ACIT 16(1), MUMBAI V. TV. VISION LTD, MUMBAI

ITA 6166/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2452 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 29-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMYLD
• Assessee Lawyers: NIKUNJ GADA LD
• Keywords: TDS; Set aside
• Section: 143(3); 40(a)(ia); 201; 6

Judgement Text

ITA NO.6166/MUM/2018 ASSESSMENT YEAR :2014-15 M/S. T.V. VISION LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6166/MUM/2018 ( / ASSESSMENT YEAR:2014-15) A CIT - 16(1) ROOM NO.439 AAYKAR BHAVAN M.K. MARG, MUMBAI-400 020. / VS. M/S. T.V. VISION LTD. 4 TH FLOOR, ADHIRAJ CHAMBERS OBEROI COMPLEX, NEW LINK ROAD, ANDHERI WEST, MUMBAI-400 053. ! ./ ./PAN/GIR NO. AACCT-7276-Q ( !# /APPELLANT ) : ( $!# / RESPONDENT ) ASSESSEE BY : SHRI NIKUNJ GADA LD. AR REVENUE BY : SHRI R. MANJUNATHA SWAMY-LD. CIT-DR / DATE OF HEARING : 03/12/2019 / DATE OF PRONOUNCEMENT : 03/12/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2014-15 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-4, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO.CIT(A)-4/E-FILE-184A/ACIT-16(1)/2016-17 D ATED 07/08/2018 ON FOLLOWING GROUNDS OF APPEAL: - ITA NO.6166/MUM/2018 ASSESSMENT YEAR :2014-15 M/S. T.V. VISION LTD. 2 1. WHETHER ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE DIS ALLOWANCE U/S. 40(A)(IA) RWS 194J IN RESPECT OF 'CARRIAGE FEES/CHANNEL PLACEMENT FEES' A ND FAILING TO APPRECIATE THAT THE PAYMENTS MADE FOR USE/RIGHT TO USE OF 'PROCESS' ARE 'ROYALTY' AS PER EXPLANATION 6 TO SECTION 9(1)(VI) HENCE SUCH PAYMENTS ARE COVERED U/ S, 194J OF THE INCOME TAX ACT, 1961 ?. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE DISALLO WANCE U/S. 40(A)(IA) RWS 194 J OF 'CARRIAGE FEES/CHANNEL PLACEMENT FEES', WHEREAS THE JURISDICTIONAL 1TAT, MUMBAI 'L' BENCH, IN ITS ORDER DATED 28.03.2014 IN THE CAS E OF ADIT-(IT)-2(2), MUMBAI VS VIACOM 18 MEDIA PVT. LTD. HAS CONFIRMED THAT THE PAYMENTS MADE FOR USE/RIGHT TO USE OF 'PROCESS' ARE 'ROYALTY' IN TERMS OF THE INCO ME 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 TO DELETE THE DISA LLOWANCE U/S. 40(A)(IA) AND THEREBY HOLDING THAT THE SHORT DEDUCTION OF TAX WILL NOT RE SULT INTO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT, WITHOUT APPRECIATING THAT THE HONBLE K ERALA 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 CLEARLY LAID DOWN THAT THE DISALLOWANCE U/S. 40(A)(IA) WOULD BE MADE EVEN IN THE CASES OF S HORT DEDUCTION OF TAX?. 4. WHETHER ON THE FACTS, IN THE CIRCUMSTANC ES OF THE CASE AND AS PER LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE DIS ALLOWANCE U/S. 40(A)(IA), WITHOUT APPRECIATING THAT SECTION 40(A)(IA) IS NOT A CHARGI NG SECTION BUT IS A MACHINERY SECTION AND THUS THE EXPRESSION 'TAX DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B' OCCURRING IN THE SAID SECTION HAS TO BE UNDERSTOOD AS TAX DEDUCTIBLE AT SOURCE UNDER THE APPROPRIATE PROVISION OF CHAPTER XVII-B AND HEN CE, TAX DEDUCTIBLE UNDER WRONG SECTION OF CHAPTER XVII-B WOULD RESULT INTO INVOKIN G OF SECTION 40(A)(IA) OF THE ACT? 5. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) O N THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE LEARNED AUTHORIZED REPRESENTATIVE FOR ASSESS EE (AR), AT THE OUTSET, SUBMITTED THAT THE ISSUE IS COVERED BY THE ORDERS OF THIS TRIBUNAL FOR AY 2011-12 VIDE ITA NO. 3386/MUM/2016 ORDER DAT ED 28/02/2018, AY 2012-13 VIDE ITA NO. 3387/MUM/2016 ORDER DATED 2 8/02/2018 WHICH HAS BEEN FOLLOWED IN AY 2013-14 VIDE ITA NO.5862/MU M/2017 ORDER DATED 23/10/2019. THE COPIES OF THE ORDERS HAVE BEE N PLACED ON RECORD. IT HAS ALSO BEEN SUBMITTED THAT LEARNED FIRST APPEL LATE AUTHORITY HAS FOLLOWED THE AFORESAID DECISIONS. THE LD. CIT-DR CO ULD NOT CONTROVERT THE SAME BUT SUPPORTED THE STAND TAKEN BY LD. AO IN THE ASSESSMENT ORDER. ITA NO.6166/MUM/2018 ASSESSMENT YEAR :2014-15 M/S. T.V. VISION LTD. 3 3. FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE B EING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN THE BUSI NESS OF BROADCASTING TELEVISION CHANNELS, WAS SADDLED WITH ADDITIONS U/S 40(A)(IA) FOR RS.21.66 CRORES IN AN ASSESSMENT FRAM ED U/S 143(3) ON 27/12/2016. THE SAID AMOUNT REPRESENTS CARRIAGE FEE S PAID TO CABLE OPERATORS AS PER CONTRACTUAL TERMS, ON WHICH TAX WA S DEDUCTED AT SOURCE @2% U/S 194C. HOWEVER, LD. AO OPINED THAT TAX WAS R EQUIRED TO BE DEDUCTED AT HIGHER RATES OF 10% U/S 194J / 194H. TH E ASSESSEE DEFENDED THE SAME, INTER-ALIA, BY SUBMITTING THAT THE SERVICES PROVIDED BY THE CABLE OPERATORS WAS A STANDARD SERVICE OF PL ACING THE CHANNELS ON DESIRED FREQUENCY AND NOT FOR PROVIDING ANY TECHNIC AL SERVICES. RELIANCE WAS PLACED ON THE DECISION OF HONBLE DELHI HIGH CO URT RENDERED IN CIT V/S PRASAR BHARTI BROADCASTING CORPORATION OF INDIA (292 ITR 580) WHICH WAS FOLLOWED BY TRIBUNAL IN VARIOUS SUBSEQUEN T DECISIONS. HOWEVER, DISREGARDING THE SAME, LD. AO FORMED AN OP INION THAT THE PAYMENT WAS MADE TOWARDS RIGHT TO USE THE PROCESS WHICH WAS EMBEDDED IN THE DEFINITION OF ROYALTY AS DEFINED IN EXPLANATION 2 TO SECTION 9(1)(VI) READ TOGETHER WITH CLARIFICATION I NSERTED IN EXPLANATION 6 TO SECTION 9(1)(VI). THEREFORE, WRONG DEDUCTION OF TAX WOULD ATTRACT DISALLOWANCE U/S 40(A)(IA). ACCORDINGLY, THE SAID A MOUNT WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 