DCIT TDS 1(1), MUMBAI V. BALAJI TELEFILMS LTD, MUMBAI

ITA 5590/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0299 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 04-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: SNEHAL R SHAH
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.5590 & 5595/MUM./2014 ( ASSESSMENT YEAR :2010 - 11 & 2011 - 12) DCIT TDS 1(1) R.NO. 802, K.G MITTAL HOSPITAL BLDG, CHARNI RD. MUMBAI 400020 . APPELLANT V/S BALAJI TELEFILMS LTD., C - 13, BALAJI HOUSE, DALIA INDL. ESTATE NEW LINK RD. ANDHERI (W) MUMBAI 400021 PAN AAACD4376M . RESPONDENT ASSESSEE BY : SHRI. SNEHAL R. SHAH REVENUE BY : SHRI. SUMAN KUMAR DATE OF HEARING - 14.06.2017 DATE OF ORDER 14 .06.2017 O R D E R PER: B.R. BASKARAN, ACCOUNTANT MEMBER BOTH THE APPEAL S FILED BY THE REVENUE ARE DIRECTED AGAINST T HE ORDER S PASSED BY LD. CIT(A) - 12 , MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR S 2010 - 11 AND 2011 - 12. SINCE THE IDENTICAL ISSUE IS URGED IN THESE APPEALS, THERE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. BALAJI TELEFILMS LTD., ITA NO.5590 & 5595/MUM./2014 2 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN CANCELLING THE DEMAND RAISED BY THE A.O U/S . 201(1) AND 201(1A) OF THE ACT FOR SHORT DEDUCTION OF TAX AT SOURCE. 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRODUCTION OF TELEVISIONS SERIALS AND SHOWS. THE SURV EY ACTION U/S. 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 18.08.2011. THE A.O NOTICED THAT THE ASSESSEE HAS MADE PAYMENTS TO VARIOUS T.V CHANNELS FOR BROADCASTING ITS SERIALS DURING FIXED TIME SLOTS. THE ASSESSEE TREATED THIS TELECASTING FEES PAID TO THE T.V CHANNELS AS CONTRACT PAYMENT S AND ACCORDINGLY DEDUCTED TAX AT SOURCE AT THE RATE OF 2% U/S. 194C OF THE ACT. THE A.O, HOWEVER, TOOK THE VIEW THAT THE TELECASTING FEES PAID WHERE IN THE NATURE OF WITHIN COURSE FEES FOR TEC HNICAL AND PROFESSIONAL SERVICES ACCORDINGLY HE TOOK THE VIEW THAT THE ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE AT THE RATE OF 10% U/S. 194J OF THE ACT. ACCORDINGLY THE A.O TREATED THE ASSESSEE AS ASSESSEE IN DEFAULT AND RAISED THE DEMAND U/S. 201(1) A ND 201(1A) O F THE ACT IN BOTH THE YEARS UNDER CONSIDERATION. 4 . BEFORE LD. CIT(A) THE ASSESSEE PLACED A RELIANCE ON CIRCULAR NO. 775 DATED 08.08.1995 ISSUED BY THE CBDT AND ALSO THE AGREEMENT ENTERED BETWEEN THE ASSESSEE AND THE T.V CHANNELS. THE ASSESSEE ALSO PLACED RELIANCE ON THE DE FINITION OF THE WORD WORK BALAJI TELEFILMS LTD., ITA NO.5590 & 5595/MUM./2014 3 PROVIDED IN CLASS B OF E XPLANATION TO SECTION 194C OF THE ACT , W HEREIN IT IS PROVIDED THAT THE TERM WORK INCLUDES BROADCASTING AND THE TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROAD CASTING ARE TELECASTING. THE ASSESSEE ALSO PLACED A RELIANCE ON THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRASAR BHARTI BROADCASTING CORPORATION OF INDIA 292 ITR 580 IN SUPPORT OF ITS CONTENTIONS . 5 . THE LD CIT(A) WAS CONVINC ED WITH THE CONTENTION S OF THE ASSESSEE AND ACCORDINGLY HELD THAT THE TELECASTING FEES PAID BY THE ASSESSEE TO THE T.V CHANNELS WOULD FALL WITHIN THE AMBIT OF PROVISION OF SECTION 194C OF THE ACT AND NOT U/S. 194J OF THE ACT. ACCORDINGLY HE ALLOWED THE AP PEALS OF THE ASSESSEE IN BOTH THE YEARS UNDER CONSIDERATION. AGGRIEVED BY THE O RDERS PASSED BY THE CIT(A), THE REVENUE HAS FILED TH E S E APPEAL S BEFORE US. 6 . HAVING HEARD THE RIVAL CONTENTION S AND ALSO UPON GOING THROUGH THE RECORD, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS PASSED A REASONED ORDER. FOR THE SAKE OF CONVENIENCE WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDERS OF THE BENCH LD. CIT(A). 5.1 I HAVE CONSIDERED THE AVERMENTS MADE IN THE IMPUGNED ORDER AND ALSO THE WRITTEN AND ORAL SUBMISSIONS OF THE LEARNED A.R. OF THE APPELLANT AND ALSO THE BOARD'S CIRCULAR AND JUDICIAL PRONOUNCEMENT RELIED UPON BY HIM. IN THE INSTANT CASE, THE APPELLANT IS A PRODUCTION COMPANY AND THE IMPUGNED P AYMENTS ARE TELECASTING FEES TO CHANNELS FOR BROADCASTING ITS SERIALS DURING BALAJI TELEFILMS LTD., ITA NO.5590 & 5595/MUM./2014 4 FIXED TIME SLOTS. ACCORDING TO THE A.O., 'FIXED TIME SLOT' IS THE IMPORTANT CRUX OF THE MATTER IN AS MUCH AS IT INVOLVES TECHNICAL AND PROFESSIONAL SERVICES OF A HUMAN MIND WHEREA S ACCORDING TO THE LEARNED A.R., THE APPELLANT COMPANY, BEING A THIRD PARTY, HAS NO ROLE TO PLAY IN A PARTICULAR 'TIME SLOT' AS IS EVIDENT FROM COPY OF LETTERS FROM A COUPLE OF CHANNELS VIZ. GEMINI TV AND UDAYA TV WHEREIN IT HAS BEEN CATEGORICALLY STATED T HAT THE DATE, TIMING AND CONTENTS OF THE PROGRAMME SHALL BE SUBJECT TO THE APPROVAL OF THE EDITORIAL BOARD, WHICH WOULD BE SUBJECT TO CHANGE AT THEIR DISCRETION. THE LD. A.R HEAVILY HARPED UPON THE INCLUSIVE DEFINITION OF THE TERM 'WORK' AS PROVIDED IN CLA USE (IV) BELOW EXPLANATION TO SECTION 194C OF THE ACT, WHICH PROVIDES AS UNDER; '(IV) 'WORK' SHALL INCLUDE - (A) ADVERTISING: (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING: ... 11 IN VIE W OF THE ABOVE INCLUSIVE DEFINITION OF 'WORK', PAYMENTS MADE TOWARDS A CONTRACT CONCERNING 'BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING' WOULD BE COVERED BY SECTION 194C AND NOT U/S.194J OF THE ACT. 5.2 MOREOVER, IN PARAGRAPH 4.1 OF THE IMPUGNED ORDER, THE A.O. HAS TRIED TO DISTINGUISH BETWEEN THE PROVISIONS OF SECTION 194C & 194J OF THE ACT WHEREBY IT IS CONTENDED INTER ALIA THAT THE TERM 'ADVERTISING' HAS BEEN INCLUDED IN THE DEFINITION OF WORK' VID E CLAUSE (A) BELOW EXPLANATION TO SECTION 194C ALSO APPEARS IN EXPLANATION TO SECTION 194J OF THE ACT AND HENCE, ACCORDING TO THE A.G., THE SAME TERM CANNOT APPEAR IN TWO DIFFERENT SECTIONS IF THE SAME ARE MUTUALLY EXCLUSIVE. IN THIS CONTEXT, IT IS NOTED T HAT HERE IN THE INSTANT CASE, THE APPELLANT COMPANY HAS NOT MADE THE PAYMENTS FOR ADVERTISING, RATHER IT IS THE APPELLANT COMPANY, WHICH EARNS INCOME FROM SELLING ADVERTISING SPACE DURING BROADCAST OF TV SERIALS AS APPARENT FROM PARAGRAPH 3 OF THE IMPUGNED ORDER ITSELF. HENCE, THE TERM 'ADVERTISING' DOES NOT COME INTO PLAY IN THE INSTANT CASE. IT APPEARS THAT THE A.G. GOT CONFUSED WHILE INTERPRETING THE PROVISIONS OF LAW. 5.3 THE ISSUE IN RELATION TO APPLICATION OF SECTION 194C TO 194J WITH RESPECT TO PAYM ENTS FOR TELECASTING FEES/BROADCASTING FEES AROSE FOR CONSIDERATION BEFORE THE HCN'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRASAR BHARATI BROADCASTING CORPORATION OF INDIA REPORTED IN [2007] 292 ITR 580 WHEREIN IT WAS HELD AS UNDER; BALAJI TELEFILMS LTD., ITA NO.5590 & 5595/MUM./2014 5 'WE OBSERVE THAT EX PLANATION IIL WHICH WAS INTRODUCED SIMULTANEOUSLY WITH SECTION 194)', IS VERY SPECIFIC IN ITS APPLICATION TO NOT ONLY BROADCASTING AND TELECASTING BUT ALSO INCLUDE 'PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING AND TELECASTING: IF, ON THE SAME DATE, TWO P ROVISIONS ARE INTRODUCED IN THE ACT, ONE SPECIFIC TO THE ACTIVITY SOUGHT TO BE TAXED AND THE OTHER IN MORE GENERAL TERMS, RESORT MUST BE HAD TO THE SPECIFIC PROVISION WHICH MANIFESTS THE INTENTION OF THE LEGISLATURE. IT IS NOT, THEREFORE, POSSIBLE TO ACCEP T THE CONTENTION OF THE REVENUE THAT PROGRAMMES PRODUCED FOR TELEVISION, INCLUDING 'COMMISSIONED PROGRAMMES: WILL FALL OUTSIDE THE REALM OF SECTION 194C EXPLANATION III OF THE ACT. 11 THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO HAVING RE GARD TO THE LEGAL POSITION DISCUSSED HERETOFORE, IT IMMENSELY TRANSPIRES THAT THE IMPUGNED PAYMENTS,' IN THE INSTANT CASE, ARE NOTHING BUT THE TELECASTING FEES PAID BY THE APPELLANT COMPANY IN PURSUANCE OF THE AGREEMENTS AND HENCE THE SAME FALL WITHIN THE AMBIT OF THE PROVISIONS OF SECTION 194C OF THE ACT AND ACCORDINGLY, THE RELEVANT GROUNDS OF APPEAL STAND ALLOWED. 7 . SINCE THE LD. CIT(A) HAD PASSED A RECENT ORDER AFTER CONSIDERING THE FACTUAL ASPECTS OF THE ISSUES, WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER. ACCORDINGLY WE UPHOLD THE SAME. 8 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON 14 .06.2017 SD/ - SD/ - AMARJIT SINGH B.R BASKARAN JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14 .06.2017 BALAJI TELEFILMS LTD., ITA NO.5590 & 5595/MUM./2014 6 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI