ACIT-16(1), MUMBAI V. MEDIA WORLDWIDE LTD., MUMBAI

ITA 5863/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5903 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 14-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M DAYASAGAR
• Keywords: Retrospective amendment
• Section: 143(3); 40(a)(ia); 194C; 6

Judgement Text

, ,, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ./ ITA NO.5863/MUM/2017 ( / ASSESSMENT YEAR :2012-2013) ACIT-16(1), MUMBAI VS. M/S MEDIA WORLDWIDE LTD. 5 TH FLOOR, TECHWEB CENTRE, LINK ROAD, OSHIWARA, MUMBAI- 400102 ./PAN NO. : AAICS 5926 L ( /APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI M. DAYASAGAR, CITDR /ASSESSEE BY : SHRI VIMAL PUNMIYA, AR / DATE OF HEARING : 02/01/2019 /DATE OF PRONOUNCEMENT 15/01/2019 / O R D E R PER SHRI RAJESH KUMAR, AM : THIS APPEAL BY REVENUE ARISES OUT OF THE ORDER OF T HE CIT(A) 4, MUMBAI, DATED 05.06.2017, WHICH IN TURN HAS ARISEN OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) RELATING TO A.Y. 2012-2013. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 1. 'WHETHER ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING T O DELETE THE DISALLOWANCE U/S. 40(A)(IA) RWS 194J IN RESPECT OF 'CARRIAGE FEES/CHANNEL PLACEMENT FEES' AND FAILING TO APPRECI ATE THAT THE PAYMENTS MADE FOR USE/RIGHT TO USE OF 'PROCESS' ARE 'ROYALTY' AS PER EXPLANATION 6 TO SECTION 9(L)(VI) HENCE SUCH PAYMENTS ARE COVERED U/S. 194J OF THE INCOME TAX AC T, 1961. 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE ITA NO.5863/17 2 DISALLOWANCE U/S. 40(A)(IA) RWS 194J OF 'CARRIAGE FEES/CHANNEL PLACEMENT FEES', WHEREAS THE JURISDICT IONAL ITAT, MUMBAI V BENCH, IN ITS ORDER DATED 28.03.2014 IN THE CASE OF ADIT-(IT)-2(2), MUMBAI VS VIACOM 18 MEDIA P VT. LTD. HAS CONFIRMED THAT THE PAYMENTS MADE FOR USE/R IGHT TO USE OF 'PROCESS' ARE VOYALTY' IN TERMS OF THE INCOM E TAX ACT, 1961'. 3. 'WHETHER ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING T O DELETE THE DISALLOWANCE U/S. 40(A)(IA) PLACING RELIANCE ON THE DECISION OF CALCUTTA HIGH COURT DATED 10.12.2012 IN CIT VS S .K. TEKRIWAL [2014] WITHOUT APPRECIATING THAT THE HONTB LE KERALA HIGH COURT IN ITS JUDGMENT DATED 20.07.2015 IN THE CASE OF CIT-1, KOCHI VS. PVS MEMORIAL HOSPITAL LTD. [2015] 60 TAXMANN.COM 69 (KERALA) HAS DECIDED THE ISSUE IN FA VOUR OF THE DEPARTMENT AFTER DISCUSSING IN DETAIL THE JUDGM ENT IN THE CASE OF CIT VS. S.K. TEKRIWAL (SUPRA)'. 4. 'THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFI CER RESTORED'. 5. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY 3. THE ONLY COMMON ISSUE RAISED IN ALL THE GROUNDS OF APPEAL BY THE REVENUE IS AGAINST THE DELETION OF DISALLOWANCE U/S .40(A)(IA) R.W.S.194J IN RESPECT OF CARRIAGE FEES/CHANNEL PLACEMENT FEES BY THE CIT(A) AS AGAINST THE ORDER OF AO HOLDING THAT SUCH PAYMENT T OWARDS USE OF PROCESS AND ROYALTY WHICH IS IN VIOLATION OF EXPLA NATION 6 TO SECTION 9(1)(VI) OF THE ACT AND THUS COVERED U/S.194J OF TH E ACT. 4. FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED CERTAIN EXPENSES ON WHICH TDS HAS BEEN DEDUCTED @2% U/S.194 C INSTEAD OF 10% U/S 194J OF THE ACT AND SUCH EXPENSES BEING IN THE NATURE OF CARRIAGE FEES/CHANNEL PLACEMENT FEES AMOUNTING TO R S.11,65,28,137/-, UPLINKING CHARGES OF RS.98,09,816/- AND BANDWIDTH C HARGES OF ITA NO.5863/17 3 RS.3,27,14,058/-. ACCORDING TO THE AO. THESE AMOUNT S ARE PAID FOR THE PROFESSIONAL SERVICES RENDERED AND, THEREFORE, LIAB LE FOR TDS @10% U/S.194J, WHEREAS THE ASSESSEE HAS ONLY DEDUCTED TD S @2%. THE AO OBSERVED THAT PLACEMENT OR CARRIAGE IS NOTHING BUT A PROCESS BY WHICH BROADCASTER GETS THEIR CHANNEL PLACED AT PRIME BRA ND OF FREQUENCY AND, THEREFORE, FOR THIS PROCESS THE ASSESSEE PAYS CHAN NEL PLACEMENT FEE OR CARRIAGE FEE, THE AO FURTHER OBSERVED THAT PROCESS FEE IS COVERED WITHIN THE AMBIT OF DEFINITION OF SECTION 12D OF THE ACT AND BY VIRTUE OF EXPLANATION 6 TO SECTION 9(1)(VI) OF THE ACT. FINAL LY, LD. AR DISALLOWED THE PAYMENTS MADE BY THE ASSESSEE FOR NON DEDUCTION OF TAX AT SOURCE U/S.40(A)(IA) OF THE ACT TO THE TUNE OF RS.15,90,52 ,011/- BY FRAMING THE ASSESSMENT U/S.143(3) OF THE ACT VIDE ORDER DATED 1 6.03.2016. 5. LD. AR AT THE OUTSET SUBMITTED THAT THE ISSUE IN VOLVED IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE IN ITA NO.5153/MUM/2016 FOR THE ASSESSMENT YEAR 2012-2013, ORDER DATED 06.07.20 18. LD. AR SUBMITTED THAT IN VIEW OF THE ISSUE BEING SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, THE APPEAL OF THE REVENUE SHOULD BE DISMI SSED. 6. LD. DR, ON THE OTHER HAND, RELIED ON THE GROUND S OF APPEAL AND ORDER OF AO. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD INCLUDING THE ITAT DECISION IN ASSESSEE OWN CASE IN ITA NO.5153/MUM/2016, ORDER DATED 06.07.2018, WE OBSERV E THAT THE FACTS OF THE PRESENT CASE BEFORE US IS MATERIALLY SAME TO ON E AS STATED BY THE ITA NO.5863/17 4 COORDINATE BENCH IN THE ABOVE DECISION. THE OPERATI VE PART OF THE ORDER OF THE TRIBUNAL IN THE AFORESAID CASE IS REPRODUCED AS UNDER :- 15. WE FIND THAT THE CHANNEL PLACEMENT FEE PAID TO THE CABLE TV OPERA TOR/DTH PROVIDER CAN NOT BE REGARDED AS ROYAL TY AS IT DOES NOT FALL UNDER THE DEFINITION IN TERMS OF EXPLANATI ON-2 OF SECTION- 9(L)(VI) OF THE INCOME TAX ACT. THOUGH THERE IS AN AMENDMENT IN THE PROVISION AND AS PER NEWLY INSERTED EXPLANATION-6 W ITH RETROSPECTIVE EFFECT THE TERM PROCESS HAS BEEN DEFI NED AND IT INCLUDES TRANSMISSION, UPLINKING AND DOWN LINKING O F SIGNALS ETC. BUT THE SAID RETROSPECTIVE AMENDMENT CAN NOT BE PRESSED INTO SERVICE FOR THE PURPOSE OF DISALLOWANCE U/S. 40(A)(IA) BECA USE OF THE REASON THAT AT THE RELEVANT TIME WHEN THE ASSESSEE HAS DED UCTED THE TAX AT SOURCE IT WAS NOT IN THE STATUTE. 16. IT IS A CONTRACT CHARGES AS PER SECTION 194C. D ECISION OF MUMBAI HIGH COURT IN THE CASE OF CIT-11 V/S NGC NET WORKS (I) P LTD, INCOME TAX - APPEAL NO 397 OF 2015 IS APPLICAB LE. 17. ON THE OTHER HAND, IT WAS ARGUED BY LEARNED DR THAT ASSESSEE HAS ALREADY DEDUCTED TAX AT 11% IN RESPECT OF VERY SIMILAR PAYMENT MADE TO BT INDIA PVT. LTD., AND BT GLOBAL COMMUNICATION INDIA PVT. LTD.,, THEREFORE, THERE WA S NO JUSTIFICATION FOR DEDUCTING TAX AT SOURCE AT 2% FOR THE PAYMENT M ADE TO ESSEL SHYAM COMMUNICATIONS LTD., 18. IT WAS REPLIED BY LEARNED AR THAT ASSESSEE HAS DEDUCTED TAX AT HIGH RATE OF 10% ON THE PLEA THAT BOTH THESE COM PANIES WERE FOREIGN COMPANIES, WHO HAVE AGREED FOR DEDUCTION OF TAX AT HIGHER PERCENTAGE. AS PER LEARNED DR, CIT(A) HAS NOT DECID ED MERIT OF THE CASE WITH REGARD TO THE NATURE OF PAYMENT AND IS ME RELY RELIED ON THE ORDER OF THE TRIBUNAL WHEREIN TRIBUNAL HAVE OBS ERVED THAT NO FINDING WAS GIVEN BY THE AO. WITH REGARD TO NATURE OF PAYMENT, THEREFORE TRIBUNAL CONCURRED WITH THE CIT(A) WITH R EGARD TO NATURE OF PAYMENT. AS PER LEARNED DR IN THIS CASE, SPECIFI C FINDING HAS BEEN GIVEN BY AO WITH REGARD TO THE NATURE OF PAYME NT BEING ROYALTY. 19. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PE RUSED. 20. THE ISSUE UNDER CONSIDERATION IS SQUARELY COVER ED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE VERY SAME A.Y.2012-13 WHEREIN, THE TRIBUNAL HAVE HELD THAT TH E PAYMENT SO MADE BY THE ASSESSEE FOR CHANNEL CARRIAGE FEES, UP- LINKING CHARGES AND BAND WIDTH CHARGES WAS LIABLE TO DEDUCTION OF T AX U/S.194C AND NOT U/S.194J. AFTER ACCEPTING THIS CONTENTION, THE TRIBUNAL HAVE SET ASIDE THE ORDER OF AO PASSED U/S.201 (1) / 201(1A) OF THE IT ACT. THE PRECISE OBSERVATION OF THE TRIBUNAL IN ITS ORDE R DATED 29/11/2017 WAS AS UNDER:- ITA NO.5863/17 5 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. DURING THE COURSE OF HEARING, THE LD. AR STATED THAT THIS ISSUE IS CO VERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIB UNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2011-12 IN I.T.A. NO. 2057/KOL/20I4 DATED 12.05.2017. IN THE S AID ORDER OF THIS TRIBUNAL IT WAS HELD AS UNDER: '4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS AGREED BY THE ID. REPRESENTATIVES OF BOTH THE SIDES, THE I SSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIB UNAL IN ASSESSEE'S OWN CASE FOR THE IMMEDIATELY PRECEDING Y EAR, I.E. AY 2010-11 RENDERED VIDE ITS ORDER DATED 29.08.2014 IN ITA NO. 1422/KOL/2012, WHEREBY THE ORDER PASSED BY THE ID. CIT(APPEALS) CANCELLING THE DEMAND RAISED BY THE ASSESSING OFFICER AGAINST THE ASSESSEE UNDER SECTIO N 201(1 )/2Q](IA) FOR THE ALLEGED SHORT DEDUCTION OF TAX AT SOURCE FROM THE SIMILAR PAYMENTS MADE BY THE ASSESSEE WAS UPHEL D BY THE TRIBUNAL VIDE PARAGRAPH NO. 8 OF ITS ORDER, WHI CH READS AS UNDER:- '8. UPON CAREFUL CONSIDERATION OF THE SUBMISSIONS, WE FIND THAT IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE CASE OFM/S. SRISTI TELEVISION (REFERRED TO SUPRA). WE FIND THAT THE TRIBUNAL HAS ADJUDICATED THE ISSUE AS UNDER:- '8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD WE CAN GAINFULLY REFER TO THE P ROVISIONS OF SECTIONS S94C AND 194J, WHICH ARE REPRODUCED AS UNDER:- '194C-PAVMENTS TO CONTRACTORS: ANY PERSON RESPONSIB LE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS S ECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SU CH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAY MENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO'. '194J-FEES FOR PROFESSIONAL OR TECHNICAL SERVICES: (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING RESIDENT ANY SUM BY WAY OF- (A) FEES FOR PROFESSIONAL SERVICES, OR (B) FEES FOR TECHNICAL SERVICES, (C) ROYALTY, OR (D) ANY SUM REFERRED TO IN CLAUSE (VA) OF SECTION 2 8. SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF TH E PAYEE OR AT THE TIME OF PAYMENT THEREOF IN OR BY ISSUE OF A CHEQUE OR ITA NO.5863/17 6 DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, D EDUCT AN AMOUNT EQUAL TO PER CENT, OF SUCH SUM AS INCOME TAX ON INCOME COMPRISED THEREIN. WE FIND THAT THE ASSESSEE PRODUCED VARIOUS TYPES OF PROGRAMMES/SERIALS AND NEWS AND THESE WER E TELECASTED/BROADCASTED THROUGH MULTI SYSTEM OPERATO RS FOR WHICH PAYMENTS WERE MADE TO THEM UNDER THE HEAD 'CARRIAGE CHARGES'. THE ASSESSEE HAS DULY DEDUCTED AND PAID TAX UNDER SECTION J94C OF THE ACT. WE AGREE WI TH THE ID CIT(APPEALS) THAT NO TECHNICAL SERVICES WERE INVOLV ED IN PAYMENT OF CARRIAGE CHARGES MADE BY THE ASSESSEE FO R BROADCASTING OF THE PROGRAMMES PRODUCED BY THE ASSE SSEE. THE ASSESSEE PRODUCED VARIOUS TYPES OF PROGRAMMES/SERIALS AND NEWS AND THESE WERE TELECASTED/BROADCASTED THROUGH MULTI SYSTEM OPERATO RS. PAYMENTS IN THIS REGARD WERE MADE AS CARRIAGE CHARG ES FOR WHICH PAYMENT OF TAX WAS DEDUCTIBLE UNDER SECTION I 94C OF THE INCOME TAX ACT. AS PER DEFINITION OF TECHNICAL SERVICES GIVEN IN EXPLANATION TO SECTION 9 OF THE ACT, THE DEDUCTEE SHOULD HAVE RENDERED MANAGERIAL, TECHNICAL OR CONSU LTANCY SERVICES. IN THIS CASE, WE FIND THAT THERE IS NO SU CH FINDING OF THE ASSESSING OFFICER. THE DEDUCTEE HAS ONLY TELECA STED THE PROGRAMMES PRODUCED BY THE ASSESSEE. IN THIS CASE L AW REFERRED TO BY THE LD.CIT'(APPEALS) DECISION IN THE CASE OF DC IT -VS- NNM SECURITIES LIMITED, ITAT HELD THAT IF T HE ASSESSEE IS USING ANY FACILITY OF ANYONE THE SAME I S NOT TECHNICAL SERVICES. HON'BLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF KARUKSHETRA DARPAN (P) LTD -VS- CIT[217 CTR 326J HAS HELD THAT TELECASTING ON {HE PROGRAMME WAS COVERED UNDER SECTION 194C OF THE ACT. 9. IN THE BACKGROUND OF THE ABOVE DISCUSSION AND FO LLOWING THE PRECEDENT AS ABOVE, WE DO NOT FIND ANY REASON T O INTERFERE WITH THE ORDER OF THE ID. CLT(APPEALS). A CCORDINGLY, WE UPHOLD THE SAME'. SINCE THE FACTS IN THE CASE BE FORE US ARE IDENTICAL, RESPECTFULLY FOLLOWING THE ABOVE PRE CEDENT, WE UPHOLD THE ORDER OF THE ID.CIT(A) ON THIS ISSUE. AC CORDINGLY, THIS APPEAL OF THE REVENUE STANDS DISMISSED'. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR AY 2010 -11 ON A SIMILAR ISSUE, WE UPHOLD THE IMPUGNED ORDER OF THE ID. CIT(APPEALS) DELETING THE DEMAND RAISED BY THE ASSE SSING OFFICER FOR THE ALLEGED SHORT DEDUCTION OF TAX AT S OURCE BY THE ASSESSEE FROM THE PAYMENTS MADE TOWARDS CHANNEL CARRIAGE FEES, UP-LINKING CHARGES AND BANDWIDTH CHA RGES AND DISMISS THIS APPEAL OF THE REVENUE. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND HENCE THE ASS ESSEE IS LIABLE TO DEDUCT TAX AT SOURCE ONLY U/S 194C OF THE ACT IN ITA NO.5863/17 7 RESPECT OF AFORESAID SUBJECT MENTIONED PAYMENTS. ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 21. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL THAT PAYMENT SO MADE BY THE ASSESSEE WAS LIABLE TO DEDUCTION OF TAX U/S.194C @2% AND NOT U/S.194J @10% AND CONSEQUENTLY, DISALLO WANCE MADE BY THE AO IS NOT SUSTAINABLE U/S.40(A)(IA) OF THE IT ACT. 8. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, HOLD THAT THE PAYMENTS SO MADE BY THE ASS ESSEE WAS LIABLE TO DEDUCTION OF TAX U/S.194C OF THE ACT @2% AND NOT @1 0% U/S.194J OF THE ACT. ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVE NUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 15/01/2019. SD/- (RAM LAL NEGI) SD/- (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 15/01/2019 . . /PRAKASH KUMAR MISHRA , SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI 1. / THE APPELLANT- 2. / THE RESPONDENT- 3. ( ) / THE CIT(A), MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//