ACIT 16(1), MUMBAI V. ZOOM ENTERTAINMENT NETWORK LTD., MUMBAI

ITA 3384/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0907 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: S VENKATRAMA N
• Keywords: Question of law; Difference of opinion
• Section: 194C

Judgement Text

INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI BEFORE S/SH.JOGINDERSINGH,JUDICIAL MEMBER AND RAJENDRA,ACCOUNTANT MEMBER ./ I.T.A./3384/MUM/2016 , / ASSESSMENT YEAR: 2010-11 ACIT 16(1) 439,AAYKAR BHAVAN, M K MARG,MUMBAI-20 VS. ZOOM ENTERTAINMENT NETWORK LTD. 1 ST FLOOR, TRADE GARDEN, KAMALA MILLS COMPOUND, SENAPATI BAPAT MARG . LOWER PAREL,MUMAI-400 013 PAN:AAACZ2897B ( /APPELLANT ) ( / RESPONDENT ) / REVENUE BY: SH.RAJESH KUMAR YADAV / ASSESSEE BY: SH.S.VENKATRAMAN / DATE OF HEARING: 19.04.2017 / DATE OF PRONOUNCEMENT: 19.04.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 29/02/2016, OF THE CIT (A)-4, MUMBAI, THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAG ED IN THE BUSINESS OF BOLLYWOOD BASED SPECIALTY AND LIFESTYLE TELEVISION SEGMENT, FILED I TS RETURN OF INCOME ON 28/09/2010,DECLARING LOSS OF RS. 10.91 CRORES.THE AO COMPLETED THE ASSESSMEN T, U/S. 143 (3) OF THE ACT,ON 28/03/ 2013,DETERMINING ITS INCOME AT RS. 14.99CRORES. 2.EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE DISALLOWANCE MADE U/S. 40(A)(IA) READ WITH SECTION 194J OF THE ACT,OF RS. 7.27 CRORES, BEING P ROGRAM, PRODUCTION AND ACQUISITION EXPENSES AND OF RS.17.05 CRORES,BEING CHANNEL PLACEMENT FEE OR CARRIES FEE.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD DEDU CTED TAX AT SOURCE U/S. 194C OF THE ACT. HOWEVER,HE WAS OF THE OPINION THAT PAYMENTS WERE SU BJECT TO DEDUCTION OF TAX AT SOURCE U/S. 194J OF THE ACT. ACCORDINGLY,INVOKING THE PROVISION S OF SECTION 40(A)(IA),HE MADE THE DISALLOW - ANCE OF RS.7,24,85,194/-AND RS.17, 05, 53, 761/-UND ER THE HEADS PROGRAM/PRODUCTION EXPENDITURE AND CARRIAGE FEES RESPECTIVELY. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) AND MADE ELABORATE SUBMISSIONS. IT R ELIED UPON CERTAIN CASE LAWS ALSO.AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSION OF THE ASSESSEE,HE HELD THAT THE DECISIONS 3384/M/16-ZOOM ENTERTAINMENT 2 RELIED UPON BY THE ASSESSEE SUPPORT THE VIEW THAT W HERE TAX HAD BEEN DEDUCTED AT SOURCE,UNDER A PARTICULAR SECTION ALREADY NO DISALLOWANCE WOULD AR ISE U/S. 40(A)(IA) EVEN IF IN THE OPINION OF THE AO TAX OUGHT TO HAVE BEEN DEDUCTED UNDER A DIFFEREN T SECTION. HE REFERRED TO THE CASE OF S. K.TAKRIWAL(361ITR432) WHEREIN THE HONBLE CALCUTTA HIGH COURT HAD HELD THAT NO DISALLOWANCE WAS WARRANTED U/S.40(A)(IA)IN A CASE WHERE THE TAX HAD BEEN DEDUCTED UNDER A PARTICULAR SECTION. HE ALSO REFERRED TO THE CASE OF PRASAR BHARTI(292 I TR 580). IN THAT MATTER, THE HONBLE DELHI HIGH COURT HAD HELD THAT PAYMENT MADE TOWARDS PROGR AMS PRODUCED FOR BROADCASTING FELL WITHIN THE EXPRESSION WERE, AS DEFINED IN THE EXPLANATION TO SECTION 194C OF THE ACT HE FURTHER HELD THAT IN ASSESSEES OWN CASE THE TRIBUNAL HAD HELD THAT T AX HAD BEEN CORRECTLY DEDUCTED AT SOURCE ON PAYMENT TO CABLE OPERATORS U/S. 194C, THAT IT HAD C ORRECTLY DEDUCTED TAX AT SOURCE ON PAYMENT MADE BOTH FOR PRODUCTION PROGRAM AND ON CARRIAGE FE ES. FINALLY, HE DELETED THE ADDITIONS MADE BY THE AO U/S. 40(A)(IA) OF THE ACT. 4. IN THE COURSE OF HEARING BEFORE US, THE DEPARTMENTA L REPRESENTATIVE (DR) STATED THAT MATTER COULD BE DECIDED ON MERITS.THE AUTHORISED REPRESENT ATIVE (AR) SUPPORTED THE ORDER OF THE FAA AND REFERRED TO THE CASES OF NIMBUS COMMUTATION LTD .(ITA/1424/MUMBAI/2014-AY.2009-10, DATED 09/02/2016). HE RELIED UPON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY.S.2008-09 AND 2009-10(ITA/671-72/MUMBAI/2012, DA TED 27/07/2015). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE APPEAL HAS BEEN FILED AS THE AO WAS OF THE OPINION THAT THE ASSESSEE HAD SHOULD HAVE DEDUCTED TAX UNDER A PARTICULAR PROVISION I.E.194J OF THE AC T AND NOT AS PER THE PROVISIONS OF SECTION 194C OF THE ACT.WE FIND THAT IN THE MATTER OF SAMIR TEKR IWAL THE HONBLE CALCUTTA HIGH COURT HAS DEALT WITH THE ISSUE OF APPLICABILITY OF THE PROVI SIONS OF SECTION 40(A)(IA).IN THAT MATTER THE ASSESSEE HAD DEDUCTED TAX U/S. 194C(2) OF THE ACT, FROM PAYMENTS MADE TO SUB-CONTRACTORS. ACCORDING TO THE REVENUE, THE PAYMENTS WERE IN THE NATURE OF MACHINERY HIRE CHARGES FALLING UNDER THE HEAD RENT AND THE PROVISIONS OF SECTION 194-I WERE APPLICABLE. ON THE GROUND THAT THE ASSESSEE HAD DEDUCTED TAX AT 1% U/S. 194C(2),AS AGA INST THE ACTUAL DEDUCTION TO BE MADE AT 10% U/S.194-I THE PAYMENTS WERE DISALLOWED PROPORTIONAT ELY INVOKING THE PROVISIONS OF SECTION 40(A)(IA).THE TRIBUNAL HELD THAT WHERE TAX WAS DEDU CTED BY THE ASSESSEE, THOUGH UNDER A BONA FIDE WRONG IMPRESSION UNDER WRONG PROVISIONS, THE P ROVISIONS OF SECTION 40(A)(IA) COULD NOT BE INVOKED AND THAT IF THERE WAS ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENTS FALLING UNDER VA RIOUS TAX DEDUCTION AT SOURCE PROVISIONS, THE 3384/M/16-ZOOM ENTERTAINMENT 3 ASSESSEE COULD BE DECLARED TO BE AN ASSESSEE IN DEF AULT U/S. 201 BUT NO DISALLOWANCE COULD BE MADE INVOKING THE PROVISIONS OF SECTION 40(A)(IA) . ON APPEAL THE HONBLE COURT HELD THAT NO SUBSTANTIAL QUESTION OF LAW AROSE FROM THE ORDER OF THE TRIBUNAL. IN THE CASE OF PRASAR BHARATI(SUPRA)THE HONBLE DELHI HIGH COURT HAS DELI BERATED UPON THE ISSUE OF TAX DEDUCTIBILITY OF BROADCASTING AND TELECASTING INCLUDING PRODUCTIO N OF PROGRAMMES,AS UNDER: SECTION 194C(1) OF THE INCOME-TAX ACT, 1961, REQUIR ES A PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK (INCLUDI NG SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND ANY CORPORATION ESTABLISHED BY OR UNDER A CENTRAL ACT TO DEDUCT TAX AT SOURCE IN THE EQUIVA LENT OF ONE PER CENT. OF SUCH PAYMENT IN CASE OF ADVERTISING AND TWO PER CENT. IN ALL OTHER CASES. B Y THE FINANCE ACT, 1995, WITH EFFECT FROM JULY 1, 1995, EXPLANATION III WAS INSERTED IN SECTION 194C . IN TERMS OF CLAUSE ( B) OF EXPLANATION III TO SECTION 194C PAYMENT MADE TOWARDS A CONTRACT CONCER NING BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCA STING OR TELECASTING WOULD BE COVERED BY SECTION 194C . EVEN WHILE THE FINANCE ACT, 1995INTR ODUCED EXPLANATION III TO SECTION 194C , IT SIMULTANEOUSLY INSERTED SECTION 194J IN THE ACT WHI CH PROVIDED FOR DEDUCTION OF TAX AT SOURCE AT THE TIME OF PAYMENT OF A FEE FOR PROFESSIONAL OR T ECHNICAL SERVICE. EXPLANATION III TO SECTION 194C WHICH WAS INTRODUCED SIMULTANEOUSLY WITH SECTI ON 194J IS VERY SPECIFIC IN ITS APPLICATION NOT ONLY TO BROADCASTING AND TELECASTING BUT ALSO I NCLUDES PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING AND TELECASTING.THAT PROGRAMMES PRODU CED FOR TELEVISION INCLUDING COMMISSIONED PROGRAMMES WOULD BE COVERED BY EXPLA NATION III TO SECTION 194C . CONSIDERING THE ABOVE AND THE FACT THAT THE SIMILA R ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN EARLIER YEARS,WE HOLD THAT THE O RDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.CONFIRMING HIS ORDER,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH APRIL, 2017. SD/- SD/- ( / RAJENDRA ) ( JOGINDERSINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 19.04.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.