF SECTION 248 OF TH E ACT WERE NOT AT ALL APPLICABLE ON THE FACTS OF THE ASSESSEE - APPELLANT , AS THERE WAS NO AGREEMENT OR ARRANGEMENT BETWEEN THE ASSESSEE - APP ELLANT AND THE NON - RESIDENTS REGARDING LIABILITY TO DEDUCT TAX. 3.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS ERRED IN LAW AND ON FACTS IN DISMISSING THE APPEAL OF THE ASSESS EE - APPELLANT AND THAT TOO WITHOUT GIVING ANY FAIR AND PROPER OPPORTUNITY OF BEING HEARD TO THE APPELLANT COMPANY. THEREBY, VIOLATING THE PRINCIPLE S OF NATURAL JUSTICE. 3.2 THAT WITHOUT PREJUDICE TO THE ABOVE, THE ASSES SEE - APPELLANT HAD DEPOSITED THE TAXES DUE AS PER THE ORDER OF LEARNED 1TO UNDER SECTION 195 OF THE ACT AND AS SUCH, THE CONDITIONS OF SECTI ON 248 OF THE ACT HAVE ALSO BEEN FULFILLED BY THE ASSESSEE - APPELLANT, TH US, THE APPEAL OF THE ASSESSEE - APPELLANT BE DIRECTED TO BE SET - ASIDE TO THE FILE OF LEARNED CIT (A), SO THAT, THE SAME MAY BE DECIDED ON MERITS . 3 ITA NO3346/DEL/2015. TV TODAY NETWORKS LTD., NEW DELHI. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE: THE ASSESSEE COMPANY IS ENGAGED IN BROADCASTING OF CHANNELS VIZ AAJ TAK, HEADLINES TO DAY, DILLI AAJ TAK, AND TEJ. THE ASSESSEE HAS ENGAGED M/S EBS NEWS MEDIA LTD. (EBS) A TAX RESIDENT OF UNITED KINGDOM (IN S HORT UK) FOR CONVERTING INPUT INFORMATION I.E. PROGRAMME NAME, D AY, TIME OF TELECAST ETC. SENT BY THE ASSESSEE INTO A FORMAT TH AT IS DESIRED BY THE PLATFORM DIRECTLY IN UK ONLY. THE ASSESSEES CAS E IS THAT EBS HAS DONE ENTIRE CONVERSION JOB IN UK AND NO PART OF WORK THEREOF HAS BEEN DONE IN INDIA, SO EBS DOES NOT HAVE ANY BUSINE SS CONNECTION /BUSINESS ESTABLISHMENT IN INDIA WITHIN THE MEANING OF SECTION 9(1)(I) OF THE ACT / ARTICLE 5 OF (INDO- UK DTAA) A S SUCH THE PAYMENT IS NOT IN THE NATURE OF FTS AS MAKE AVAI LABLE CLAUSE OF ARTICLE 13 OF INDO-UK DTAA HAS NOT BEEN SATISFIED. THE ASSESSEE ALSO CLAIMED THAT THE PAYMENT MADE TO EBS HAS NOT BEEN CHARGEABLE TO TAX IN INDIA. DECLINING THE CONTENTIO NS RAISED BY THE ASSESSEE, AO PROCEEDED TO HOLD THAT PAYMENT MADE TO EBS IS IN THE NATURE OF FEE FOR TECHNICAL SERVICES AND HEN CE TAX NEEDS TO BE WITHHELD AT 10.557%. 4 ITA NO3346/DEL/2015. TV TODAY NETWORKS LTD., NEW DELHI. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CI T(A) BY WAY OF FILING THE APPEAL, WHO HAS SUMMARILY DISMISSED TH E APPEAL ON MAINTAINABILITY. FEELING AGGRIEVED, THE ASSESSEE C OMPANY HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT A PPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDER PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE . 5. THE LD. CIT(A) HAS DISMISSED THE APPEAL FILED BY T HE ASSESSEE BEING NON-MAINTAINABLE BY RETURNING FOLLOWING FINDIN GS:- 5.1 I HAVE CAREFULLY EXAMINED THE ISSUE IN LIGHT OF ARGUMENTS MADE BY THE APPELLANT, SECTION 195(2) OF THE ACT IS REPRODU CED AS BELOW:- (2) WHERE THE PERSON RESPONSIBLE FOR PAYING ANY SUC H SUM CHARGEABLE UNDER THIS ACT (OTHER THAN SALARY TO A N ON-RESIDENT CONSIDERS THAT THE WHOLE OF SUCH SUM WOULD NOT BE INCOME CHAR GEABLE IN THE CASE OF THE RECIPIENT, HE MAY MAKE AN APPLICATION TO THE ASSESSING OFFICER TO DETERMINE, BY GENERAL OR SPECIAL ORDER, THE APPROPR IATE PROPORTION OF SUCH SUM SO CHARGEABLE, AND UPON SUCH DETERMINATION, TAX SHALL BE DEDUCTED UNDER SUB-SECTION (1) ONLY ON THAT PROPORTION OF TH E SUM WHICH IS SO CHARGEABLE. 5.2 FROM PERUSAL OF THIS SUB-SECTION, IT IS CLEAR T HAT IT IS AVAILABLE TO PRAYER ONLY WHEN HE IS NOT SURE WHETHER WHOLE OF PAYMENT OR A PORTION THEREOF IS CHARGEABLE TO TAX IN INDIA. IN THAT SIT UATION, PAYER CAN APPROACH THE AO FOR DETERMINING THE PORTION OF PAYM ENT WHICH SHALL BE CHARGEABLE TO TAX IN INDIA AND HENCE SUBJECT TO WIT HHOLDING TAX U/S 5 ITA NO3346/DEL/2015. TV TODAY NETWORKS LTD., NEW DELHI. 195(1). THIS SUB-SECTION CANNOT BE RESORTED TO DET ERMINE THE RATE (LOWER OR NIL) OF WITHHOLDING OF TAX. 5.3 FURTHER, ORDER U/S 195(2) CAN BE APPEALED AGAIN ST U/S 248 ONLY AND NOT U/S 246 OF THE ACT WHICH IS REPRODUCED AS B ELOW: 248 APPEAL BY PERSON DENYING LIABILITY TO DEDUCT TA X IN CERTAIN CASES. WHERE UNDER AN AGREEMENT OR OTHER ARRANGEMENT, THE TAX DEDUCTIBLE ON ANY INCOME, OTHER THAN INTEREST, UNDE R SECTION 195 IS TO BE BORNE BY THE PERSON BY WHOM THE INCOME IS PAYABLE, AND SUCH PERSON HAVING PAID SUCH TAX TO THE CREDIT OF T HE CENTRAL GOVERNMENT, CLAIMS THAT NO TAX WAS REQUIRED TO BE D EDUCTED ON SUCH INCOME, HE MAY APPEAL TO THE COMMISSIONER (APP EALS) FOR A DECLARATION THAT NO TAX WAS DEDUCTIBLE ON SUCH INCO ME. 5.4 PERUSAL OF THIS SECTION SHOWS THAT TWO PRE-CON DITIONS NEED TO BE SATISFIED: (I) UNDER AN AGREEMENT TOR ARRANGEMENT, TAX IS TO B E BORNE BY THE PAYER I.E. PAYMENT SHALL BE NET OF TAXES; AN D (II) PAYER HAS ACTUALLY DEDUCTED THE TAX AND PAID T O CREDIT OF CENTRAL GOVT. HENCE, UNLESS THESE TWO PRE-CONDITIONS ARE FULFILLE D, APPEAL AGAINST ORDER U/S 195(2) IS NOT MAINTAINABLE. 5.5 IN THE PRESENT CASE, THE APPELLANT WAS REQUIRED TO ESTABLISH THAT ABOVE MENTIONED TWO PRE-CONDITIONS HAVE BEEN SATISF IED. HOWEVER, THE APPELLANT FURNISHED ONLY THE COPIES OF FORM 15CB WH ICH DO NOT ESTABLISH ANYTHING. THE APPELLANT HAS NOT FURNISHED EVIDENCE OF DEDUCTION AND PAYMENT OF TAXES AND WHETHER THE TAXES HAVE BEEN DE DUCTED AFTER GROSSING UP. IN VIEW OF THESE FACTS, PRESENTS APPEA LS ARE NOT MAINTAINABLE U/S 248 OF THE ACT AND HENCE DISMISSED. NO ADJUDIC ATION IS BEING DONE ON MERITS OF THE CASE AS THE APPEALS ARE NOT MAINTA INABLE PER SE. 6. IN THE FACE OF THE FACTS THAT EBS NEWS MEDIA LTD. (EBS) IS TAX RESIDENT OF UK AS PER DOUBLE TAXATION AVOIDANCE ACT (IN SHORT 6 ITA NO3346/DEL/2015. TV TODAY NETWORKS LTD., NEW DELHI. DTAA) BETWEEN INDIA AND UK; THAT EBS NEWS DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA AS PER DTAA BETWEEN INDIA AND UK; THAT THE ENTIRE CONVERSION WORK HAS BEEN COMPLET ED BY EBS NEWS IN UK AND NO PART OF ITS WORK HAS BEEN PERFORMED IN INDIA; THAT NO PART OF THIS INCOME IS RECEIVED OR DEEMED T O BE RECEIVED IN INDIA BY EBS NEWS NOR ANY SUCH INCOME IS ACCRUED OR ARISEN OR DEEMED TO ACCRUE OR ARISEN IN INDIA TO THE EBS, WE ARE OF THE CONSIDERED VIEW THAT FINDINGS RETURNING BY LD. CIT(A) AS TO NON- MAINTAINABILITY OF THE APPEAL ARE NOT SUSTAINABLE. HENCE, IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS SET ASIDE TO THE F ILE OF THE LD. CIT(A) TO DISPOSED OF ON MERIT AFTER PROVIDING AN OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQUENTLY, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/6/2018 SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL M EMBER DATED: 07.06.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 7 ITA NO3346/DEL/2015. TV TODAY NETWORKS LTD., NEW DELHI. 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 28.05.2018 DRAFT PLACED BEFORE THE AUTHOR 06.06.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER APPROVED DRAFT COMES TO THE SR. PS/ PS 7/6/2018 KEPT FOR PRONOUNCEMENT ON 7/6/2018 FILE SENT TO THE BENCH CLERK 7/6/2018 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE OF DISPATCH OF ORDER. 8 ITA NO3346/DEL/2015. TV TODAY NETWORKS LTD., NEW DELHI.