B4U TELEVISION NETWORK INDIA LTD, MUMBAI V. DCIT (TDS) 1(1), MUMBAI

ITA 3594/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2159 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M A Y; SUMIT KUMAR ITA NO M

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.3594/M/14 ( %' ( / ASSESSMENT YEAR: 2010-11) M/S. B4U TELEVISION NETWORK INDIA LTD. 45-MAROL CO-OP. INDUSTRIAL ESTATE LTD., ANDHERI KURLA ROAD, ANDHERI (EAST) MUMBAI - 400059 ' / VS. DY. COMMISSIONER OF INCOME TAX (TDS) 1(1) MUMBAI / I.T.A. NO. ITA 3595/M/14 ( %' ( / ASSESSMENT YEAR: 2011-12) M/S. B4U TELEVISION NETWORK INDIA LTD. 45-MAROL CO-OP. INDUSTRIAL ESTATE LTD., ANDHERI KURLA ROAD, ANDHERI (EAST) MUMBAI - 400059 ' / VS. DY. COMMISSIONER OF INCOME TAX (TDS) 1(1) MUMBAI ./ ./ PAN/GIR NO. : AABCB1717B ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 17.11.2015 !' /DATE OF PRONOUNCEMENT: 30.11.2015 #$ / O R D E R PER AMARJIT SINGH, JM: ASSESSEE BY: SHRI SUNIL NAHTA DEPARTMENT BY: SHRI SUMIT KUMAR ITA NO. 3594/M/14 & 3595/M/14 A.Y. 2010-11 & 2011-12 2 THIS ORDER SHALL DISPOSED OF BOTH THE APPEALS BEARI NG ITA NO. 3594/M/14 FOR A.Y. 2010-11 AND ITA 3595/M/14 FOR A.Y. 2011-12 AS THE MATTER OF CONTROVERSY INVOLVES SIMILAR IN NATURE AND CAN SAFELY BE ADJUDI CATED BY THIS SINGLE ORDER. 2. THE ASSESSEE COMPANY IS MAINLY ENGAGED IN THE AC TIVITY OF RENDERING AND SUPPLYING CONTENT FOR TELEVISION CHANNELS AND ALSO IN THE BUSINESS OF PURCHASE AND SALE OF FILM AND MUSIC SOFTWARE. 3. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND GONE THROUGH THE RECORD. THE MATTER OF CONTROVERSY BETWEEN THE PARTIES IS THAT WHETHER THE REMUNERATION PAID TO THE DIRECT OR MR. K. S. KALYANSUNDARAM IS LIABLE TO BE TAXED IN VIEW OF PROVISION CONTENDED U /S. 192(1) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT) OR IS LIABLE TO BE T AXED IN VIEW OF THE PROVISION CONTENDED IN SECTION 194J OF THE ACT. LEARNED REPR ESENTATIVE OF THE ASSESSEE HAS ARGUED THAT MR. K. S. KALYANSUNDARAM IS NOT THE PER MANENT/REGULAR EMPLOYEE OF THE COMPANY, HOWEVER, HIS PROFESSIONAL SERVICES WAS TAKEN ON CONTRACT, THEREFORE, THE ASSESSEE COMPANY HAS RIGHTLY DEDUCTED TAX AT SO URCE @ 10% U/S. 194J OF THE ACT AND THE TAX IS NOT LIABLE TO BE DEDUCTED AND PA YABLE U/S. 192(1) OF THE ACT BECAUSE MR. K. S. KALYANSUNDARAM WAS NOT PERMANENT/ REGULAR EMPLOYEE OF THE COMPANY AND WAS NOT ON THE PAY ROLL. THE REPRESENT ATIVE OF THE ASSESSEE BROUGHT TO THE ATTENTION OF THE TRIBUNAL TOWARDS AGREEMENT BETWEEN THE COMPANY AND MR. K. S. KALYANSUNDARAM WHEREIN MR. K. S. KALYANSUNDAR AM HAS NOT BEEN SHOWN AS THE PERMANENT /REGULAR EMPLOYEE OF THE COMPANY. 4. WHILE, ON THE OTHER HAND THE LEARNED DEPARTMENTA L REPRESENTATIVE REFATED THE SAID CONTENTIONS AND ARGUED THAT THE LEARNED CIT(A) HAS RIGHTLY ADJUDICATED THE MATTER OF CONTROVERSY BY HOLDING THAT MR. K. S. KAL YANSUNDARAM WAS A REGULAR EMPLOYEE AND ACCORDINGLY, THE INCOME WAS ASSESSED I N VIEW OF THE ITA NO. 3594/M/14 & 3595/M/14 A.Y. 2010-11 & 2011-12 3 201(1)/201(1A), HENCE, THE APPEAL OF THE ASSESSEE I S LIABLE TO BE DISMISSED. BEFORE DECIDING THE MATTER OF CONTROVERSY IT IS NECESSARY TO ADVERT THE TERMS & CONDITIONS OF THE CONTRACT ON RECORD: A) WORKING PERIOD OF THE PROFESSIONAL WAS FIXED AND IN ADDITION TO SUCH FIXED PERIOD, THE PROFESSIONAL WAS ALSO REQUIRED TO ATTEND THE COMPANY'S WORK AS AND WHEN REQUIRED BY THE COMPANY B) THE CONSOLIDATED REMUNERATION FIXED ANNUALLY WAS PAID PER MONTH AND SUCH PAYMENT WAS REFERRED TO AS REMUNERATION IN T HE APPOINTMENT CONTRACT. C) THE PROFESSIONAL WAS TO ABIDE BY THE CODE OF CON DUCT FOR THE