DCIT (TDS) 3(2), MUMBAI V. SAHARA ONE MEDIA & ENTERTAINMENT LTD, MUMBAI

ITA 6542/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8900 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 29-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Section: 133A; 194C; 201(1)

Judgement Text

, B BB B INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , IOU IOUIOU IOU , BEFORE S/SH. RAJENDRA, ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER /.ITA NO.6542/MUM/2014, /ASSESSMENT YEAR-2011-12 DCIT, (TDS)-3(2), ROOM NO. 1012, 10 TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOPITAL BUILDING, CHARNI ROAD, MUMBAI-400002. VS. M/S. SAHARA ONE MEDIA & ENTERTAINMENT LTD, SAHARA INDIA POINT CTS40-44, SV ROAD , GOREGOAN WEST, MUMBAI-400059 PAN: AAACP3047R ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : SH. VISHWAS MUNDHE (DR) ! ! / ASSESSEE BY : MS. SHLOKA SHAH, AR ' ! / DATE OF HEARING : 04 -01-2017 ! '( / DATE OF PRONOUNCEMENT : 04 -01-2017 , 1961 ' 254(1) #!$! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER PAWAN SINGH, J.M. IOU IOUIOU IOU : 1. THE PRESENT APPEAL FILED BY REVENUE U/S 253 OF THE INCOME-TAX ACT AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-14, MUMBAI (FO R SHORT THE CIT(A) DATED 11.08.2014 FOR ASSESSMENT YEAR(AY) 2011-12. THE REV ENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD CIT(A) ERRED IN NOT APPRECIATING THAT PRODUC TION CHARGES WAS IN THE NATURE OF ROYALTY WHICH IS COVERED UNDER EXPLANATION 2 TO CLAUSE(VI) OF SEC 9 AND FALLING WITHIN THE AMBIT OF SECTION 194J FOR TDS. 2. THE LD CIT(A) ERRED IN HOLDING THAT ASSESSEE HAS R IGHTLY DEDUCTED TDS U/S 194C ON DUBBING EXPENSES/ PRINT PROCESSING FEES ON CONTRACT , WITHOUT APPRECIATING THAT THIS WORK INVOLVES TECHNICAL EXPERTISE WHICH CAN ONLY BE EXHIBITED BY COMPETENT AND HIGHLY SKILLED PERSONS IRRESPECTIVE FILLS THEREBY A TTRACTING THE PROVISION OF SECTION 194J OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMPANY AND ENGAGED IN THE BUSINESS OF PRODUCTION OF CINEMATOGRAPHIC MOTION PICTURES AND S MALL SCALE PROGRAMS THROUGH ASSIGNED PRODUCERS. THE SURVEY ACTION UNDER SECTION 133A WAS CARRIED OUT IN CASE OF ASSESSEE ON 28 JANUARY 2011. IN THE SURVEY IT WAS F OUND THAT THE ASSESSEE HAS DEBITED PRODUCTION EXPENSES AND THE EXPENSES /PRINT PROCESS ING FEES AND PRODUCTION EXPENSES WERE ITA 6542/M/2014 SAHARA ONE M EDIA & ENTERTAINMENT 2 IN THE NATURE OF FEES FOR TECHNICAL SERVICES AND ROYALTY AND HENCE THE TAX SHOULD HAVE BEEN DEDUCTED UNDER SECTION 194J OF THE ACT @ 10% INSTEA D OF @ 2% DEDUCTED BY THE ASSESSEE UNDER SECTION 194C WITH RESPECT TO THE PAYMENTS MAD E DURING THE YEAR. THE SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE. AND AFTER CONSIDE RING THE REPLY OF THE ASSESSEE THE AO PASSED THE ORDER UNDER SECTION 201 1) (1A) ON 22 ND OF MARCH 2013. THE AO RAISED THE DEMAND OF RS. 4,56,19,4741/- UNDER SECTION 201(1) A ND RS. 1,38,12,649/- UNDER SECTION 201(1A). ON APPEAL BEFORE COMMISSIONER (APPEALS) TH E DEMAND OF TAX WAS QUASHED. AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) TH E REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3. AT THE OUTSET OF THE HEARING THE LD. AUTHORIZED REP RESENTATIVE (AR) OF ASSESSEE ARGUED THAT THE GROUNDS OF APPEAL RAISED IN THE PRESENT APPEAL ARE SQUARELY COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASES FOR AY 2008-09 TO 2010-11 IN ITA NO. 4548 TO 4550/MUM/2012. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE NOT DISPUTED THE FACTUAL AND LEGAL POSITION. 4. WE HAVE CONSIDERED THE CONTENTION OF THE PARTIES AN D GONE THROUGH THE ORDER OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE GROUP C ASES IN ITA NO. 4548 TO 4550/MUM/2012, WHEREIN THE CO-ORDINATE BENCH OF THI S TRIBUNAL MADE THE FOLLOWING ORDER: 11. WE HAVE GONE THROUGH THE VARIOUS CLAUSES OF TH E SAMPLE AGREEMENT PLACED IN FILE BEFORE US AND A HARMONIOUS READING OF THE WHOL E AGREEMENT REVEALS THAT THE SAID AGREEMENT IS ESSENTIALLY AN AGREEMENT TO PRODUCE TE LESERIALS AND NOT FOR TRANSFER OF COPY RIGHTS ETC. OF A ALREADY PRODUCED PROGRAAME OF ANOTHER PRODUCER. THE CLAUSE (II)B OF THE AGREEMENT WHICH HAS BEEN CONSIDERED BY AO WHEN READ WITH OTHER CLAUSES OF THE AGREEMENT CLEARLY REVEALS THAT THE P URPOSE & OBJECT OF THE SAID CLAUSE IN THE AGREEMENT IS TO RECOGNIZE THE VESTING OF ALL THE RIGHT IN THE PRODUCER (ASSESSEE)RELATING TO THE PROGRAMME TO BE PRODUCED BY THE ASSIGNED PRODUCER WHICH CAN BE SAID TO BE A CONTRACT FOR THE PURPOSE OF SEC TION 194C. SOME OF THE RELEVANT EXTRACT FROM THE CLAUSES OF THE AGREEMENT, FOR THE SAKE OF CONVENIENCE, ARE REPRODUCED BELOW: II REPRESENTATIONS AND DECLARATIONS BY T HE ASSIGNED PRODUCER: 1. THE ASSIGNED PRODUCER HEREBY EXPRES SLY REPRESENTS AND WARRANTS TO THE PRODUCER: A) THAT IT IS PRODUCING AND/OR PROPOSES TO PRODUCE THE SAID PROGRAMME SOLELY FOR THE PRODUCER STRICTLY IN ACCORDANCE WITH THE CONCEPT/THEME, CREATIVES, FORMAT, PROCESS FLOW AND MANAGEMENT, SYNOPSIS, SCRE ENPLAY-SCRIPT WITH DIALOGUES, STORY, LEGENDARY MATERIAL, CAST, CREW, TREATMENT, S ONGS, SHOOTING-SCHEDULE IN THE GIVEN MEDIUM, DELIVERY DATES AND PRODUCTION-VALUES ETC., AS DULY APPROVED BY THE PRODUCER. ANY ALTERATION IN THE APPROVED DETAILS, THEREFORE, HAS TO BE WITH PRIOR WRITTEN CONSENT OF THE PRODUCER ONLY. B) THAT IT OWNS THE EXCLUSIVE, UNENCUMBER ED, UNRESTRICTED AND EFFECTIVE RIGHTS OF ITA 6542/M/2014 SAHARA ONE M EDIA & ENTERTAINMENT 3 COPYRIGHT IN PERPETUITY OF THE SAID PROGRAMME AND ALL ITS ELEMENTS LIKE CONCEPT/THEME, CREATIVES, FORMAT, PROCESS FLOW AND MANAGEMENT, SCRIPT-SCREENPLAY WITH DIALOGUES, LITERARY CONTENT, CHARACTERS, VISUA LS, AUDIO, SONGS AND MUSICAL WORKS AND PERFORMANCE ETC. AND HAS OBTAINED THE REQUIRED LAWFUL AUTHORITY, FROM PPL/ IPRS/TPPL/ PERSPECTIVE PRODUCERS OR RIGHT HOLDERS, IF REQUIRED, TO USE THE MATERIAL OWNED BY OTHERS, AS PART OF THE SAID PROGRAMME (S UBJECT TO HOWEVER, THE APPROVAL OF THE PRODUCER) AND ABSOLUTELY GRANT IT TO THE PRODUCER AND THAT NEITHER PRIOR TO SIGNING THIS AGREEMENT, IT HA S GRANTED, TRANSFERRED AND/OR ASSIGNED THE SAID RIGHTS OF THE SAID PROGRAMME OR PARTS THEREOF TO ANY OTHER PERSON, PARTY, COMPANY OR ORGANIZATION WHATSO EVER, NOR WOULD GRANT, TRANSFER, ASSIGN, USE AND EXPLOIT THE SAME IN ANYWA Y EVER, EXCEPT THIS FIRST AND CONCLUSIVE ASSIGNMENT TO THE PRODUCER HEREIN. (I) THAT THE PRODUCER SHALL BE ENTITLED TO HAVE A NOMINEE PRESENT DURING ANY STAGE OF PROGRESS, BE IT PRE-PRODUCTION, MAIN-PRODU CTION OR POSTPRODUCTION PROCESS OF THE SAID PROGRAMME FOR THE CONSULTATIONS AND A DVICE, AS MAY BE CONSIDERED NECESSARY BY THE PRODUCER FROM TIME TO TIME. TH E PRODUCER ALSO RESERVES THE RIGHT TO EFFECTIVELY ADVISE, BE IT CREATIVE, CO MMERCIAL AND OTHERWISE, TO THE ASSIGNED PRODUCER IN WRITING ON ALL PRE-PRODUCTION MAIN-PRODUCTION AND POST-PRODUCTION MATTERS OF THE SAID PROGRAMME AND CONSTITUENTS THEREIN, IN THE COURSE OF THIS AGREEMENT AND THE SAME SHALL BE BIND ING ON THE ASSIGNED PRODUCER FOR REQUIRED MODIFICATIONS, INCORPORATION S, INSERTIONS AND COMPLIANCES WHATSOEVER. HOWEVER, THE ASSIGNED PROD UCER SHALL ALONE BE RESPONSIBLE FOR ANY CONSEQUENCES ARRIVING OUT OF AN Y OMISSION AND /OR COMMISSION WITH REGARD TO THE MAKING OF THE SAID PROGRAMME A ND/OR ITS EXPLOITATIONS BY THE PRODUCER AND/OR ITS ASSIGNEES. . N) THAT THE PRODUCER SHALL BE ENTITLED TO MARKET, SELL, TELECAST, ASSIGN AND EXPLOIT THE SAID PROGRAMME AND PARTS THEREOF GLOB ALLY IN ANY WAY BY ANY MEANS IN WHICHEVER WAY, TO BE DECIDED EXCLUSIVELY BY THE PRODUCER BEING THE ABSOLUTE OWNER AND PERPETUAL COPYRIGHT HOLDER OF TH E THE SAID PROGRAMME IN WHICH THE ASSIGNED PRODUCER SHALL H AVE NO RIGHTS/INTERESTS AND/OR CLAIMS WHATSOEVER. O) THAT THE ASSIGNED PRODUCER SHALL PROVIDE THE RESPECTIVE SYNOPSIS, CREATIVES, FORMAT, ITS PROCESS FLOW AND MANAGEMENT, SCRIPTSSCREENPLAY WITH DIALOGUES AND TH E DETAILS OF SET, PRODUCTION- DESIGN AND SCHEDULE, CAST, CREW, PERFORMERS AND CON TRIBUTORS ETC. TO THE PRODUCER IN ADVANCE FOR NECESSARY APPRAISAL, VALUE ADDITIONS AND APPROVALS. ANY SUGGESTIONS AND/OR VALUE ADDITIONS ADVISED BY THE PRODUCER IN THE SAME SHALL HAVE TO BE INCORPORATED BY THE ASSIGNED PROD UCER. THE ASSIGNED PRODUCER SHALL, IN NO EVENT, DEVIATE FROM THE APPR OVED FORMAT, PROCESS FLOW AND MANAGEMENT AND SCRIPT-SCREENPLAY WITH DIALOGUES AND OTHER CONSTITUENTS OF THE SAID PROGRAMME AND IF IT IS NOTICED BY THE PRODUCER I N ITS REASONABLE OPINION AS A DEVIATION, COMPROMISE AND/OR ANY POOR ADVERSE IMPRESSION OF THE TREATMENT, CONTENT AND QUALITY ETC., THE ASSIGNED PRODUCER S HALL BE ASKED TO IMMEDIATELY ADDRESS THE CONCERN AND IF REQUIRED TO RE-SHOOT THE SAID PROGRAMME EITHER IN TOTALITY OR THE AFFECTED PART ALONE, AS THE CASE MAY BE , AT THE ASSIGNED PRODUCERS COST ALONE AND IN THE EVEN T OF ITS FAILURE TO PROMPTLY DO SON OR WILLFUL AVOIDANCE/INABILITY THEREOF, THE PRODUCER SHALL BE ENTITLED TO PROPORTIONATELY FORFEIT THE CONCERNED PROSPECTIVE P AYMENTS AND IF ALREADY PAID, TO CLAIM FORTHWITH REFUND AND CLAIM FOR DAMAGES FROM THE ASSIGNED PRODUCER FOR ANY LOSS/DAMAGES/INCONVENIENCE WHATSOEVER. . ITA 6542/M/2014 SAHARA ONE M EDIA & ENTERTAINMENT 4 R) THAT THE PRODUCER SHALL BE ENTITLED TO EXAMINE, VERIFY AND AUDIT THE PROJECT SPECIFIC BOOKS AND ACCOUNTS AS WELL AS THE PRODUCTI ON PROGRESS OF THE ASSIGNED PRODUCER FOR THE SAID PROGRAMME FROM TIME TO TIM E, WHICH SHALL BE WITHOUT PREJUDICE TO ANY OF THE RIGHTS AND REMEDIES ARISING UNDER THIS AGREEMENT AND SHALL NOT IN ANY WAY RESTRAIN/PROHIBIT THE PRODUCER FRO M QUESTIONING/DISPUTING THE ACCURACY OF ANY TRANSACTION, PAYMENT AND ACTION/INA CTION FOR THE PROJECT AT A LATER DATE. IF ANY SUCH AUDIT AUTHENTICALLY REVEALS THAT THE ASSIGNED PRODUCER HAS COMPROMISED IN THE PRODUCTION VALUES OR AVOIDED CER TAIN OBLIGATIONS/COMPLIANCES OR ANY OTHER OMISSION/COMMISSION ETC., THE PRODUCER SHALL BE ENTITLED, DECIDES OTHER REMEDIES, TO APPROPRIATELY VALUATE AND FIX/RE VISE A LOWER GROSS CONSIDERATION FOR AFFECTED PROPORTION AND RECOVER/ADJUST FOR SUCH COMPROMISE, OMISSION AND/OR COMMISSION ETC. WHATSOEVER, AS THE CASE MAY BE. . IV.B) THE ABOVESTATED GROSS CONSIDERATIO N PER EPISODE INCLUDES ANY AND ALL COSTS, INVESTMENTS AND EXPENSES, IN THE COMPLETE CO NDUCT OF PROCESS FLOW AND MANAGEMENT, PRODUCTION, DELIVERY OF THE EXCELLENT Q UALITY FINISHED (BROADCASTABLE) SAID PROGRAMME AND ASSIGNMENT OF PERPETUAL AND UN IVERSAL COPYRIGHTS THEREOF, INCLUDING RELATING TO THE FOLLOWING- (I) RECCE, (II) PRE-PRODUCTION(STORY, SCRIPT-SCREENPLAY WITH DIALOG UES, CREATIVES, FORMAT, PROCESS FLOW, PARTICIPANTS, RELATES, INCLUDING SETS AND PROPERTIES ETC.) (III) MAIN-PRODUCTION (INCLUDING RAW-STOCK, STUDIOS, PROP ERTIES, COSTUMES, SONG- DANCE RECORDINGS-PICTURIZATIONS, EQUIPMENT AND LOCA TIONS), (IV) POST-PRODUCTION(INCLUDING GRAPHICAL AND SPECIAL EFF ECTS AND PRESENTATIONS), (V) ALL STATUTORY AND OTHERWISE OBLIGATIONS AND EXPENSE S, COSTS, LEVIES, INSURANCE PREMIA AND TAXES ETC. (VI) (VI) AUTHORITY TO USE THE FILM SONGS/OTHER CLIPPING S IN THE SAID PROGAMME WHETHER DIRECTLY OR INDIRECTLY RELATED TO THE APPEARING GUEST, IF ANY, TO BE OBTAINED BY PPL/IPRS/TPPL/RESPECTIVE RIGHT HOLDERS, AS THE CASE MAY BE, (VII) REMUNERATIONS AND EXPENSES OF OVERALL CAST AND CRE W SUCH AS WRITER, DIRECTOR, CAMERAMAN, SOUND RECORDIST, LYRICIST, MUS IC DIRECTOR, SINGERS, CHOREOGRAPHERS, DANCERS, ARTISTES, PERFORMERS, SUPP LIERS, PARTICIPANTS, PRESENTERS, HOSTS/ ANCHORS/COMPERES, AUDIENCE, CONT RIBUTORS ETC. AND THE EXPENSES RELATED TO THE TRAVEL, BOARDING, LODGING E TC. OF THE ENTIRE UNITS AND ALL CONCERNED, (VIII) PER EPISODE, ALL RUSHES ON DIGI-BATA, AUDIO TRACKS/ SPOOLS OF MUSIC AND SONGS, 02(TWO) DIGI-BETA BROADCASTABLE MASTERS WITH MIXED SOUND IN HINDI LANGUAGE, 01(ONE) DIGI- BETA UNMIXED MASTER AND 02( TWO) VHS AND/OR VCD/DVD OF EACH EPISODE, WITH ONE TCR, 03(THREE) ST ILL NEGATIVE ROLLS (PER EPISODE) WITH POSITIVE (5X 7) (OF DESIRED NU MBER) COPIES OF EACH SNAP, AS DESIRED BY THE PRODUCER; A 10(TEN) MINUTE S SHOWREEL, LOG SHEETS AND ALL THE PRODUCTION PROPERTIES ETC., WHIC H ARE PROCURED OUT OF THE GROSS CONSIDERATION (ALL TO BE DELIVERED TO THE PR ODUCER BEING THE PROPERTY OF THE PRODUCER), (IX) MAKING THE CAST AND CREW AVAILABLE FOR THE DESIRED PROMO-PUBLICITY OF THE SAID PROGRAMME AND ALSO THE MAKING OF THE SAID PR OGRAMME AND ITS TELECAST, AS DESIRED BY THE PRODUCER FOR NECE SSARY PROMOTIONS OF THE SAID PROGRAMME, (X) (X) COSTS REGARDING THE SHOW PACKAGING, INCLUDING R EMUNERATIONS OF PROFESSIONALS HIRED FOR THE SAME(IT IS EXPRESSLY MU TUALLY AGREED THAT PRODUCER SHALL DEDUCT A SUM OF RS.4,00,000/-(RUPEE S FOUR LACS) ONLY, ITA 6542/M/2014 SAHARA ONE M EDIA & ENTERTAINMENT 5 PER 52 (FIFTY TWO) EPISODES OR AS MAY BE MUTUALLY A GREED, FOR CREATING THE DESIRED PACKAGING OF THE SAID PROGRAMME, FROM THE PAYABLES OF FIRST LOT OF EPISODES); AND (XI) ANY OTHER DIRECT AND INDIRECT EXPENSES, INCLUDING B UT NOT LIMITED TO THE ASSIGNED PRODUCERS REMUNERATION ETC., WHATSOEVER . 12. A PERUSAL OF CLAUSE II(A) OF THE AGREEMENT SHOW S THAT TRANSACTION AS IN RELATION TO PRODUCTION OF THE PROGRAMME BY THE ASSIGNED PROD UCER SOLELY FOR THE PRODUCER AND STRICTLY ACCORDING TO THE REQUIREMENTS AND SPEC IFICATIONS OF THE PRODUCER OR AS APPROVED BY THE PRODUCER. AS PER CLAUSE II (1) (I), THE PRODUCER SHALL BE ENTITLED TO HAVE A NOMINEE PRESENT DURING ANY STAGE OF PROGRESS OF PRODUCTION AND RESERVES THE RIGHT TO EFFECTIVELY ADVISE REGARDING THE DIFFERENT COMPONENTS AND THE STAGES OF THE PRODUCTION OF THE PROGRAMME, AS MENTIONED THERE IN, AND SUCH ADVICE SHALL BE BINDING ON ASSIGNED PRODUCER. AS PER CLAUSE(N) THE PRODUCER WILL BE THE ABSOLUTE OWNER AND PERPETUAL COPYRIGHT HOLDER OF THE SAID PR OGRAMME IN WHICH THE ASSIGNED PRODUCER SHALL HAVE NO RIGHTS/INTERESTS AND/OR CLAI MS WHATSOEVER. AS PER CLAUSE (O) ANY SUGGESTIONS AND/OR VALUE ADDITIONS ADVISED BY T HE PRODUCER IN THE PROGRAMME SHALL HAVE TO BE INCORPORATED BY THE ASSIGNED PRODU CER AND HE SHALL, IN NO EVENT, DEVIATE FROM THE APPROVED FORMAT, PROCESS FLOW AND MANAGEMENT AND SCRIPT- SCREENPLAY ETC. OF THE PROGRAMME. FURTHER AS PER CL AUSE (R), THE PRODUCER SHALL BE ENTITLED TO EXAMINE, VERIFY AND AUDIT THE PROJECT S PECIFIC BOOKS AND ACCOUNTS AS WELL AS THE PRODUCTION PROGRESS OF THE ASSIGNED PRODUCER FOR THE SAID PROGRAMME FROM TIME TO TIME AND THE ASSIGNED PRODUCER SHALL NOT IN ANY WAY RESTRAIN/PROHIBIT THE PRODUCER THE PRODUCER FROM QUESTIONING/DISPUTING THE ACCURACY OF ANY TRANSACTION, PAYMENT AND ACTION/INACTION FOR THE PROJECT AT A LA TER DATE. THE GROSS CONSIDERATION CLAUSE CLEARLY REVEALS THAT THE CONSIDERATION PAY ABLE BY THE PRODUCER TO THE ASSIGNED PRODUCER IS RELATING TO DIFFERENT CONSTITU ENTS OF THE TO BE PRODUCED PROGRAMME AS MENTIONED UNDER CLAUSE IV(B), BUT DOE S NOT INCLUDE ANY SEPARATE CONSIDERATION FOR TRANSFER OR ASSIGNMENT OF COPYRIG HTS ETC. OF THE PROGRAMME. THE CLAUSE II(B) RELIED UPON BY THE AO , AS REPRODUCED ABOVE, WHEN READ WITH THE OTHER CLAUSES OF THE AGREEMENT SOME OF WHICH HAVE BEEN DI SCUSSED ABOVE, CLEARLY REVEALS THAT THE AGREEMENT IN QUESTION IS AN AGREEMENT TO P RODUCE THE PROGRAMME AND NOT FOR TRANSFER OF COPYRIGHTS ETC. HENCE CLAUSE (II)B OF THE ARTICLE CANNOT BE INTERPRETED IN A MANNER TO GIVE A DIFFERENT MEANING TO THE AGRE EMENT IN QUESTION THE ASSIGNMENT OR VESTING OF COPY RIGHTS ETC. IN THE PROGRAMME ARE INCIDENTAL TO THE MAIN OBJECT OF THE AGREEMENT OR TRANSACTIONS IN QUESTION. WHEN A C ONTACTOR PRODUCES A PROGRAMME ON BEHALF OF OTHER, IT IS OBVIOUS THAT ALL THE RIGH TS INCLUDING COPY RIGHTS ETC. WILL VEST IN THE PRODUCER AND THE ASSIGNED PRODUCER/CONTRACTO R WILL NOT BE LEFT WITH ANY CONTROL OR RIGHT OVER THE PROGRAMME AND SUCH RIGHTS OF THE PRODUCER HAVE BEEN RECOGNIZED WITH THE SAID ASSIGNMENT CLAUSE, WHICH I S INCIDENTAL TO THE MAIN OBJECT OF THE CONTRACT. THE OBSERVATION OF THE AO THAT ASSIGN ED PRODUCER HAS AN ABSOLUTE CONTRACT OVER THE RIGHTS OF THE PROGRAMME IS FALSIF IED FROM THE PERUSAL OF THE DIFFERENT CLAUSES OF THE AGREEMENT. IN VIEW OF OUR ABOVE DISCUSSION OF THE MATTER, IT IS HELD THAT THE AGREEMENT IN QUESTION WAS AN AGREE MENT TO PRODUCE THE PROGRAMME BY THE ASSIGNED PRODUCER I.E., CONTRACTOR ON BEHALF OF THE PRODUCER I.E., ASSESSEE. 13. NOW COMING TO THE LEGAL ASPECT OF THE CASE, THE RELEVANT EXTRACT OF THE OPERATIVE PROVISIONS OF SECTION 194C AND EXPLANATION III IS R EPRODUCED BELOW: 194C(1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CAR RYING OUT ANY WORK(INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURS UANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND- .. ITA 6542/M/2014 SAHARA ONE M EDIA & ENTERTAINMENT 6 EXPLANATION III.- FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION WORK SHALL ALSO INCLUDE- (A) ADVERTISING; (B) BROADCASTING AND TELE CASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; (C ) CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY R AILWAYS; (D) CATERING .. 194J. FEES FOR PROFESSIONAL OR TECHNICAL SERVICES. - (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESP ONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF (A) FEES FOR PROFESSIONAL SERVICES, OR (B) FEES FOR TECHNICAL SERVICES, OR (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 THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WH ICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO TEN PER CENT OF SUCH SUM AS INCOME- TAX ON INCOME COMPRISED THEREIN : .. 14. PERUSAL OF THE ABOVE EXTRACT OF THE PROVISIONS OF SECTION 194C, REVEALS THAT CLAUSE (B) TO EXPLANATION III TO SECTION 194C SPECI FICALLY COVERS THE ACTIVITY OF PRODUCTION OF PROGRAMMES, HENCE, THE PAYMENT MADE T O THE CONTRACTOR I.E. ASSIGNED PRODUCER FOR PRODUCTION OF PROGRAMME SPECIFICALLY F ALLS WITHIN THE AMBIT OF CLAUSE(B) TO EXPLANATION III TO SECTION 194C, WHERE AS THE PROVISIONS OF SECTION 194J ARE GENERAL IN NATURE. IT IS SETTLED LAW THAT WHEN AN ACTIVITY OR TRANSACTION IS COVERED BY THE SPECIFIC PROVISIONS OF THE ACT, THEN RESORT MUST BE HAVE TO THAT SPECIFIC PROVISION AND NOT TO THE GENERAL PROVISIONS ESPECIA LLY WHEN GENERAL PROVISIONS ARE CONTRARY, DEPARTING FROM, GIVING A DIFFERENT INTENT ION, INTERPRETATION OR MEANING IN ANY MANNER AS COMPARED TO THE SAID SPECIFIC PROVISI ONS. IT IS THUS CLEAR THAT THE PROVISIONS OF SECTION 194C WOULD PREVAIL OVER SECTI ON 194J OF THE ACT. 15. IN THIS CASE SECTION 194C CLEARLY STATES THAT PAYMENT FOR PRODUCTION OF PROGRAMMES CONSTITUTES PAYMENTS FOR WORK UNDER SE CTION 194C, HENCE, THE ASSESSEE RIGHTLY DEDUCTED TDS U/S 194C AT THE RATE OF 2% ON PAYMENTS MADE TO THE CONTRACTOR (ASSIGNED PRODUCER). WHEN FACED WITH SOM EWHAT SIMILAR ISSUE, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PR ASARBHARTI BROADCASTING CORPN. OF INDIA(SUPRA) HAS OBSERVED AS UNDER: WE ARE UNABLE TO AGREE WITH THIS SUBMISSION. WE OBSERVE THAT EXPLANATION III, WHICH WAS INTRODUCED SIMULTANEOUSLY WITH SECTION 19 4J, IS VERY SPECIFIC IN ITS APPLICATION TO NOT ONLY BROADCASTING AND TELECASTIN G BUT ALSO INCLUDE PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING AND TELECASTING. I F ON THE SAME DATE, TWO PROVISIONS 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. I T IS NOT, THEREFORE, POSSIBLE TO ACCEPT THE CONTENTION OF THE REVENUE THAT PROGRAMME S PRODUCED FOR TELEVISION, INCLUDING COMMISSIONED PROGRAMMES; WILL FALL OUTSI DE THE REALM OF SECTION 194C EXPLANATION III OF THE ACT. WE FIND NO INFIRMITY IN THE VIEW TAKEN BY THE ITAT WHICH WE HEREBY AFFIRM.. 16. THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT THE AB OVE DECISION OF THE HONBLE DELHI HIGH COURT SQUARELY COVERS THE CASE OF THE ASSESSEE . IN VIEW OF THE ABOVE STATED SETTLED LEGAL POSITION, THE ASSESSEE RIGHTLY DEDUCT ED THE TDS FOR PRODUCTION EXPENSES IN THE NATURE OF CONTRACT PAYMENT AT 2% IN ACCORDAN CE WITH THE PROVISIONS OF SECTION 194C. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE SAME IS UPHELD. THIS ISSUE IS ACCORDINGLY DECIDED A GAINST THE REVENUE (MISPRINT AS ITA 6542/M/2014 SAHARA ONE M EDIA & ENTERTAINMENT 7 ASSESSEE) . GROUND NO.1(II)(III)&(IV): DUBBING EXPENSES/PRINT P ROCESSING FEES : 17 . THE AO HELD THAT THE PAYMENTS IN RESPECT OF DUBB ING EXPENSES/PRINT PROCESSING FEES ARE IN THE NATURE OF FEES FOR TEC HNICAL/PROFESSIONAL SERVICE. THEREFORE, THE TAX SHOULD HAVE BEEN DEDUCTED UNDER SECTION 194J OF THE ACT INSTEAD OF SECTION 194C. HE OBSERVED THAT THE WORK OF PROCE SSING OF FILM IS CREATIVE WORKING WHICH IS PERFORMED BY SKILLED AND TECHNICALLY COMPE TENT PERSONS. IT IS A TECHNICAL WORK PERFORMED BY TECHNICALLY COMPETENT PERSON WITH EXPERTISE IN THE FIELD AND THEREFORE, ANY PAYMENT FOR THIS EXPENDITURE WAS LIA BLE FOR TDS U/S 194J. THE LD. CIT(A) HOWEVER OBSERVED THAT THE DUBBING AND PROCES SING OF FILMS ARE PROCESSES IN THE PRODUCTION ACTIVITY UNDERTAKEN BY THE ASSESSEE. THE SERVICE OF DUBBING THUS WAS IN THE NATURE OF WORK AND WOULD FALL UNDER SECTIO N 194C OF THE ACT. HE FURTHER OBSERVED THAT THE SERVICE RENDERED IN REGARD TO PAY MENT OF PRINT PROCESSING FEES WAS ALSO IN THE NATURE OF WORK AND WOULD FALL UND ER SECTION 194C OF THE ACT IN VIEW OF SIMILAR PROCESSES INVOLVED. HE THEREFORE DE LETED THE DEMAND OF TAX OF RS.27,09,159/- UNDER SECTION 201(1) MADE BY THE AO UNDER THIS HEAD. 18. BEFORE US THE LD. AR HAS SUBMITTED THAT BOTH DU BBING AND PROCESSING ARE PART OF PRODUCTION ACTIVITY OF THE FILM/SERIAL UNDERTAKEN B Y THE ASSESSEE. THE DUBBING IS NOTHING BUT AN ANCILLARY ACTIVITY TO THE PRODUCTION OF SERIAL/FILMS . IT IS DONE TO MAKE SURE THAT THE SERIAL COMMUNICATES WITH THE TARGETED AUDIENCE AND TO MAKE IT READY FOR TELECAST. HE HAS FURTHER SUBMITTED THAT PRINT P ROCESSING FEES IS PAID FOR PROCESSING OF RAW FILMS AND MAKING EXTRA COPIES OF THE SAME. AT THE TIME OF SHOOTING OF THE SERIAL/FILM, THE SERIAL IS SHOT USING RAW IM AGES/FILMS. SUCH RAW FILMS ARE NOT IN EDITABLE OR PRINTABLE FORMAT. FURTHER, SERIALS ARE REQUIRED TO BE TELECAST IN DIGITAL FORMATS. CONVERSION OF SUCH RAW FILMS IS NECESSARY TO MAKE THE FILM EDITABLE AND SUITABLE FOR TELECAST. ACCORDINGLY, PROCESSING FEES ARE PAID WHOLLY AND SOLELY FOR THE PURPOSE OF MAKING THE FILM READY FOR EDITING AND RE ADY FOR OTHER PROCESSES OF PRODUCTION. THUS, IT IS A PART OF PRODUCTION PROCES S OF A SERIAL. ON THE OTHER HAND THE LD. DR HAS RELIED UPON THE AO. 19. A PERUSAL OF THE SECTION 194C REVEALS THAT THE ACTIVITIES UNDER THIS SECTION INCLUDE BROADCASTING AND TELECASTING INCLUDING PROD UCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING. HENCE ALL THE ACTIVITI ES FROM THE PRODUCTION OF THE PROGRAMME UP TO ITS TELECAST ARE INCLUDED UNDER THI S SECTION. THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT PRODUCTION OF PROGRAMMES IS N OTHING BUT COMBINATION OF PROCESSES RIGHT FROM PLANNING SCHEDULE TO POST PROD UCTION PROCESSES ENABLING THE SERIAL TO BE READY FOR TELECAST. HE RIGHTLY HELD TH AT THE DUBBING CHARGES AND PROCESSING FEES BEING A PART OF PRODUCTION OF TELEV ISION SERIALS AND PROGRAMMES ARE SQUARELY COVERED UNDER THE AMBIT OF SPECIFIC PROVIS IONS OF SECTION 194C OF THE ACT AND LIABLE TO TDS AT THE RATE OF 2%. THE GENERAL PR OVISIONS OF SECTION 194J AS OBSERVED ABOVE, ARE NOT ATTRACTED IN THIS CASE. THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE ARE HEREBY UPHELD. SO FAR THE GROUND OF APPEA L RELATING TO WRONG APPLICATION OF LAW BY THE CIT(A) IS CONCERNED, WE MAY OBSERVE T HAT, IN VIEW OF THE ABOVE DISCUSSION, THE ISSUES INVOLVED UNDER THESE HEADS H AVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE INDEPENDENTLY, ON MERITS, EVEN WITHOUT CON SIDERING THE APPLICATION OR NON APPLICATION OF ANY SUCH CASE LAW. THUS WE DO NOT FI ND ANY FORCE IN THE CONTENTION OF THE REVENUE IN THIS RESPECT. THE ISSUES INVOLVED IN GROUND NO. 1(II)(III)&(IV) ARE ACCORDINGLY DECIDED AGAINST THE REVENUE. ITA 6542/M/2014 SAHARA ONE M EDIA & ENTERTAINMENT 8 5. CONSIDERING THE DECISION OF CO-ORDINATE BENCH IN AS SESSEES OWN CASE, WE FIND THAT BOTH THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THE PRES ENT APPEAL ARE SQUARELY COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE. HENCE, WE DO NOT FIND ANY ILLEGALITY AND INFIRMITY IN THE ORDER OF LD CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. AS A RESULT APPEAL FILED BY TH E REVENUE STANDS DISMISSED. *'+ ,-' VF/KDKJH . / ! 01 UK 2 ! ' 3 . ORDER PRONOUNCED IN T HE OPEN COURT ON 04 ,JANUARY,2017. 5 ! 6 7 04, ( , 201 7 ! 01 ; SD/- SD/- /- ( / RAJENDRA ( IOU IOUIOU IOU / PAWAN SINGH)) ( / ACCOUNTANT MEMBER # ( / JUDICIAL MEMBER 1 /MUMBAI, 7 /DATE: 04.01.2017 SK ' )!*+ ,+! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ ., ( <' , 4. THE CONCERNED CIT / ., <' 5. DR E BENCH, ITAT, MUMBAI / =>0 '?, B BB B , . . . 1 6. GUARD FILE/ 0 *1 =' ' //TRUE COPY// 5 / BY ORDER, / DY./ASST. REGISTRAR ( ?, , 1 /ITAT, MUMBAI