ACIT-TDS, Noida V. M/s. Dish TV India Ltd., Noida

ITA 6066/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6663 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-02-2016
• Assessment Year: misc
• Appeal Filed On: 08-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Rule of consistency
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: B : NEW DELHI BEFORE SHRI R.S. SYAL, AM & SHRI A.T. VARKEY, JM ITA NO.5310/DEL/2013 ASSESSMENT YEAR : 2009-10 DISH TV INDIA LTD., FC-19, SECTOR-16A, FILM CITY, NOIDA. PAN: AAACA5478M VS. ACIT (TDS), NOIDA. ITA NO.6066/DEL/2013 ASSESSMENT YEAR : 2009-10 ACIT (TDS), NOIDA. VS. DISH TV INDIA LTD., FC-19, SECTOR-16A, FILM CITY, NOIDA. PAN: AAACA5478M ASSESSEE BY : SHRI SANJIV SAPRA, CA DEPTT. BY : SHRI SUNIL CHANDER SHARMA, CIT-DR DATE OF HEARING : 25.02.2016 DATE OF PRONOUNCEMENT : 29.02.2016 ORDER PER R.S. SYAL, AM: THESE CROSS APPEALS ONE BY THE ASSESSEE AND THE O THER BY THE REVENUE - EMANATE FROM THE ORDER PASSED BY T HE LD. ITA NOS.5310 & 6066/DEL/2013 2 COMMISSIONER OF INCOME-TAX (APPEALS) [CIT(A)] ON 21 .8.2013 IN RELATION TO THE ASSESSMENT YEAR 2009-10. 2. THE SOLE ISSUE AGITATED BY THE ASSESSEE IN ITS A PPEAL IS AGAINST TREATING THE PAYMENTS MADE BY IT TO VARIOUS TV CHANNELS AS LIABLE FOR DEDUCTION OF TAX AT SOURCE U /S 194J OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED ` THE ACT) AS AGAINST UNDER SECTION 194C AS WAS DONE BY IT. THE R EVENUE IS AGGRIEVED AGAINST THE DIRECTION OF THE LD. CIT(A) T O THE ASSESSING OFFICER (AO) FOR LOOKING INTO THE CLAIM O F THE ASSESSEE W.R.T THE PAYMENT OF TAXES BY THE DEDUCTEE S AND THEN ALLOWING APPROPRIATE RELIEF TO THE ASSESSEE WHILE D ETERMINING LIABILITY U/S 201 OF THE ACT, WITHOUT APPRECIATING THAT THE SAME IS TANTAMOUNT TO SETTING ASIDE OF THE CASE, WHICH I S ULTRA VIRES HIS POWER U/S 251(1) OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, DISH TV INDIA LIMITED, IS AN INDIAN COMPANY ENGAGED IN THE BUSINESS OF DISTRIBUTION OF CHANNELS FROM ITS DTH ( DIRECT TO ITA NOS.5310 & 6066/DEL/2013 3 HOME) NETWORK. THE ASSESSEE, AFTER DEDUCTION OF TA X AT SOURCE U/S 194C AND 195 OF THE ACT, MADE PAYMENTS TO CERTA IN TV CHANNELS IN INDIA AND ABROAD. THE DISPUTE IN THE I NSTANT APPEAL IS ONLY QUA THE PAYMENTS MADE TO CHANNELS IN INDIA ON WHICH THE ASSESSEE DEDUCTED TAX AT SOURCE U/S 194C OF THE ACT. DURING THE COURSE OF VERIFICATION OF TDS RETURNS FI LED BY THE ASSESSEE, IT WAS NOTICED BY THE AO (TDS) THAT TAX W ITHHOLDING DONE BY THE ASSESSEE U/S 194C WAS INCORRECT INASMUC H AS IT WAS REQUIRED TO BE DONE U/S 194J. IT WAS HELD SO A FTER GOING THROUGH AGREEMENT OF THE ASSESSEE WITH SUN TV NETWO RK LTD. AND OTHERS UNDER WHICH THE ASSESSEE OBTAINED NON-EX CLUSIVE RIGHT TO DISTRIBUTE PROGRAMS OF SUCH CHANNELS FROM ITS DTH PLATFORM TO THE ULTIMATE VIEWERS/SUBSCRIBERS. AS P ER THESE AGREEMENTS, THE ASSESSEE WAS REQUIRED TO PAY A LICE NSE FEE TO THE CHANNELS WHICH, IN THE OPINION OF THE AO, WAS A PAYMENT OF `ROYALTY WITHIN THE MEANING OF CLAUSE (IV) OF E XPLANATION 2 TO SECTION 9(1)(VI). HE, THEREFORE, PASSED AN OR DER U/S 201(1) AND (1A) OF THE ACT, CREATING A DEMAND OF RS.40,56, 14,101/- ITA NOS.5310 & 6066/DEL/2013 4 INCLUSIVE OF INTEREST U/S 201(1A) AMOUNTING TO RS.9,36,03,254/-. IT IS A MATTER OF RECORD THAT THE ASSESSEE MOVED APPLICATION U/S 154, WHICH LED TO THE REDUCTI ON IN DEMAND TO RS. 26.42 CRORE, INCLUSIVE OF INTEREST U/S 201(1A) AMOUNTING TO RS.6.09 CRORE. THE ASSESSEE ASSAILED T HE ORDER BEFORE THE LD. CIT(A), WHO CAME TO HOLD THAT THE AS SESSEE PAID LICENSE FEE TO THE TV CHANNELS WHICH WAS IN THE NAT URE OF ROYALTY COVERED UNDER EXPLANATION 2(V) OF SECTION 9 (1)(VI) AND AS SUCH, DEDUCTION OF TAX AT SOURCE WAS REQUIRED TO BE MADE U/S 194J OF THE ACT. IN REACHING THIS CONCLUSION, HE R ELIED, INTER ALIA, ON AN ORDER PASSED BY THE CHENNAI BENCH OF THE TRI BUNAL IN ACIT VS. SHRI BALAJI COMMUNICATIONS (2013) 140 ITD 687 (CHENNAI) IN WHICH CASE SATELLITE RIGHTS OF CERTAIN FILMS AND PROGRAMS WERE PURCHASED AND PAYMENT WAS MADE WITHOU T ANY DEDUCTION OF ANY TAX AT SOURCE. THE AO IN THAT CASE WAS OF OPINION THAT SINCE THE AGREEMENTS WERE FOR ASSIGNME NT OF RIGHTS WHICH MEANT THAT THE PAYMENTS WERE IN NATURE OF ROYALTY AND NOT FOR SALE OF RIGHT TO ASSESSEE, THE PROVISIO NS OF SECTION ITA NOS.5310 & 6066/DEL/2013 5 194J WERE APPLICABLE. THE TRIBUNAL EVENTUALLY UPHEL D THE VIEW OF THE AO BY OBSERVING THAT AS LONG AS TRANSFER IS OF ANY RIGHT RELATABLE TO A COPYRIGHT OF A FILM OR VIDEO TAPE, W HICH IS TO BE USED IN CONNECTION WITH TELEVISION OR TAPES, CONSID ERATION PAID WOULD BE ROYALTY ONLY. WITHOUT PREJUDICE TO ITS MA IN ARGUMENT THAT DEDUCTION OF TAX AT SOURCE WAS RIGHTLY MADE U/ S 194C OF THE ACT, THE ASSESSEE ALSO ARGUED BEFORE THE LD. CI T(A) THAT THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F HINDUSTAN COCA COLA BEVERAGE (P) LTD. VS. CIT (2007 ) 293 ITR 226 (SC) WAS APPLICABLE INASMUCH AS THE PAYMENTS MADE BY IT TO VARIOUS TV CHANNELS WERE INCLUDED BY THE D EDUCTEES IN THEIR RESPECTIVE INCOMES AND DUE TAXES WERE PAID TH EREON. THE LD. CIT(A) GOT CONVINCED WITH THE ASSESSEES SUBMIS SION IN THIS REGARD AND DIRECTED THE AO TO LOOK INTO THIS C LAIM AND ALLOW APPROPRIATE RELIEF. THE AO PASSED ORDER ON 1 8.11.2013 U/S 201(1) AND (1A) READ WITH SECTION 251 OF THE AC T DELETING DEMAND U/S 201(1), EXCEPT TO THE EXTENT OF RS.6,05, 387/-, REPRESENTING THE AMOUNT OF TAX LIABLE TO DEDUCTION AT SOURCE U/S ITA NOS.5310 & 6066/DEL/2013 6 194J ON THE AMOUNT OF RS.75.67 LAC WHICH WAS NOT OF FERED TO TAX BY THE CONCERNED TV CHANNELS. APART FROM THAT, HE ALSO UPHELD THE CHARGEABILITY OF INTEREST U/S 201(1A) TO THE EXTENT OF RS.2.19 CRORE. THIS RESULTED INTO REDUCTION IN THE ASSESSEES LIABILITY FROM THE ORIGINAL AMOUNT OF RS.40.56 CROR E TO THE FINAL DETERMINATION AT RS.2,25,48,341. BOTH THE SI DES ARE IN APPEAL ON THEIR RESPECTIVE STANDS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL. FIRST, WE TAKE UP THE ASSESSEES CONTENTION ABOUT THE APPLICABILITY OF SECTION 194C ON THE PAYM ENTS MADE BY IT TO THE TV CHANNELS AS AGAINST SECTION 194J HE LD BY THE AUTHORITIES BELOW. 5.1. BEFORE DELVING INTO THE CORE ISSUE, WE DEEM IT BEFITTING TO HAVE AN IN-DEPTH INSIGHT INTO THE FACTUAL MATRIX . IN THIS REGARD, WE FIND THAT THE ASSESSEE OBTAINED DTH LICE NSE FROM MINISTRY OF I&B, GOVERNMENT OF INDIA AND COMMENCED ITS DTH SERVICE UNDER THE BRAND NAME OF `DISH TV. THE ASSESSEE ITA NOS.5310 & 6066/DEL/2013 7 HAS REQUISITE INFRASTRUCTURE COMPRISING OF UP-LINKI NG FACILITIES, DIGITAL HEADEND, CONDITIONAL ACCESS SYSTEM (CAS), SUBSCRIBER MANAGEMENT SYSTEMS (SMS), SATELLITE TRANSPONDERS AND OTHER REQUIREMENTS FOR PROVIDING E NCRYPTED SIGNALS. THE ASSESSEE MADE PAYMENTS TO VARIOUS TV C HANNELS FOR OBTAINING RIGHTS IN THEIR PROGRAMS SO AS TO MAK E THEM DIRECTLY AVAILABLE TO THE ULTIMATE VIEWERS THROUGH ITS DISTRIBUTION AND TRANSMISSION NETWORK. SUCH PAYMENT S MADE AFTER DEDUCTION OF TAX AT SOURCE U/S 194C OF THE AC T HAVE BEEN TABULATED ON PAGE 1 OF THE ORDER PASSED BY THE AO P URSUANT TO THE ORDER U/S 251. ON A PERTINENT QUERY, THE LD. AR CANDIDLY ADMITTED THAT THE ASSESSEE ENTERED INTO VARIOUS AGR EEMENTS WITH THE TV CHANNELS, ALL OF WHICH ARE SIMILARLY W ORDED. HIGHEST PAYMENT WAS MADE TO ESPN SOFTWARE INDIA PVT . LTD. AMOUNTING TO RS.76.58 CRORE ON WHICH TAX WAS DEDUCT ED U/S 194C TO THE TUNE OF RS.1.94 CRORE. ITA NOS.5310 & 6066/DEL/2013 8 5.2. ON A REPRESENTATIVE BASIS, WE TAKE UP THE AGREEMENT WITH ESPN SOFTWARE INDIA PVT. LTD. FOR ANALYSIS. A COPY OF THIS AGREEMENT, EFFECTIVE FROM 14 TH JUNE, 2006, HAS BEEN PLACED AT PAGES 112 ONWARDS OF THE PAPER BOOK. AS PER THIS AGREEMENT, THE ASSESSEE GOT NON-EXCLUSIVE RIGHT TO DISTRIBUTE ESPN AND STAR SPORTS SERVICES CHANNELS IN INDIA. T HE RIGHT TO DISTRIBUTE HAS BEEN SET OUT IN ARTICLE 2 OF THE AGREEMENT, WHOSE RELEVANT PART READS AS UNDER:- (I) SUBJECT TO THE PROVISIONS HEREOF AND IN CONSIDERATION OF DISHTVS PAYMENT OF THE SUBSCRIPTION FEES, THE COMPANY GRANTS TO DISHTV, NON-EXCLUSIVE RIGHT: TO RECEIVE; TO DECRYPT, TURNAROUND, ENCRYPT (WITHOUT INTERFERING IN ITS CONTENTS) EITHER ITSELF OR THROUGH THE AFFILIATE(S) ; AND TO REDISTRIBUTE/TRANSMIT THE SERVICE THROUGH DISH TV PLATFORM, FOR RECEPTION BY THE CUSTOMERS THROUGH CPE AS PER THEIR REQUEST AND CHOICE WHICH MAY OR MAY NOT HAVE STORAGE CAPACITY.. 5.3. AS PER CLAUSE 3.6 OF THE AGREEMENT, THE ASSESS EE SHALL NOT TRANSFER, ALIENATE OR PART WITH POSSESSION OF THE I RD TO AND IN FAVOUR OF ANY THIRD PARTY WITHOUT PRIOR WRITTEN PER MISSION OF THE ESPN. CLAUSE 6 OF THE AGREEMENT PROVIDES THAT E SPN SHALL ITA NOS.5310 & 6066/DEL/2013 9 HAVE SOLE RIGHT AND PRIVILEGE TO DETERMINE WHICH S PORTS EVENTS AND OTHER PROGRAMS, ADVERTISEMENTS, MESSAGES AND TH E LIKE SHALL BE INCLUDED IN THE SERVICE AND THE ASSESSEE A GREES AND UNDERTAKES TO DISTRIBUTE THE SERVICE IN ITS ENTIRET Y AS AND HOW IT IS DELIVERED BY ESPN WITHOUT ANY CUTTING, EDITING. ARTICLE 7(III) OF THE AGREEMENT PROVIDES THAT THE ASSESSEE : `SHALL NOT REMOVE, MODIFY, MISUSE OR TAMPER WITH THE IRS INCLU DING THE SEAL OR ANY SIGNALS EMANATING THEREFROM. ARTICLE 7 (IV) SETS OUT THAT THE ASSESSEE : `SHALL NOT AUTHORIZE OTHERS TO COPY, TAPE, USE, DISTRIBUTE OR REPRODUCE ANY PART OF THE SERVIC E WITHOUT THE LICENSORS PRIOR WRITTEN AUTHORIZATION. IT SHALL NO T COPY OR TAPE PROGRAMS FOR RESALE OR SUB-LICENSING AND SHALL IMME DIATELY NOTICE THE COMPANY OF ANY UNAUTHORIZED COPY, TAPING OR USE OF ANY PART OF THE SERVICE.. THE LD. AR HAS PLACED ON RECORD A COPY OF MEMORANDUM OF UNDERSTANDING (MOU) EXECUTED ON 12.03.2009 WITH ESPN COVERING THE PERIOD FROM JULY 1, 2008 TO 30.6.2012 FOR A TOTAL CONSIDERATION OF RS.322 CR ORE. AS PER THIS MOU, ESPNL SHALL CONTINUE TO PROVIDE ITS CHANN ELS TO ITA NOS.5310 & 6066/DEL/2013 10 DISH TV ON A FIXED SUBSCRIPTION FEES AMOUNTING TO RS.70 CRORE FOR THE PERIOD 1.7.2008 TO 30.6.2009. 5.4. IT IS DISCERNIBLE FROM A CAREFUL PERUSAL OF VARIOUS CLAUSES OF THE AGREEMENT READ WITH THE MOU THAT THE ASSESSE E ACQUIRED A NON-EXCLUSIVE `RIGHT TO DISTRIBUTE THE CONTENTS OF CHANNELS OF ESPN THROUGH ITS DTH NETWORK FOR A FIXE D AMOUNT OF RS.70 CRORE FOR THE PERIOD JULY 1, 2008 TO JULY 30, 2009. CHOICE OF PRODUCING PROGRAMS RESTS SOLELY WITH TV C HANNELS, IN WHICH THE ASSESSEE HAS NO INTERFERENCE. THE CONT ENTS CAN BE ANY PROGRAMS PRODUCED OR GOT PRODUCED BY THE TV CHA NNEL AS PER ITS WISDOM OR IN RESPECT OF WHICH IT HOLDS LICE NSE TO COMMERCIALLY EXPLOIT. THE ASSESSEE, BY MEANS OF THI S AGREEMENT, HAS GOT A SIMPLE RIGHT TO DISTRIBUTE THE CONTENTS WITHOUT ANY MODIFICATION, WHICH ALWAYS CONTINUES TO REMAIN THE EXCLUSIVE PROPERTY OF THE CHANNEL, ON WHICH THE ASSESSEE EXERCISES NO RIGHT EXCEPT DISTRIBUTION AS SUCH. WHA T TO TALK OF THE ASSESSEE REMOVING OR MODIFYING THE SIGNALS, THE ASSESSEE ITA NOS.5310 & 6066/DEL/2013 11 CANNOT EVEN COPY OR TAPE PROGRAMS FOR RESALE OR SUB -LICENSING. THE ASSESSEE CAN NEITHER TRANSFER ANY PART OF SUCH CONTENTS IN FAVOUR OF ANY THIRD PARTY NOR EVEN AUTHORIZE THEM T O COPY, TAPE, USE, DISTRIBUTE OR REPRODUCE ANY PART OF THE CONTENT AT ITS OWN. THE ASSESSEE SIMPLY HOLDS LICENSE, WHICH IS AG AIN SIMPLY NON-EXCLUSIVE IN NATURE, FOR DISTRIBUTION OF CONTEN TS TO THE ULTIMATE VIEWERS. IN THE ABOVE BACKDROP OF THE FACT S, THE MOOT QUESTION IS WHETHER THE PAYMENTS MADE BY THE ASSES SEE TO TV CHANNELS ARE COVERED U/S 194C OR 194J? 6. SECTION 194C WITH THE MARGINAL NOTE: PAYMENTS TO CONTRACTORS PROVIDES THROUGH SUB-SECTION (1) THAT: ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDE NT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTR ACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN TH E CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIM E OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF ITA NOS.5310 & 6066/DEL/2013 12 PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMO UNT EQUAL TO . THE TERM `WORK HAS BEEN DEFINED UNDER CLAUSE (I V) OF THE EXPLANATION TO INCLUDE, INTER ALIA, `(B) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMS FO R SUCH BROADCASTING OR TELECASTING. THE CASE OF THE ASSES SEE RESTS ON SUB-CLAUSE (B). WHEN WE CONSIDER THE MANDATE OF SEC TION 194C(1) IN CONJUNCTION WITH CLAUSE (IV)(B) OF THE E XPLANATION, THE PROVISION IN THE PRESENT CONTEXT READS AS : AN Y PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT BROADCASTING AND TELECASTING IN PURSUANCE OF A CO NTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL , AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRAC TOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CH EQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, D EDUCT AN AMOUNT EQUAL TO . THIS, IN SIMPLE TERMS, INDICATES THAT IN ORDER TO COVER AN AMOUNT U/S 194C READ WITH EXPLANA TION (IV)(B), IT IS ESSENTIAL THAT THE ASSESSEE MUST ENT ER INTO CONTRACT ITA NOS.5310 & 6066/DEL/2013 13 WITH ANOTHER RESIDENT FOR CARRYING OUT THE WORK OF BROADCASTING AND TELECASTING. 7. THE ENTIRE EXERCISE OF VIEWING TV PROGRAMS CA N BE BROADLY SPLIT INTO THREE PARTS, VIZ, FIRST IS THE P RODUCTION OF PROGRAMS BY OR ON BEHALF OF THE CHANNELS; SECOND IS UPLINKING OF SUCH PROGRAMS BY THE TV CHANNELS, WHICH ARE AMPL IFIED AND THEN RELAYED IN THE FOOTPRINT AREA THROUGH TRANSPON DER ON SATELLITE; AND THIRD IS THE ACTUAL TRANSMITTING OF SUCH PROGRAMS TO THE VIEWERS, WHICH IS CALLED TELECASTING OR BROA DCASTING. TV CHANNELS PRODUCE OR PURCHASE RIGHTS OF PROGRAMS AFT ER SPENDING A LOT OF MONEY ON THEM AND THUS EXERCISE I PRS OVER THEM. NO ONE ELSE CAN TELECAST SUCH PROGRAMS WITHOU T THE PRIOR PERMISSION OF THE CHANNEL. THE SECOND STEP IS SIMPL Y A MEDIUM OF PICKING UP SIGNALS OF THE PROGRAM PRODUCED ETC. BY TV CHANNEL AND DROPPING IT THE DTH/CABLE OPERATOR FOR ONWARD RELAY TO THE ULTIMATE VIEWERS, WHICH IS CALLED BROA DCASTING OR TELECASTING, BEING THE THIRD STEP. IN COMMON PARLAN CE, THE WORD ITA NOS.5310 & 6066/DEL/2013 14 `TELECAST MEANS `TRANSMIT BY TELEVISION. SECTION 2 OF THE BROADCASTING ACT DEFINES BROADCASTING TO MEAN : ` ANY TRANSMISSION OF PROGRAMS, WHETHER OR NOT ENCRYPTED, BY RADIO WAVES OR OTHER MEANS OF TELECOMMUNICATION FOR RECEPTION BY THE PUBLIC BY MEANS OF BROADCASTING RECEIVING APPARATUS, BUT DOES NOT INCLUDE ANY SUCH TRANSMISSION OF PROGRAMS THAT IS MADE SOLELY FOR PERFORMANCE OR DISPLAY IN A PUBLIC PLACE;. THUS BROADCASTING OR TELECASTING MEANS TRANSMISSION OF PROGRAMS. TELECASTING ENCOMPASSES RELAYING OF TV PR OGRAMS AND NOT THAT OF BLANK SIGNALS. THUS WHAT IS CONTEMP LATED UNDER THE THIRD STEP IS TO RELAY THE PROGRAMS TO THE ULTI MATE VIEWERS. THE ESSENCE OF TELECASTING LIES IN RELAYING SIGNALS CONTAINING TV PROGRAMS. 8. LARGELY, THERE CAN BE TWO BUSINESS MODELS IN THIS LINE OF BUSINESS. FIRST, WHEN A TV CHANNEL TAKES UPON ITSEL F THE TASK OF TELECASTING ITS PROGRAMS AS WELL; AND THE SECON D WHEN RIGHTS IN SUCH PROGRAMS ARE TRANSFERRED BY IT TO DT H/CABLE ITA NOS.5310 & 6066/DEL/2013 15 OPERATORS FOR VALUE. IN BOTH THE BUSINESS MODELS, T HE END RESULT IS SAME, BEING THE TV PROGRAMS RELAYED TO ULTIMATE VIEWERS. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT OUT OF THE THREE STEPS DISCUSSED ABOVE, FIRST TWO ARE DON E BY TV CHANNELS, WHILE, THE THIRD IS DONE BY THE ASSESSEE, WHO HAS MADE PAYMENT TO THE TV CHANNELS FOR RECEIVING THEIR TV PROGRAMS SO THAT IT COULD MAKE THEM AVAILABLE TO TH E ULTIMATE VIEWERS FOR CONSIDERATION. 9. IT GOES WITHOUT SAYING THAT APPLICABILITY OF THE CORRECT PROVISION OF TAX WITHHOLDING DEPENDS ON ASCERTAINING THE PURPOSE OF PAYMENT AT THE THRESHOLD. IT IS THE PREC ISE NATURE OF TRANSACTION REQUIRING PAYMENT WHICH MATTERS RATHER THAN THE WHOLE SEQUENCE. WE HAVE NOTED ABOVE THAT SECTION 19 4C IS ATTRACTED WHEN PAYMENT IS MADE FOR CARRYING OUT THE `WORK OF BROADCASTING AND TELECASTING. SO, THE PERTINENT QUE STION TO ASK IS THE PURPOSE FOR WHICH THE ASSESSEE PAID TO THE T V CHANNELS. IF A PERSON RESPONSIBLE PAYS TO A CONTRACTOR FOR TH E `WORK OF ITA NOS.5310 & 6066/DEL/2013 16 `TELECASTING, THEN, OF COURSE, THE PROVISIONS OF S ECTION 194C ARE ATTRACTED. IN THE INSTANT CASE, WE FIND THAT TH E ASSESSEE HAS MADE PAYMENT TO THE TV CHANNELS NOT FOR ANY BROADCA STING OR TELECASTING, BUT, TO RECEIVE PROGRAMS FOR PROVIDING ENCRYPTED SIGNALS TO THE VIEWERS THROUGH ITS OWN DTH NETWORK, WHICH COMPRISES OF UP-LINKING FACILITIES, CAS, SMS, ETC. THE ACT OF TELECASTING IS BEING DONE BY THE ASSESSEE ON ITS OW N BEHALF AND THE SOURCE OF ITS REVENUE IS FROM END-VIEWERS WHO P AY TO IT FOR RECEIVING TELECAST OF TV PROGRAMS. 10. UNDER THE FIRST BUSINESS MODEL, TV CHANNEL AP PROACHES DTH/CABLE OPERATORS FOR TELECASTING ITS PROGRAMS ON ITS OWN BEHALF. UNDER THIS MODEL, REVENUE FROM ULTIMATE VIE WERSHIP GOES TO THE CHANNEL ITSELF AND PAYMENT IS MADE BY I T TO THE DTH/CABLE OPERATOR FOR USING THEIR INFRASTRUCTURE F OR TELECASTING. IT IS THIS AMOUNT PAID BY THE TV CHAN NEL TO THE DTH/CABLE OPERATOR, WHICH CAN BE CATEGORIZED AS PAY MENT `FOR CARRYING OUT BROADCASTING AND TELECASTING TO FALL WITHIN THE ITA NOS.5310 & 6066/DEL/2013 17 SWEEP OF SECTION 194C. AS THE ASSESSEE HAS NOT MADE PAYMENTS TO THE TV CHANNELS FOR TELECASTING PROGRAMS ON ITS BEHALF, IT IS HELD THAT THE PROVISIONS OF SECTION 194C ARE NOT AT TRACTED IN THE EXTANT CASE. 11. NOW WE TURN TO EXAMINING THE ATTRACTABILITY OR OTHERWISE OF THE PROVISIONS OF SECTION 194J, WHICH REQUIRES D EDUCTION OF TAX AT SOURCE FROM FEES FOR PROFESSIONAL OR TECHNI CAL SERVICES. SUB-SECTION (1) OF SECTION 194J PROVIDES THAT : `AN Y PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY , WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF (A) FEES FOR PROFESSIONAL SERVICES, OR (B) FEES FOR TE CHNICAL SERVICES OR . (C) ROYALTY, OR SHALL, DEDUCT AN AMOUNT EQUAL TO TEN PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. THE TERM ROYALTY AS USED IN CLAUSE (C) OF SECTION 194J(1) HAS BEEN DEFINED IN THE EXPLANATION TO: HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VI) OF SUB- SECTION (1) OF SECTION 9.. WHEN WE CONSIDER EXPLAN ATION 2 TO ITA NOS.5310 & 6066/DEL/2013 18 SECTION 9(1)(VI), WE GET THE MEANING OF ROYALTY, WHOSE RELEVANT PART IS AS UNDER:- `EXPLANATION 2. FOR THE PURPOSES OF THIS CLAUSE, 'ROYALTY' MEANS CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION BUT EXCLUDING ANY CONSIDERATION WHICH WOULD BE THE INCOME OF THE RECI PIENT CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS') FOR ( I ) TO ( IVA ) ( V ) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING THE GR ANTING OF A LICENSE) IN RESPECT OF ANY COPYRIGHT, LITERARY, ARTISTIC OR SCI ENTIFIC WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONNECTION WITH TEL EVISION OR TAPES FOR USE IN CONNECTION WITH RADIO BROADCASTING, BUT NOT INCLUDING CONSIDERATION FOR THE SALE, DISTRIBUTION OR EXHIBIT ION OF CINEMATOGRAPHIC FILMS ; OR 12. THE CASE OF THE REVENUE IS THAT THE ASSESSEE PA ID ROYALTY TO TV CHANNELS WITHIN THE MEANING OF CLAUSE (V) OF THE EXPLANATION 2. ON GOING THROUGH THE MANDATE OF THI S PROVISION, IT BECOMES VIVID THAT ROYALTY MEANS CONS IDERATION FOR THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING THE GRANTING OF A LICENSE) IN RESPECT OF ANY COPYRIGHT, LITERARY, ARTISTIC OR SCIENTIFIC WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONNECTION WITH TELEVISION . A CIRCUMSPECTION OF THIS PROVISION INDICATES THAT ROYALTY IS A PAYMENT FOR TRANSFER OF ALL OR ANY ITA NOS.5310 & 6066/DEL/2013 19 RIGHTS IN COPYRIGHT, LITERARY, ARTISTIC OR SCIENTIF IC WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONNECTION WITH TELEVISION . REVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE PROGRAMS MADE BY THE TV CHANNELS ARE THEIR EXCLUSIVE PROPERTY OVER WHICH THEY EXERCISE IPRS. NO ONE CAN USE SUCH THEM WITHOUT PRIOR PERMISSION OF THE CHANNELS. THE ASSESSEE, BY MEANS OF THE AGREEMENT, HAS ACQUIRED RIGHT TO DI STRIBUTE THE TV PROGRAMS FOR VALUE, WHICH PAYMENT IS UNDER CONSI DERATION. THE ASSESSEE CAN SIMPLY USE SUCH TV PROGRAMS, WHICH EVENTUALLY CONTINUE TO REMAIN THE EXCLUSIVE PROPERT Y OF THE CHANNEL. SUCH `RIGHT TO DISTRIBUTION IS A LIMITED RIGHT CONFINED TO USING THE CONTENTS OF PROGRAMS WITHOUT ANY MODIFICATION WHATSOEVER. THE QUID PRO QUO FOR THE PAYMENT BY THE ASSESSEE IS TRANSFER OF RIGHTS BY THE TV CHANNELS IN THEIR PROGRAMS, WHICH ARE IN THE NATURE OF COPYRIGHT, LITERARY, ARTISTIC WORK INCLUDING FILMS OR VIDEO TAPES, THAT ARE MEANT FOR USE BY THE ASSESSEE EXCLUSIVELY IN CONNECTION WITH TELEVISION . ITA NOS.5310 & 6066/DEL/2013 20 13. WE HAVE BRIEFLY DISCUSSED SUPRA TWO BUSINESS MODELS IN THIS LINE OF BUSINESS AND FOUND THAT WHEREAS UNDER THE FIRST MODEL, TV CHANNEL APPROACHES DTH/CABLE OPERATORS FO R TELECASTING ITS PROGRAMS ON ITS OWN BEHALF, UNDER T HE SECOND MODEL, RIGHT TO USE IN PROGRAMS ARE TRANSFERRED BY TV CHANNEL TO DTH/CABLE OPERATORS FOR VALUE. IN SUCH LATER CAS E, REVENUE FROM ULTIMATE VIEWERSHIP GOES TO THE DTH/CABLE OPER ATORS AND TV CHANNEL ENDS UP BY RECEIVING CONSIDERATION FROM DTH/CABLE OPERATOR FOR TRANSFER OF RIGHTS IN ITS PR OGRAMS. WHILE THE THIRD STEP, NAMELY, TELECASTING AND BROAD CASTING OF TV PROGRAMS UNDER THE FIRST BUSINESS MODEL IS DONE BY DTH/CABLE OPERATORS FOR AND ON BEHALF OF TV CHANNEL S, AND UNDER THE SECOND BUSINESS MODEL IS DONE BY DTH/CAB LE OPERATORS FOR AND ON THEIR OWN BEHALF AND NOT THE T V CHANNELS. WHEREAS UNDER THE FIRST BUSINESS MODEL, PAYMENT IS MADE BY TV CHANNEL TO DTH/CABLE OPERATORS FOR `BROADCASTING AND TELECASTING THEIR TV PROGRAMS, WHICH IS COVERED U/ S 194C, UNDER THE SECOND BUSINESS MODEL, PAYMENT IS MADE BY ITA NOS.5310 & 6066/DEL/2013 21 DTH/CABLE OPERATORS TO TV CHANNEL FOR TRANSFER OF I PRS IN PROGRAMS TO BE USED BY DTH/CABLE OPERATORS IN `CONN ECTION WITH TELEVISION, WHICH IS COVERED UNDER CLAUSE (V) OF EXPLANATION 2 TO SECTION 9(1)(VI) REQUIRING DEDUCTI ON OF TAX AT SOURCE U/S 194J OF THE ACT. THE CASE UNDER CONSIDER ATION CLEARLY FALLS UNDER THE SECOND BUSINESS MODEL. IN O UR CONSIDERED OPINION, THE AUTHORITIES BELOW WERE FULL Y JUSTIFIED IN HOLDING THE APPLICABILITY OF THE PROVISIONS OF S ECTION 194J OF THE ACT. 14. NOW, WE WILL ESPOUSE THE CASE LAW RELIED BY THE LD. AR TO CANVASS THE VIEW THAT DEDUCTION OF TAX AT SOURCE WA S REQUIRED U/S 194C. FIRST IS THE JUDGMENT OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN CIT VS. PRASAR BHARATI (BROADCASTING) CORPORATION OF INDIA (2007) 292 ITR 580 (DEL). THE ASSESSEE IN THAT CASE MADE CERTAIN PAYMENTS TO OUTSIDE PRODU CERS FOR PROGRAMS UNDER COMMISSIONED CATEGORY FOR WHICH TH E ASSESSEE DEDUCTED TAX AT SOURCE U/S 194C BY TREATIN G THEM AS ITA NOS.5310 & 6066/DEL/2013 22 CONTRACT PAYMENTS. THE REVENUE TOOK A STAND THAT T HE TELEVISION PROGRAMS PRODUCERS SHOULD BE TREATED AS PROFESSIONALS/TECHNICAL PERSONS AND THE PAYMENT MAD E TO THEM SHOULD BE SUBJECTED TO TDS U/S 194J. AN ORDER WAS P ASSED U/S 201(1)/(1A) OF THE ACT HOLDING THE ASSESSEE IN DEFA ULT FOR SHORT DEDUCTION. WHEN THE MATTER WENT BEFORE THE HONBLE HIGH COURT, THEIR LORDSHIPS OBSERVED THAT EXPLANATION II I WHICH WAS INTRODUCED SIMULTANEOUS WITH SECTION 194J IS VERY S PECIFIC IN ITS APPLICATION TO NOT ONLY BROADCASTING AND TELECA STING, BUT ALSO INCLUDES PRODUCTION OF PROGRAMS FOR SUCH BROA DCASTING AND TELECASTING. THAT IS HOW, THE CASE WAS HELD T O BE FALLING U/S 194C OF THE ACT. WHEN WE PERUSE THE NATURE OF P AYMENT MADE IN THE CASE OF PRASAR BHARATI (BROADCASTING) CORPORATION OF INDIA (SUPRA) , IT COMES UP THAT THE SAME WAS MADE TO OUTSIDE PRODUCERS FOR MAKING PROGRAMS ON BE HALF OF PRASAR BHARATI. SINCE PAYMENT FOR MAKING PROGRAMS IS DIRECTLY COVERED UNDER EXPLANATION (IV)(B) BEING PRODUCTION OF PROGRAMS FOR SUCH BROADCASTING OR TELECASTING, THE RE REMAINS ITA NOS.5310 & 6066/DEL/2013 23 ABSOLUTELY NO DOUBT THAT PAYMENTS TO PRODUCERS FOR MAKING PROGRAMS FALLS WITHIN THE AMBIT OF SECTION 194C OF THE ACT. WE FIND THAT THE FACTS OF THIS CASE ARE NOWHERE CLO SE TO THOSE UNDER CONSIDERATION. INSTANTLY, WE ARE EXAMINING TH E APPLICABILITY OF TDS PROVISIONS ON PAYMENTS MADE BY THE ASSESSEE TO THE TV CHANNELS FOR USE OF THEIR PROGRA MS IN CONNECTION WITH TELEVISION, WHICH IS DIRECTLY COVER ED UNDER EXPLANATION 2(V) OF SECTION 9(1)(VI) AND NOT FOR `P RODUCING ANY PROGRAMS. AS SUCH, THE DECISION IN PRASAR BHARTI (BROADCASTING) CORPORATION OF INDIA ( SUPRA) , DOES NOT SUPPORT THE CASE OF THE ASSESSEE. 15. THE NEXT DECISION RELIED BY THE LD. AR IS JUD GMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN KURUKSHETRA DARPANS (P) LTD. VS. CIT (2008) 217 CTR 326 (P&H) . IN THAT CASE, THE ASSESSEE, A CABLE NETWORK OPERATOR, WAS I N THE BUSINESS OF DISTRIBUTING CABLE CONNECTIONS TO CUSTO MERS. IT ENTERED INTO CONTRACT WITH A LICENSOR OF VARIOUS TV CHANNELS ITA NOS.5310 & 6066/DEL/2013 24 FOR LOCAL CABLE DISTRIBUTION SYSTEMS. THESE LICENS ORS WERE NOT THE OWNERS OF THE TV CHANNELS AND THEY ONLY HAD THE EXCLUSIVE RIGHT TO MARKET AND DISTRIBUTE SATELLITE BASED TELE VISION SERVICE. THE ASSESSEE IN THAT CASE DID NOT DEDUCT ANY TAX AT SOURCE FROM THE PAYMENTS MADE TO THE LICENSORS. IN THE OPINION OF THE REVENUE, THE TAX WAS REQUIRED TO BE DEDUCTED AT SOU RCE U/S 194C OF THE ACT. WHEN THE MATTER FINALLY WENT BEFO RE THEIR LORDSHIPS, IT WAS HELD THAT THE PROVISIONS OF SECTI ON 194C WERE ATTRACTED. HERE AGAIN, WE FIND THAT THIS JUDGMENT DOES NOT ADVANCE THE CASE OF THE ASSESSEE IN ANY MANNER. TH E ASSESSEE IN THAT CASE ENTERED INTO CONTRACT WITH THE `LICENS ORS OF VARIOUS TV CHANNELS FOR LOCAL CABLE DISTRIBUTION SY STEMS WHO WERE NOT THE OWNERS OF TV CHANNELS AND THEY ONLY HA D THE EXCLUSIVE RIGHT TO MARKET AND DISTRIBUTE SATELLITE BASED TELEVISION SERVICE. AS AGAINST THAT, THE INSTANT AS SESSEE IS ITSELF A LICENSOR WHO HAS OBTAINED LICENSES DIRECTLY FROM THE TV CHANNELS AND THE PAYMENT HAS BEEN MADE TO THE OWNER S OF THESE TV CHANNELS FOR THE USE OF LICENSES GIVEN IN ITS FAVOUR. ITA NOS.5310 & 6066/DEL/2013 25 MOREOVER, IN THAT CASE, THE DISPUTE WAS BETWEEN NON -DEDUCTION OF TAX AT SOURCE VERSUS DEDUCTION OF TAX AT SOURCE U/S 194C. THERE WAS NO ISSUE OF APPLICABILITY OF SECTION 194J OF THE ACT. IT WAS IN THAT BACKGROUND THAT THE HONBLE PUNJAB & HARYANA HIGH COURT HELD THAT THE PROVISIONS OF DEDUCTION OF TAX AT SOURCE WERE ATTRACTED AND THE ASSESSEE WAS LIABLE T O DEDUCT TAX AT SOURCE U/S 194C OF THE ACT AS WAS HELD BY THE AO . WE, THEREFORE, HOLD THAT THIS CASE DOES NOT FORTIFY THE ASSESSEES STAND. 16. THE LAST RELIANCE OF THE LD. AR IS ON AN ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNAL IN ACIT VS. NGC NETWORKS (I) PVT. LTD. (ITA NO.1382/M/2014). WE HAVE GONE THROUGH THIS ORDER, WHOSE COPY HAS BEEN PLACED IN THE PAPER BOOK. IT IS NOTICED THAT THE DISPUTE IN THAT CASE WAS ABOUT THE DEDUCTIBILITY OF TAX AT SOURCE ON CHANNEL PLACEMENT FEES PAID F OR PLACING THE CHANNEL ON A PARTICULAR FREQUENCY OR BANDWIDTH. THESE CHARGES WERE PAID TO PUT THE CHANNEL IN PRIME FREQU ENCY/BAND. ITA NOS.5310 & 6066/DEL/2013 26 THE ASSESSEE DEDUCTED TAX AT SOURCE U/S 194C. THE REVENUE MADE OUT A CASE THAT THE PROVISIONS OF SECTION 194J WERE ATTRACTED. WHEN THE MATTER CAME UP BEFORE THE TRIB UNAL, IT WAS HELD THAT SECTION 194J WAS NOT ATTRACTED. AGAI N, WE FIND THAT THIS JUDGMENT TO BE OF NO CONSEQUENCE BECAUSE OF DISTINCTION IN ITS FACTUAL BACKDROP. THE DISPUTE I N THAT CASE WAS ONLY ABOUT DEDUCTION OF TAX AT SOURCE ON `CHANN EL PLACEMENT CHARGES WHICH IS NOT THE CASE BEFORE US. WE, THEREFORE, FIND THIS CASE ALSO OF NO ASSISTANCE TO THE ASSESSEE. 17. THE LD. AR THEN PRESSED INTO SERVICE THE `PRINC IPLE OF CONSISTENCY BY ARGUING THAT THE ASSESSEE MADE SIMI LAR PAYMENTS IN PAST ALSO TO THE TV CHANNELS AFTER DEDU CTION OF TAX AT SOURCE U/S 194C, WHICH VIEW HAS NOT BEEN DIS TURBED BY THE REVENUE. IT WAS, ERGO, ARGUED THAT THE SAME VIE W SHOULD BE FOLLOWED FOR THIS INSTANT YEAR AS WELL. THIS WAS VE HEMENTLY OPPOSED BY THE LD. DR. ON A SPECIFIC QUERY, IT WAS ADMITTED BY THE LD. AR THAT IN NONE OF THE EARLIER YEARS, TH E TDS RETURNS ITA NOS.5310 & 6066/DEL/2013 27 WERE TAKEN UP FOR VERIFICATION AND AS SUCH, THE ISS UE AS TO THE ATTRACTABILITY OF SECTION 194C OR SECTION 194J OF T HE ACT WAS NEVER EXAMINED. IN VIEW OF THE FACT THAT THIS ISS UE HAS NEVER BEEN EXAMINED IN THE PAST IN ASSESSEES CASE, SUCH A NON- DECISION CANNOT HAVE A PRECEDENT VALUE. THE LD. AR ADMITTED IN ALL FAIRNESS THAT THE REVENUE HAS TAKEN SIMILAR STAND IN THE SUCCEEDING YEARS BY HOLDING THE MAGNETIZING OF THE PROVISIONS OF SECTION 194J TO THE SIMILAR PAYMENTS, FOR WHICH THE MATTER IS SUB JUDICE . BE THAT AS IT MAY, THE RULE OF RES JUDICATA IS NOT APPLICABLE IN FISCAL STATUTES LIKE INCOME-TAX. THE CONTENTION OF THE LD. AR ABOUT THE APPLICABILITY OF THE `RULE OF CONSISTENCY, IN OUR CONSIDERED OPINION CANNOT BE ALLOWED TO DETHRONE THE RULE OF `NO ESTOPPEL AGAINST THE STATU TE. AFTER MAKING AN ELABORATE ANALYSIS, WE HAVE HEREINABOVE H ELD THAT SECTION 194J IS ATTRACTED TO THE FACTS OF THE INSTA NT CASE. MERELY BECAUSE IN EARLIER YEARS THIS ISSUE WAS NOT EXAMINED AND THE ASSESSEES CONTENTION GOT ACCEPTED WITHOUT VERIFICATION, CANNOT GIVE LICENSE TO IT CLAIM IN TH E LATER YEARS ITA NOS.5310 & 6066/DEL/2013 28 THAT THE CORRECTLY APPLICABLE SECTION BE PUT UNDER CARPET. SINCE THE STATUTE REQUIRES SUCH AN AMOUNT TO BE CONSIDERE D U/S 194J, WE CANNOT PERMIT A WRONG PROVISION OF SECTION 194C TO BE APPLIED IN THE GARB OF CONSISTENCY. THIS CONTENTION IS THEREFORE, JETTISONED. 18. LASTLY, THE LD. AR RESORTED TO THE ARGUMENT OF FOLLOWING A VIEW FAVOURABLE TO THE ASSESSEE WHERE TWO VIEWS ARE AVAILABLE. IT WAS SUBMITTED THAT ALBEIT THE DECISION OF THE CHENNAI BENCH IN SHREE BALAJI (SUPRA) IS IN FAVOUR OF THE REVENUE, BUT THE OTHER DECISIONS AS CITED BY HIM IN FAVOUR OF THE AS SESSEE, BE PREFERRED. THIS CONTENTION AGAIN, IN OUR CONSIDERED OPINION IS BEREFT OF ANY FORCE. WE HAVE EXAMINED ALL THE THREE DECISIONS RELIED BY HIM AND FOUND NONE TO BE GERMANE TO THE I SSUE UNDER CONSIDERATION. THIS CONTENTION, THEREFORE, FAILS. 19. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT THE PAYMENT MADE BY THE ASS ESSEE TO THE TV CHANNELS IS COVERED U/S 9(1)(VI) AND, AS SUC H, DEDUCTION ITA NOS.5310 & 6066/DEL/2013 29 OF TAX AT SOURCE WAS REQUIRED U/S 194J OF THE ACT A S HAS BEEN RIGHTLY HELD BY THE AUTHORITIES BELOW. 20. NOW WE TAKE UP THE REVENUES APPEAL, IN WHICH T HE ASSAIL IS ONLY TO THE DIRECTION OF THE LD. CIT(A) FOR ALLO WING RELIEF IN RESPECT OF PAYMENT OF TAXES BY THE DEDUCTEES. THE ASSESSEE WITHOUT PREJUDICE TO ITS MAIN GROUND OF THE APPLICA BILITY OF SECTION 194C, ARGUED IN THE ALTERNATIVE BEFORE THE LD. FIRST APPELLATE AUTHORITY THAT LIABILITY U/S 201 BE PROPO RTIONATELY REDUCED TO THE EXTENT OF INCLUSION OF RECEIPTS BY T HE PAYEES IN THEIR RESPECTIVE INCOME. THE LD. CIT(A) ACCEPTED TH IS CONTENTION AND DIRECTED THE AO TO VERIFY THE CLAIM OF THE ASSESSEE IN THIS REGARD AND ALLOW APPROPRIATE RELIE F. IN DOING SO, HE RELIED ON THE JUDGMENT OF THE HONBLE APEX C OURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. (SUPRA), IN WHICH IT HAS BEEN HELD THAT WHERE THE PAYEE HAS ALR EADY PAID TAX ON THE INCOME ON WHICH THERE WAS A SHORT DEDUCT ION OF TAX AT SOURCE, RECOVERY OF TAX CANNOT BE MADE ONCE AGAI N FROM THE ITA NOS.5310 & 6066/DEL/2013 30 TAX-DEDUCTOR. THE AO VIDE HIS ORDER PASSED U/S 201 (1)/(1A) READ WITH SECTION 251 HAS REDUCED THE DEMAND TO RS. 2.25 CRORE CONSISTING OF INTEREST U/S 201(1A) AMOUNTING TO RS. 2.19 CRORE AND TAX U/S 201(1) AMOUNTING TO RS.6.05 LAC. THE RE LIEF CAME TO BE ALLOWED BY CONSIDERING THE AMOUNTS PAID BY TH E ASSESSEE TO TV CHANNELS AND CORRESPONDING AMOUNTS INCLUDED B Y THE DEDUCTEES IN THEIR RESPECTIVE INCOME. ONLY A SUM ON WHICH TAX WITHHOLDING COMES TO RS.6.05 LAC, WAS NOT CONSIDERE D BY THE DEDUCTEES IN THEIR RESPECTIVE INCOME FOR WHICH THE LIABILITY OF THE ASSESSEE HAS BEEN SUSTAINED U/S 201(1). THE RE MAINING DEMAND UNDER SUB-SECTION (1) HAS BEEN ERASED BECAUS E OF THE PAYEES INCLUDING THE AMOUNT RECEIVED FROM THE ASSES SEE IN THEIR RESPECTIVE INCOME. 21. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND P ERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE VIEW TAKEN BY THE LD. CIT(A) IN DIRECTING THE AO TO REDUCE THE AMOUNT U/S 201(1) FOR WHICH THE PAYEE HAD ALREADY PAID TAX ON THE INC OME, IS ITA NOS.5310 & 6066/DEL/2013 31 OTHERWISE IN CONFORMITY WITH THE JUDGMENT IN THE CA SE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD . (SUPRA) . MOREOVER, THE LEGISLATURE HAS INSERTED PROVISO TO SECTION 201 (1) BY THE FINANCE ACT, 2012 GIVING RECOGNITION TO THE PRINCIP LE LAID DOWN BY THE HONBLE SUMMIT COURT IN HINDUSTAN COCA COLA BEVERAGES PVT. LTD . (SUPRA). THIS PROVISO STIPULATES THAT THAT ANY PERSON WHO FAILS TO DEDUCT THE WHOLE OR ANY PAR T OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER O N THE SUM PAID/CREDITED TO A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 13 9; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE P ERSON FURNISHES A CERTIFICATE TO THIS EFFECT. IN VIEW OF THE JUDGMENT IN HINDUSTAN COCA COLA BEVERAGES PVT. LTD . (SUPRA) , WE HOLD THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN REDUCING THE OBLIGATION OF THE ASSESSEE U/S 201(1) TO THIS EXTEN T. ITA NOS.5310 & 6066/DEL/2013 32 22. HOWEVER, WE FIND THAT THIS JUDGMENT DOES NOT D ISCHARGE THE OBLIGATION OF THE ASSESSEE TOWARDS INTEREST U/S 201(1A) NOTWITHSTANDING THE OBLITERATION OF DEMAND U/S 201( 1) OF THE ACT. THEIR LORDSHIPS IN PARA 10 OF THIS JUDGMENT HA VE CATEGORICALLY UPHELD THE LIABILITY OF THE ASSESSEE TOWARDS INTEREST BY RELYING ON CIRCULAR NO. 275/201/95-IT(B ), DT. 29TH JAN., 1997 ISSUED BY THE CBDT, DECLARING THAT THIS WILL NOT ALTER THE LIABILITY TO CHARGE INTEREST UNDER S. 201 (1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE. IT IS FURTHER OBSERVED THAT PROVISO TO SUB-SECTION (1A) OF SECTIO N 201 PROVIDES IN UNAMBIGUOUS TERMS THAT IN CASE ANY PERS ON FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDAN CE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RES IDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT BUT I S NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVIS O OF SUB- SECTION (1), THE INTEREST UNDER CLAUSE (I) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DA TE OF FURNISHING OF RETURN OF INCOME BY SUCH RESIDENT. TH IS PROVISO ITA NOS.5310 & 6066/DEL/2013 33 REAFFIRMS THE LIABILITY OF THE ASSESSEE TOWARDS INT EREST IRRESPECTIVE OF THE DELETION OF LIABILITY U/S 201(1 ) ON THE SCORE OF PAYEES INCLUDING RECEIPTS FROM THE PERSON RESPON SIBLE IN THEIR RESPECTIVE INCOME. ON A PERTINENT QUERY, THE LD. AR WAS FAIR ENOUGH TO ACCEPT THAT THE CALCULATION OF RS.2. 25 CRORE AS MADE BY THE AO IN HIS FINAL ORDER U/S 201(1)/(1A) I S OTHERWISE CORRECT IF THE PROVISIONS OF SECTION 194J ARE HELD TO BE ATTRACTED. 23. NOW WE TAKE UP THE CONTENTION OF THE DEPARTM ENT THAT THE LD. CIT(A) WENT OUTSIDE HIS JURISDICTION IN REM ITTING THE MATTER TO THE AO DIRECTING TO ALLOW APPROPRIATE RE LIEF QUA THE AMOUNTS PAID BY THE ASSESSEE GETTING INCLUDED IN TH E INCOME OF THE RESPECTIVE PAYEES. IN PRINCIPLE, WE HOLD THAT T HE LD. CIT(A) OUGHT TO HAVE DECIDED THE ISSUE AT HIS END RATHER T HAN REMITTING IT TO THE AO SINCE SECTION 251(1) DOES NOT NOW PERM IT HIM TO RESTORE THE MATTER TO THE AO. SINCE THE AO HAS RELI GIOUSLY FOLLOWED THE DIRECTION OF THE LD. CIT(A) IN REDUCIN G THE ITA NOS.5310 & 6066/DEL/2013 34 AMOUNT, WHICH SHOULD HAVE BEEN RIGHTLY EXCLUDED BY THE LD. CIT(A) HIMSELF IN TERMS OF THE JUDGMENT OF THE HON BLE SUMMIT COURT IN HINDUSTAN COCA COLA BEVERAGE (SUPRA), NOW IT WILL BE A MERE RITUAL IN FIRSTLY SETTING ASIDE T HE ORDER OF THE LD. CIT(A) TO THIS EXTENT AND THEN ASKING HIM TO MA KE THE CALCULATION HIMSELF, CORRECTNESS OF WHICH HAS NOT B EEN DISPUTED BY THE EITHER SIDE. UNDER THESE PECULIAR CIRCUMSTANCES, WE DO NOT PROPOSE TO INTERFERE WITH THE IMPUGNED ORDER AND COUNTENANCE THE SAME IN ENTIRETY . 24. IN THE RESULT, BOTH THE APPEALS STAND DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 29.02.2016. SD/- SD/- [A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 29 TH FEBRUARY, 2016. DK ITA NOS.5310 & 6066/DEL/2013 35 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.