4. THE LEARNED FIRST APPELLATE AUTHORITY DELETED TH E DISALLOWANCE IN VIEW OF THE FACT THE SIMILAR ISSUE WAS DECIDED IN A SSESSEES FAVOR BY ITS PREDECESSOR FOR AYS 2011-12 & 2012-13 WHICH WAS UPH ELD BY THE TRIBUNAL. THE LEARNED FIRST APPELLATE AUTHORITY ALS O CONCURRED WITH ASSESSEES SUBMISSIONS THAT SHORT DEDUCTION OF TAX AT SOURCE WOULD NOT ITA NO.6166/MUM/2018 ASSESSMENT YEAR :2014-15 M/S. T.V. VISION LTD. 4 ATTRACT THE RIGORS OF SECTION 40(A)(IA) IN VIEW OF RATIO OF VARIOUS DECISIONS OF HONBLE HIGH COURTS. AGGRIEVED, THE REVENUE IS I N FURTHER APPEAL BEFORE US. 5. UPON CAREFUL CONSIDERATION, WE FIND THAT IDENTIC AL ISSUE AROSE IN ASSESSEES CASE FOR AY 2011-12, 2012-13 & 2013-14 ( CITED SUPRA). THE TRIBUNAL IN ITS LATEST DECISION FOR AY 2013-14 ORDE R DATED 23/10/2019 HELD AS UNDER: - 7. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AV AILABLE ON RECORD, AS WELL AS THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THEM. OUR IN DULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT BY THE REVENUE TO ADJUDICATE AS TO WHETHER THE CIT(A) IS RIGHT IN LAW AND THE FACTS OF THE CASE IN CONCLUDING THAT NO DISALLOWANCE UNDER SEC. 40(A)(IA)WAS CALLED FOR IN RESPECT OF THE PAYMENTS MADE BY THE ASSESSEE TOWARDS CARRIAGE FEES TO THE CABLE OPERATORS, WHICH HAD B EEN SUBJECTED TO DEDUCTION OF TAX AT SOURCE UNDER SEC.194C OF THE ACT. AS OBSERVED BY US HEREINABOVE, THE A.O HELD A CONVICTION THAT THE CARRIAGE FEES PAID BY THE A SSESSEE TO THE CABLE OPERATORS WAS LIABLE TO BE SUBJECTED TO DEDUCTION OF TAX AT SOURC E UNDER SEC.194J OF THE ACT. OBSERVING, THAT THE ASSESSEE HAD SUBJECTED THE AFOR ESAID PAYMENT OF CARRIAGE FEES AMOUNTING TO RS.25,32,42,535/- TO DEDUCTION OF TAX AT SOURCE UNDER SEC.194C OF THE ACT, THE A.O HAD DISALLOWED THE ENTIRE AMOUNT BY IN VOKING THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT. 8. THE CORE ISSUE INVOLVED IN THE PRESENT APPEAL IS AS TO WHETHER ANY OBLIGATION WAS CAST UPON THE ASSESSEE TO SUBJECT THE CARRIAGE FEE S PAID TO THE CABLE OPERATORS FOR DEDUCTION OF TAX AT SOURCE UNDER SEC.194J, OR NOT. WE FIND THAT THE AFORESAID ISSUE HAD BEEN PERMEATING IN THE ASSESSES OWN CASE FOR TH E IMMEDIATELY PRECEDING YEAR I.E A.Y. 2011-12 AND A.Y. 2012-13. AS IS DISCERNIBL E FROM THE ORDER OF THE ITAT D BENCH, MUMBAI IN THE ASSESSES OWN CASE FOR A.Y. 201 2-13, THE TRIBUNAL HAD OBSERVED THAT AS CARRIAGE FEES PAID BY THE ASSESS EE TO THE CABLE OPERATORS DID NOT FALL WITHIN THE REALM OF THE DEFINITION OF ROYALTY , THEREFORE, NO OBLIGATION WAS CAST UPON THE ASSESSEE TO DEDUCT TAX AT SOURCE UNDER SEC .194J OF THE ACT. APART THERE FROM, THE TRIBUNAL HAD ALSO APPROVED THE ALTERNATIV E VIEW TAKEN BY THE CIT(A), THAT IN CASE OF SHORTFALL DUE TO ANY DIFFERENCE OF OPINI ON AS TO THE TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENT FALLING UNDER THE VARIOUS TDS PROVISIONS, NO DISALLOWANCE COULD BE MADE BY INVOKING THE PROVISIONS OF SEC.40( A)(IA) OF THE ACT. IN FACT, THE TRIBUNAL WHILE CONCLUDING AS HEREINABOVE HAD OBSERV ED AS UNDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL ON RECORD INCLUDING THE DECISI ONS RELIED UPON BY THE PARTIES. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS WRONGLY DELETED THE DISALLOWANCE MADE BY THE AO U/S 40(A)(I A) OF THE ACT. THE OPERATIVE PART OF THE ORDER OF THE LD. CIT(A) READS AS UNDER: 3.3. I HAVE CONSIDERED THE ISSUE UNDER APPEAL CARE FULLY. I FIND THAT CARRIAGE FEES IS NOT AT ALL ROYALTY AS DEFINED IN EXPLANATIO N 2 TO SECTION 9(1)(VI) OF THE ITA NO.6166/MUM/2018 ASSESSMENT YEAR :2014-15 M/S. T.V. VISION LTD. 5 ACT. THE AO HAS NOT PROPERLY APPRECIATED THE FACT A ND NATURE OF PAYMENT. FURTHER, SUCH CARRIAGE FEES IS SUBJECT TO TDS U/S 1 94C PAID TO CABLE OPERATORS AND SUCH FEES DO NOT QUALIFY AS FEES FOR TECHNICAL SERVICES OR ROYALTY, HENCE SECTION 194J OF THE ACT IS NOT APPLI CABLE. FURTHER, IT IS PERTINENT TO MENTION THAT THIS CASE IS NOT OF NO TDS BUT IT IS A CASE OF LESS TDS U/S 194C, HENCE NO SUCH DISALLOWANCE CAN BE MADE/S 40(A )(IA) AS HAS BEEN HELD BY HON BLE CALCUTTA HIGH COURT IN THE CASE OF THE CIT VS S . K. TEKRIWAL 48 SOT 515. RECENTLY IN THE CASE OF THE DCIT VS ZEE EN TERTAINMENT LTD. ITA NO. 3931 TO 3935/MUM/2013, IT HAS BEEN HELD THAT SUCH P AYMENT TO CABLE OPERATORS SHOULD BE SUBJECT TO TDS @2% U/S 194C. FU RTHER APPELLANT GETS SUPPORT FROM THE JURISDICTIONAL ITAT, DECISION IN T HE CASE OF A CIT VS M/S STAR DEN MEDIA SERVICES PVT .LTD( ITA NO 1413/MUM/2014) AND CHANDABHOY & JASSOBHOY VS DCIT 49 SOT 448 (MUMBAI ITAT). RESPECT FULLY FOLLOWING THE DECISION OVER THE ISSUE, THE AO IS DIRECTED TO OF G ENUINE EXPENDITURE OF RS.30,42,13,444/-. 7. WE NOTICE THAT THE LD. CIT(A) HAS DELETED THE DI SALLOWANCE IN QUESTION HOLDING THAT CARRIAGE FEES DOES NOT COME WITHIN THE AMBIT OF THE DEFINITION OF ROYALTY. THEREFORE, THE ASSESSEE WAS NOT REQUIRED T O DEDUCT THE TAX AT SOURCE U/S 194J. FURTHER THE LD. CIT(A) HAS HELD TH AT IT IS NOT THE CASE OF NO TDS BUT THE CASE OF LESS TDS THEREFORE, THE DISALLOWANCE MADE BY THE AO IS BAD IN LAW. THE LD. CIT(A) HAS RELIED ON THE DEC ISION OF THE HON BLE CALCUTTA HIGH COURT RENDERED IN CIT VS S. K. TEKRIW AL 48 SOT 515 AND THE DECISIONS OF COORDINATE BENCH OF THE TRIBUNAL IN TH E CASES OF CIT VS M/S STAR DEN MEDIA SERVICES PVT .LTD( ITA NO 1413/MUM/2014) AND