STAFF OF THE COMPANY AND SUCH OTHER NORMS AS LAID DOWN BY THE BO ARD OF THE COMPANY FROM TIME TO TIME. D) THE PROFESSIONAL WAS APPOINTED INITIALLY FOR A C ONTRACT PERIOD OF ONE YEAR WHICH WAS FURTHER EXPENDABLE AT THE OPTION OF THE ASSESSEE COMPANY E) THE PROFESSIONAL WAS LIABLE TO BE TRANSFERRED FR OM THE POST ENGAGED IN ANY OTHER POST IN ANY OTHER DEPARTMENT OF THE COMPA NY OR ITS SUBSIDIARY/ASSOCIATE COMPANIES ANYWHERE IN INDIA OR ABROAD F) THE PROFESSIONAL IS REQUIRED TO DEVOTE FULL TIME AND ENERGY IN THE BEST INTEREST OF THE COMPANY AND SHALL NOT, WHILE IN SER VICE OF COMPANY, UNDERTAKE OR CONCERN ITSELF DIRECTLY OR INDIRECTLY WITH ANY OTHER EMPLOYMENT OR ACTIVITY, G) ALL WORK DEVELOPED DURING THE EMPLOYMENT OF PROF ESSIONAL SHALL BE THE EXCLUSIVE PROPERTY OF THE COMPANY AND THE PROFESSIO NAL SHALL HAVE NO RIGHT OF OWNERSHIP, COPYRIGHT ETC. 4.1 THE RESTRICTIVE COVENANT COUPLED WITH THE CONT ROL, SUPERVISION AND FINAL SAY OVER THE ACCEPTANCE OR REJECTION OF OUTPUT BEIN G EXERCISED BY THE ASSESSEE COMPANY CLEARLY SHOWS THAT THE RELATIONSHIP BETWEEN THESE PROFESSIONAL AND THE COMPANY IS IN THE NATURE OF EMPLOYEE-EMPLOYER. AS REGARDS THE TREATMENT GIVEN BY THE COMPANY OR PROFESSIONAL TO THE REMUNERATION PAID IN THEIR BOOKS OF ACCOUNTS, THE SAME IS NOT CONCLUSIVE TO DECIDE THE NATURE OF THE SAID REMUNERATION WHICH HAS TO BE ASCERTAINED ON THE BASIS OF RELATIO NSHIP BETWEEN THE ASSESSEE AND THE PROFESSIONAL. IT IS THUS ESTABLISHED THAT THE R ELATIONSHIP BETWEEN THE ASSESSEE COMPANY AND THE PROFESSIONAL WAS PURELY THAT OF EMP LOYER AND EMPLOYEE AND THE REMUNERATION PAID TO THE PROFESSIONAL IN TERMS OF T HE SAID RELATIONSHIP IS SALARY LIABLE TO BE SUBJECTED TO TDS ULS 192 OF THE ACT. W HEREAS THE COMPANY HAS DEDUCTED TAX ULS 194J TREATING THE PAYMENTS AS PROF ESSIONAL FEES. THE ASSESSEE ITA NO. 3594/M/14 & 3595/M/14 A.Y. 2010-11 & 2011-12 4 COMPANY HAS THEREFORE DEDUCTED TAX AT SOURCE FROM T HE PAYMENT OF RS.26,00,000/- MADE TO THE PROFESSIONAL SHORT BY AN AMOUNT EQUAL T O THE DIFFERENCE OF RATES U/S 192 & U/S 194 J I.E. 26.50% . 5. NO DOUBT, IN VIEW OF THE TERMS AND CONDITIONS OF THE CONTRACT OF MR. K. S. KALYANSUNDARAM, IT IS APPARENT THAT HE IS NOT REGUL AR EMPLOYEE OF THE COMPANY. THERE IS NOTHING ON RECORD TO WHICH IT CAN BE ASSUM ED THAT MR. K. S. KALYANSUNDARAM CAN BE CONSIDERED AS PERMANENT/REGUL AR EMPLOYEE OF THE COMPANY. NO P.P.F/C.P.F. HAS BEEN DEDUCTED. THERE IS NO REGULAR INCREASE OF SALARY. THERE IS NO OTHER BENEFITS ON RECORD WHICH WAS BEING PAID TO HIM AS REGULAR EMPLOYEE. NO DOUBT, IN THE SAID CIRCUMSTANCE WHEN MR. K. S. KALYANSUNDARAM HAS BEEN PROFESSIONALLY BEING PAID FOR HIS TECHNICA L SERVICES THEREFORE, PROVISIONS U/S. 194J WOULD BE QUITE APPLICABLE TO HIS CASE, WH EREAS THE PROVISION U/S 192(1) ALONG WITH INTEREST U/S. 201(1)/201(1A) ARE NOT APP LICABLE IN THE CASE OF THE ASSESSEE. THEREFORE, GROUND NO. 1 HAS BEEN DECIDED AGAINST THE REVENUE. CONSEQUENTLY, SECOND GROUND ALSO AWARDED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE. 8. WE ARE OF THE VIEW THAT ORDER IN QUESTION IS IN VIEW OF THE SAID FINDINGS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW THEREFO RE, THE SAME IS HEREBY ORDERED TO BE SET ASIDE AND APPEALS OF THE ASSESSEE ARE ACCEPT ED. THE FILE IS HEREBY ORDERED TO BE RESTORED WITH ASSESSING OFFICER TO DECIDE THE MA TTER AFRESH IN NEW OF THE OBSERVATIONS MADE ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 30 TH NOVEMBER, 2015 MP MP MP MP ITA NO. 3594/M/14 & 3595/M/14 A.Y. 2010-11 & 2011-12 5 * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI