RED CHILLIES ENTERTAIMENT P.LTD, MUMBAI V. DCIT (TDS) 3(2), MUMBAI

ITA 6655/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7996 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 09-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 03-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: ADITYA R AJGAONKAR
• Keywords: Transfer pricing; Double taxation relief; International transaction; Permanent establishment; Non-deduction of tax
• Section: 133A; 194C; 201(1)

Judgement Text

1 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.6655/MUM/2014 - A.Y 2005-06 I.T.A. NO.6656/MUM/2014 - A.Y 2006-07 I.T.A. NO.6657/MUM/2014 - A.Y 2007-08 I.T.A. NO.92/MUM/2015 - A.Y 2005-06 I.T.A. NO.93 /MUM/2015 - A.Y 2006-07 RED CHILLIES ENTERTAINMENT PVT LTD BACKSTAGE, PLOT NO.612, JUNCTION OF RAM KRISHNA MISSION ROAD & 15 TH CROSS ROAD, SANTACRUZ (W), MUMBAI-54 VS ACIT (TDS), MUMBAI PAN NO. AACCR2518P ( APPELLANT) (RESPONDENT) APPELLANT BY SHRI ADITYA R AJGAONKAR RESPONDENT BY SHRI M.C. OMI NINGSHEN DATE OF HEARING : 16-02-2017 DATE OF ORDER : 28-02-2017 O R D E R PER ASHWANI TANEJA, AM:- THESE APPEALS PERTAIN TO SAME ASSESSEE INVOLVING I DENTICAL ISSUES, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST, WE SHALL TAKE UP APPEAL FOR A.Y. 2005-06 IN ITA NO.6655/MUM/2014 FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER O F INCOME-TAX (APPEALS)-14, MUMBAI [HEREINAFTER CALLED CIT(A)]DATED 14-08-2014 FOR A.Y. 2005-06 ON THE FOLLOWING GROUNDS:- 2 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 1. THE LEARNED CIT (A) ERRED IN UPHOLDING THAT THE FEES PAID TO VARIOUS PROFESSIONALS AS BEING LIABLE FOR DEDUCTION OF TAX U/S 192 OF THE ACT, THOUGH THE APPELLANT COMPANY HAS RIGHTFULL Y DEDUCTED THE APPROPRIATE TAX ON SUCH PAYMENTS U/S 1 94J OF THE ACT. 2. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL, THE LEARNED CIT (A) ERRED IN UPHO LDING THAT THE SIX PROFESSIONALS NAMELY MR.SANJIV CHAWLA, MS. SHUS HMA CHITNIS, MR. BLESSON OOMMEN, MR. AMITABH SHUKLA, MR . VISHAL PANJABI AND MR. RAJESH WANMALI HAD AN EMPLOY ER- EMPLOYEE RELATIONSHIP WITH THE APPELLANT COMPANY. 3. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL, THE LEARNED CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE DEMAND OF RS. 3,73,166/- FOR ALLEGED SHORT DEDUCTION OF TAX (BEING THE DIFFERENCE OF TAX DEDUCTED AS BETWEEN PROVISIONS OF SEC 194,1 AND 192 OF THE ACT) AS MADE BY THE ASSESSING OFFICER IS ERRONEOUS AND BAD IN LA W. 4. WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL AS TAKEN BY APPELLANT, THE LEARNED CIT (A) ERRED IN UP HOLDING THAT IN THIS PARTICULAR CIRCUMSTANCE WHERE THE SIX PROFESSIONALS HAVE PAID THEIR DUE TAXES, INTEREST U/S 201(A) WILL REMAIN CHARGEABLE TILL DATE OF FILING OF RETURN BY THE PAY EE AND IN DIRECTING-THE ASSESSING OFFICER TO RECOMPUTE THE SAME. 5. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL, THE LEARNED CIT(A) ERRED IN UPHOLDING THAT THE PAYMENTS MADE TO MANAGER FOR THE BENEFIT OF CO-OWNERS TOWARD S THE USE OF PREMISES AT MUKESH MILLS COMPOUND SHALL BE LIABLE F OR DEDUCTION OF TAX U/S 1941 OF THE ACT THOUGH THE PAYMENTS OF T HE HIRE CHARGES IN THE HANDS OF THE RESPECTIVE RECIPIENTS W ERE BELOW THE THRESHOLD LIMIT SPECIFIED U/S 1941. 6. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL, THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THAT THE DEMAND 3 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 OF RS. 57,961/- ON ACCOUNT OF PAYMENTS MADE TO THE MANAGER OF MUKESH MILLS COMPOUND ON BEHALF OF THE CO-OWNERS OF THE PROPERTY. 7. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL, THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THAT THE PROCESSING CHARGES DEBITED BY ADLABS FILMS PVT. LTD. (FOR AD FILMS) AMOUNTING TO RS. 1,41,776/- WERE LIABLE FOR DEDUCTION OF TAX U/S 194J. 8. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL THE LEARNED CIT (A) HAS ERRED IN U PHOLDING THAT THE PROCESSING CHARGES DEBITED BY ADLABS FILMS PVT. LTD. (FOR FILM MAIN HOON NA) AMOUNTING TO RS. 34,93,624/- WER E LIABLE FOR DEDUCTION OF TAX U/S 194J THOUGH THE AMOUNT WAS CHARGED FOR THE PRINTS PROCESSED AND PRINTED BY ADLABS FILMS PV T. LTD. 9. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL, THE LEARNED CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ADLABS FILMS PVT. LTD. H AD DURING THE COURSE OF BUSINESS GIVEN A DISCOUNT OF RS. 47,2 0,138/- TO THE APPELLANT COMPANY, WHICH WAS MORE THAT THE AMOU NT CHARGED BY IT TO THE APPELLANT COMPANY (RS. 36,35,4 00/-). HENCE, THE APPELLANT COMPANY WAS NOT LIABLE TO DEDU CT TDS ON THE PRINTING AND THE PROCESSING CHARGES MERELY DEBITED BY ADLABS FILMS PVT. LTD. OF RS. 36,35,400/-. 10. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHE R GROUND OF APPEAL, THE LEARNED CIT (A) HAS FAIL TO APPRECIA TE THE CIRCUMSTANCES AS ENVISAGED BY THE GROUNDS OF APPEAL NO 7,8 & 10 AND HENCE HAS ERRED IN DIRECTING THAT THE INTERE ST U/S201(IA) WILL BE LEVIED TILL THE DATE OF PAYMENT OF TAXES BY THE PAYEE NAMELY ADLABS FILMS PVT. LTD. 11. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHE R GROUND OF APPEAL, THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THAT THE PAYMENT OF RS.8,00,96/MADE TO EMPIRE AUDIO CENTRE PVT. LTD. WAS FEES FOR PROFESSIONAL OR TECHNICAL SERVICES LIABLE FOR DEDUC TION OF TAX U/S 194J, THOUGH THE APPELLANT COMPANY HAD CONCLUDED THAT THE PAYMENTS OF CONTRACT WITH THE PARTY WAS LIABLE FOR DEDUCTION U/ S194C AND HAD DEDUCTED TAX THEREON ACCORDINGLY. 12. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHE R GROUND OF APPEAL THE LEARNED CIT (A) HAS ERRED IN UPHOLDING T HE DEMAND OF RS. 28,431/- ON ACCOUNT OF PAYMENT MADE TO EMPIRE AUDIO CENTRE PVT 4 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 LTD. TOWARDS DIGITAL MIXING WORK DUE TO THE DIFFERE NCE BEING DUE TO THE TAX DEDUCTED U/S 194C AS CONTRACT FOR WORK VISA -A-VIS TECHNICAL SERVICES AS U/S 194J. 3. GROUNDS 1 TO 4: THESE GROUNDS INVOLVE IDENTICAL ISSUE WHEREIN ASSE SSEE HAS CONTESTED THE ACTION OF THE LOWER AUTHORITIES I N HOLDING THAT REMUNERATION PAID TO SIX PROFESSIONALS ENGAGED BY THE COMPANY WA S LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 192 AS THE SAME WAS IN THE NATURE OF SALARY AS AGAINST THE CLAIM OF THE ASSESSEE TO DEDUCT TAX U/S 194J ON THE SE PAYMENTS ON THE GROUND THAT THESE PERSONS WERE ACTING IN THE CAPACITY OF I NDEPENDENT PROFESSIONALS AND NOT AS EMPLOYEE OF THE COMPANY. 4. THE BRIEF BACKGROUND IS THAT DURING THE YEAR ASSESS EE WAS ENGAGED IN THE BUSINESS OF FILM PRODUCTION. A SURVEY U/S 133A OF THE INCOME-TAX ACT, 1961 WAS CONDUCTED ON 23-11-2006 ON THE ASSESSEES BUSIN ESS PREMISES. IT WAS INTER-ALIA NOTED BY THE AO THAT DURING THE F.Y. 2004-05, THE ASSESSEE COMPANY HAD PAID REMUNERATION TO VARIOUS PERSONS IN PURSUAN CE TO THE SERVICE CONTRACT AGREEMENT ENTERED WITH THESE PERSONS AND THE COMPEN SATION PAID TO THESE PERSONS WAS TERMED AS RETAINERSHIP FEE AND ASSESS EE DEDUCTED TAX U/S 194J ON THESE PAYMENTS ON THE GROUND THAT THESE PERSONS WERE INDEPENDENT PROFESSIONALS AND AMOUNT PAID TO THEM WAS IN THE NA TURE OF FEE. THE AO WENT THROUGH THE CONTRACT ENTERED WITH THESE PERSONS AND HE WAS OF THE OPINION THAT THERE EXISTED EMPLOYER-EMPLOYEE RELATIONSHIP B ETWEEN THE ASSESSEE AND THESE PERSONS AND, THEREFORE, ASSESSEE WAS REQUIRED TO DEDUCT TAX U/S 192. ACCORDINGLY, HE WORKED OUT THE AMOUNT OF SHORTFALL IN TDS U/S 192 OF THE ACT IN THE CASE OF FOLLOWING PERSONS:- NAME OF THE EMPLOYEE GROSS PAYMENTS EFFECTIVE TDS U/S 192 TDS EFFECTED SHORTFALL SANJEEV CHAWLA 660000 175440 33700 141740 SUSHMA CHITNIS 660000 170340 33700 136640 5 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 BLESSON OOMEN 302500 66045 15750 50295 AMITABH SHUKLA 203500 35750 10450 25301 VISHAL PUNJABI 150000 19380 7100 12280 RAJESH WANMALI 120000 13260 6350 6910 TOTAL DEFAULT 373166 5. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE LD. C IT(A) WHEREIN FOLLOWING SUBMISSIONS WERE MADE:- THE BUSINESS OF THE APPELLANT COMPANY IS LADEN WITH RIS KS. THE APPELLANT COMPANY, BEING A FILM PRODUCTION COMPANY, IS INTO AN UNCERTAIN BUSINESS. THE ACTIVITIES OF THE COMPANY P EAK OUT WHEN THERE IS FILM UNDER PRODUCTION AND THE ACTIVITY LEV EL TAPERS OFF, WHEN THERE ARE NO FILMS UNDER PRODUCTION. MOST OF T HE PEOPLE WHOSE SERVICES ARE TAKEN FOR FILM PRODUCTION ARE NO T EMPLOYED ON MONTHLY BASIS BUT THEIR SERVICES ARE USED ON A C ONTRACTUAL BASIS SO THAT IN CASE OF LULL IN BUSINESS ACTIVITIE S THEIR CONTRACT CAN BE TERMINATED TO SAVE THE COST. SUCH PERSONS AR E HIRED OR EASED OUT BASED ON THE BUSINESS NEEDS OF THE COMPAN Y AND THEREFORE, THEY ARE NOT GIVEN EMPLOYMENT WITH THE C OMPANY, UNLESS THE COMPANY IS CERTAIN ABOUT THE SUSTAINABIL ITY OF THE NEED OF THEIR RESPECTIVE SERVICES FOR THE BUSINESS OF THE COMPANY. DURING THE YEAR, THE COMPANY HAS UTILIZED THE SERVICES OF THE FOLLOWING PERSONS AND FEES WERE PAID TO THEM AS PER THE UNDERSTANDING OF RETAINERSHIP. NAME OF THE PROFESSIONAL GROSS FEES SERVICES RENDERED SANJEEV CHOWLA 6,60,000 PRODUCTION MANAGEMENT SERVICES SUSHMA CHIITNIS 6,60,000 EXECUTIVE SERVICES BLESSON OOMEN 3,02,500 ACCOUNT FINANCE SERVICES 6 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 AMITABH SHUKLA 2,03,500 EDITING SERVICES VISHAL PUNJABI 1,50,000 DIRECTION SERVICES RAJESH WANMALI 1,20,000 PRODUCTION MANAGEMENT SERVICES THESE PERSONS WERE NOT EMPLOYEES OF THE COMPANY AND THEY WERE FREE TO GIVE THEIR SERVICES TO ANY OTHER PARTY . THE COMPANY FOUND IT DESIRABLE TO KEEP THEM ON CONTRACT TILL SU CH TIME THE BUSINESS OF THE COMPANY STABILIZED. THEREFORE THEY WERE NOT TAKEN ON EMPLOYMENT BUT THERE SERVICES WERE CONTRACTED. W HILE THEY WERE UNDER THE CONTRACT AS PROFESSIONALS AND NOT EM PLOYED BY THE COMPANY, THE COMPANY DEDUCTED TAX @ 5% PLUS APP LICABLE SURCHARGE AND CESS FROM THE FEES PAID TO THEM U/S 1 941 AS THESE PERSONS WERE PROFESSIONALS. HOWEVER, ASSESSIN G OFFICER CLAIMED THAT THESE PERSONS WERE IN EMPLOYMENT OF AP PELLANT COMPANY AND THEREFORE, HE RAISED A DEMAND OF RS.3,7 0,1661- AS SHORTFALL IN DEDUCTION OF TAX. IT MAY BE APPRECIATE D THAT THE RELATION BETWEEN THESE RESPECTIVE PARTIES AND THE C OMPANY WERE CONTRACTUAL RELATIONS AND THEY WERE NOT THAT O F EMPLOYMENT. SO MUCH SO THAT THE APPELLANT COMPANY D ID NOT DEDUCT ANY PROFESSIONAL TAX OF THESE PARTIES FROM T HE PAYMENTS MADE TO THEM AND THEY WERE LIABLE TO PAY THEIR OWN PROFESSIONAL TAX. THESE PARTIES WERE NOT ENTITLED FOR ANY GRATUI TY OR ANY OTHER FACILITY AVAILABLE TO THE EMPLOYEES. THEY HAD NO FI X HOURS OF DUTY AND THERE WAS NO EXCLUSIVITY. THE PARTIES AS W ELL AS THE COMPANY HAD A CLEAR UNDERSTANDING THAT THE RELATION WAS OF TAKING PROFESSIONAL SERVICES AND NOT OF EMPLOYMENT. UNDER THE CIRCUMSTANCES, IT WAS INCORRECT ON THE PART OF THE ASSESSING OFFICER TO ASSUME THAT THESE PROFESSIONAL S WERE UNDER EMPLOYMENT OF THE APPELLANT COMPANY AND DEMAN DING ADDITIONAL TAX AS TDS THOUGH THE APPELLANT COMPANY HAD LAWFULLY DEDUCTED THE APPLICABLE TAX UNDER 194]. FO R READY REFERENCE OF YOUR HONOUR THE COPIES OF THE CONTRACT S AS WELL AS THE LEDGER ACCOUNTS OF THESE PARTIES ARE ENCLOSED H EREWITH. IN 7 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 LIGHT OF THE ABOVE SUBMISSIONS AND THE FACT THAT TH E EMPLOYEE- EMPLOYER RELATION IS AN UNDERSTANDING BETWEEN AN ORGANIZATION AND AN EMPLOYEE AND NOT JUST A MATTER OF INFERENCE, WE REQUEST YOUR HONOUR TO DELETE THE DEM AND RAISED BY THE ASSESSING OFFICER TREATING THESE CONTRACTUAL PROFESSIONALS AS THE EMPLOYEES OF THE COMPANY. 6. DURING THE COURSE OF HEARING BEFORE US, THE SUBMISS IONS MADE BEFORE THE LOWER AUTHORITIES WERE REITERATED. IT WAS VEHEMENT LY ARGUED BY THE LD. COUNSEL THAT CONTRACT WITH THESE PERSONS MAY HAVE B EEN TERMED AS EMPLOYMENT CONTRACT, BUT ACTUALLY, THESE PERSONS WE RE ACTING AS INDEPENDENT PROFESSIONALS. THE ARGUMENTS MADE BY HIM HAVE BEEN SUMMARIZED BY WAY OF A NOTE AND RELEVANT PART OF THE SAME IS REPRODUCED HE REUNDER:- 1. THE CONTRACT BETWEEN THE ASSESSEE AND THE PROFE SSIONALS DID NOT CONSTITUTE AN EMPLOYER EMPLOYEE RELATIONSHI P AS THE INTENT OF THE ASSESSEE AND THE PROFESSIONALS WA S NOT TO ENTER INTO AN EMPLOYER EMPLOYEE RELATIONSHIP IF THE COMPANY AND THE EMPLOYEE HAD UNDERSTOOD THE AGREEMENT IN A CERT AIN WAY AND HAD ACTED UPON THAT AGREEMENT, IT IS NOT OPEN TO TH E ITO TO GIVE ANOTHER INTERPRETATION. 2. THE PROFESSIONALS ENGAGED WERE NOT FOR REGULAR WORK BUT WERE ENGAGED IN CAPACITIES THAT REQUIRE AND HIGH AMOUNT OF AUTONOMY, INHERENT SKILLS AND QUALIFICATION. THE DE SIGNATIONS GIVEN TO SUCH PROFESSIONALS WERE 'PRODUCTION MANAGE R', 'EXECUTIVE ASSISTANT TO THE CHAIRMAN', 'MANAGER ACCOUNTS AND F INANCE', 'AVID IN CHARGE', 'PRODUCTION EXECUTIVE', 'VFX SERVICE', 'DI RECTION SERVICES', EDITING SERVICES', 'EXECUTIVE SERVICES, 'SUPERVISOR Y SERVICES' AND ' PRODUCTION ASSISTANT' WHICH RES IPSA SHOWS THAT THE Y WERE NOT MERE EXECUTORS AND THERE WAS A LARGE DEGREE OF PROF ESSIONAL DISCRETION AND THAT THEIR TASKS REQUIRED TECHNICAL OR PROFESSIONAL SKILLS OR EXPERIENCES. THE FACT THAT THEY WERE GIVE N DESIGNATIONS DOES NOT BY ITSELF SHOW THAT AN EMPLOYER EMPLOYEE RELATI ONSHIP EXISTS BUT MERELY SPOKE TO THE SCOPE OF THE TYPE OF ASSIGN MENTS THAT WERE GIVEN TO THEM. 8 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 3. THE COVENANTS IN CONTRACTS BY THEMSELVES WERE WIDE IN NATURE AND AFFORDED A LARGE DEGREE OF FLEXIBILITY FOR THE RETAINERS. THERE WERE NO RESTRICTIVE COVENANTS ON TIMINGS TO COME TO OFFICE OR LEAVE, OR ANY EXCLUSIVITY BAR. THEY WERE NOT SUBJECT TO THE G ENERAL RULES AND REGULATIONS. THEY WERE NOT AUTHORIZED TO ACT AS AGE NTS BY ENTERING INTO ANY COMMITMENTS WITH THIRD PARTIES ON BEHALF O F THE ASSESSEE WITHOUT EXPRESS AUTHORIZATION. THOUGH THE NUMBER OF DAYS OF LEAVE WERE CONTRACTUALLY FIXED, THERE WERE NO COVENANTS BINDING THE SAID PROFESSIONALS TO THE COMPANY RULES AND REGULATIONS AS APPLICABLE TO EMPLOYEES ON THE PAY ROLL OF THE C OMPANY. THE MERE ISOLATED MENTION OF THE WORD 'EMPLOYMENT' OR 'TERMINATION' WOULD NOT IPSO FACTO MAKE THE SAID RE LATIONSHIP A EMPLOYER - EMPLOYEE RELATIONSHIP. THE WORD TERMINAT ION IS USED NON- EXCLUSIVELY IN THE INDIAN CONTRACTS ACT, 1872 IN MU LTIPLE SECTIONS SUCH AS SEC. 201, 202, 153 ETC. EVEN FOR CONTRACTS OF AG ENCY AND BAILMENT. THE USE OF THE WORD 'EMPLOYEE' IN ISOLATION IN A HE ADING OF ONE OF THE CLAUSES OF THE CONTRACT BY ITSELF WOULD NOT RES ULT IN AN EMPLOYER EMPLOYEE RELATIONSHIP. A CONTRACT HAS TO B E READ AS A WHOLE AND IN LIGHT OF THE INTENTIONS OF THE CONTRAC TING PARTIES AND ONE WORD IN ISOLATION IN THE TITLE OF A CLAUSE CANN OT LEND COLOUR TO THE ENTIRE CONTRACT ESPECIALLY WHEN THE OPERATIVE P ART OF THE SAME CLAUSE SAYS OTHERWISE. 