CHANDABHOY & JASSOBHOY VS DCIT 49 SOT 448 (MUMBAI ITAT). AS POIN TED OUT BY THE LD. COUNSEL FOR THE ASSESSEE THIS ISSUE IS COVERED BY T HE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT DELIVERED IN CIT VS. M/S UTV ENTE RTAINMENT TELEVISION LTD. IN INCOME TAX APPEAL (SUPRA) IN FAVOUR OF THE ASSESSEE. SIMILARLY, THE HON,BLE GUJARAT HIGH COURT IN CIT VS. PRAYAS ENGINE ERING LTD., (SUPRA) AND THE KARNATAKA HIGH COURT IN CIT VS. KISHORE RAO & O THERS (HUF) (SUPRA) HAVE HELD THAT IN CASE OF SHORTFALL DUE TO ANY DIFF ERENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENTS FA LLING UNDER VARIOUS TDS PROVISIONS, NO DISALLOWANCE CAN BE MADE BY INVOKING PROVISIONS OF 40(A)(IA) OF THE ACT. 8. HENCE, IN OUR CONSIDERED OPINION, THE FINDINGS O F THE LD CIT(A) ARE BASED ON THE EVIDENCE ON RECORD AND IN ACCORDANCE WITH TH E PRINCIPLES OF LAW LAID DOWN BY THE HIGH COURTS INCLUDING THE JURISDICTIONA L HIGH COURT DISCUSSED ABOVE. WE THEREFORE DO NOT FIND ANY REASON TO INTER FERE WITH THE SAME. ACCORDINGLY, WE UPHOLD THE DECISION OF THE LD. CIT( A) AND DISMISS THE SOLE GROUND OF ISSUE OF THE REVENUE. ALSO, WE FIND, THAT THE HONBLE HIGH COURT OF BOMBA Y IN THE CASE OF CIT, TDS-2, MUMBAI VS. UTV ENTERTAINMENT TELEVISION LTD. (2017) 399 ITR 443 (BOM), HAD OBSERVED, THAT IN CASE OF AN ASSESSEE CARRYING ON T HE BUSINESS OF BROADCASTING TELEVISION CHANNELS, THE PAYMENTS MADE TOWARDS PLAC EMENT CHARGES WOULD FALL WITHIN THE MEANING OF WORK COVERED IN CLAUSE (IV) OF EXPLANATION TO SEC.194C OF THE ACT. ON THE BASIS OF OUR AFORESAID OBSERVATIONS , WE ARE OF THE CONSIDERED VIEW, THAT THE CIT(A) HAD RIGHTLY VACATED THE DISALLOWANC E OF RS.25,24,75,535/- THAT WAS ITA NO.6166/MUM/2018 ASSESSMENT YEAR :2014-15 M/S. T.V. VISION LTD. 6 MADE BY THE A.O UNDER SEC. 40(A)(IA) OF THE ACT. AC CORDINGLY, FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A), WE UPHOLD THE SAME. 9. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. WE FIND THE FACTS TO BE PARI-MATERIA THE SAME IN THE YEAR UNDER CONSIDERATION. NOTHING HAS BEEN PLACED BEFORE US WH ICH WOULD WARRANT US TO TAKE A DIFFERENT VIEW IN THE MATTER. THEREFOR E, RESPECTFULLY FOLLOWING THE EARLIER DECISIONS RENDERED BY THE TRIBUNAL IN A SSESSEES OWN CASE, WE CONFIRM THE ADJUDICATION OF LEARNED FIRST APPELL ATE AUTHORITY. 6. IN THE RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD DECEMBER, 2019. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03/12/2019 SR.PS, JAISY VARGHESE 23456736 / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. - ( ) / THE CIT(A) 4. - / CIT CONCERNED 5. ./ ' 0 , 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.