5.THE SAID PROFESSIONALS WERE NOT PROVIDED ANY BENE FITS OF EMPLOYMENT LIKE PF, ESIC, GRATUITY, BONUS ETC. THAT FORM A PART AND PARCEL OF EMPLOYMENT. EVEN THE OPTION OF EXERCI SING ANY SUCH FACILITY IN THE LONG RUN WAS NOT CONTRACTUALLY PROV IDED TO THEM. 7. IN SUPPORT OF ITS CLAIM, THE LD. COUNSEL PLACED REL IANCE UPON THE FOLLOWING JUDGMENTS:- 1. CIT VS YASHODHA SUPER SPECIALITY HOSPITAL [2011] 365 ITR 256 (ANBDHRA PRADESH HC) 2. ACIT VS GRANT MEDICAL FOUNDATION [21015] 375 ITR 49 (BOM)(HC) 3. ITO VS ENTERTAINMENT NETWORK TD ITA NO.13512/M/2 014 DATED 11/1/2017 8. P 9 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 ER CONTRA, THE LD. DR APPEARING ON BEHALF OF THE RE VENUE VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. IT WAS ARGUED BY HIM THAT IT IS A CLEAR CUT CASE OF EMPLOYMENT OF THESE PERSONS. THE PERUSAL OF THE CONTRACT ENTERED WITH THESE PERSONS SHOWS THAT THEY WERE HIR ED AS EMPLOYEES OF THE ASSESSEE COMPANY. IT WAS SUBMITTED THAT THE TERMS OF THE CONTRACT SHOWS THAT REQUISITE INGREDIENTS OF EMPLOYER-EMPLOYEE RELATION SHIP EXIST IN THIS CASE. THEREFORE, LOWER AUTHORITIES HAVE RIGHTLY HELD IT T O BE A CASE OF DEDUCTION OF TAX U/S 192. HE PLACED RELIANCE UPON THE DECISION REFE RRED TO BY LD. CIT(A) IN HIS ORDER IN THE CASE OF DCIT VS WOKHARDT HOSPITALS LTD 139 ITD 161 (HYD). IT WAS LASTLY ARGUED BY HIM THAT CASES RELIED UPON BY THE LD. COUNSEL HAVE BEEN DELIVERED ON THE BASIS OF FACTS OF THOSE CASES WHIC H ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE OF THE ASSESSEE BEFORE US. 9. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWER AUTHORITIES SERVICE CONTRACT WITH AFORESAID 6 PERSONS AND ALSO THE SUBM ISSIONS MADE BEFORE US. FIRSTLY, WE HAVE ANALYSED THE SERVICE CONTRACT WITH THESE PERSONS WHICH HAVE BEEN ENCLOSED IN THE PAPER BOOK FILED BEFORE US. O NE OF THE CONTRACTS IS REPRODUCED HEREUNDER, FOR THE SAKE OF READY REFEREN CE:- SERVICE CONTRACT THIS SERVICE AGREEMENT IS MADE ON THIS 1 ST DECEMBER, 2003 BETWEEN, RED CHILLIES ENTERTAINMENTS PRIVATE LTD MANNAT, B.J. ROAD, BANDSTAND, BANDRA WEST, MUMBAI 4 00 050 (HEREINAFTER REFERRED TO AS RC) AND SANMJIV CHAWLA, 153, OXFORD TOWERS ANDHERI WEST, MUMBAI 400 058 (HEREINAFTER REFERRED TO AS SANJIV) WHEREAS RC IS DESIROUS OF APPOINTING SANJIV ON CONTRAC TUAL BASIS FOR THE PURPOSE OF PERFORMING CERTAIN DUTIES, WHICH MAY BE AS SIGNED BY RC FROM 10 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 TIME TO TIME AND SANJIV HAS CONSENTED TO BEING APPO INTED ON FOLLOWING TERMS AND CONDITIONS: DUTIES: YOU SHALL BE DESIGNATED AS PRODUCTION MANAGER AND PERFORM ALL SUCH DUTIES AS MAY BE ASSIGNED FROM TIME TO TIME. COMPENSATION AND BENEFITS: RC SHALL PAY SANJIV A TOTAL REMUNERATION OF RS.60,000/- PER MONTH, SUBJECT TO TAX DEDUCTION AT SOURCE, AT APPLICABLE RAT E OF TAX. IN ADDITION, YOU WILL BE PROVIDED WITH A COMPANY CA R. THE COMPANY WILL ALSO PROVIDE YOU WITH A CELL PHONE FOR LOCAL AND OFF ICIAL USE. LEAVES: YOU SHALL REPORT TO OFFICE ON DAILY BASIS TO PERFORM THE DUTIES ASSIGNED TO YOU FROM TIME TO TIME. HOWEVER YOU SHALL NOT REMAIN ABSENT FROM WORK FOR MORE THAN 30 DAYS IN A CALENDAR YEAR. DATE OF COMMENCEMENT: YOUR CONTRACT WILL TAKE EFFECT FROM 1 ST DECEMBER, 2003. TERMINATION OF EMPLOYMENT: EITHER PARTY WILL BE ENTITLED TO TERMINATE THIS CON TRACT AT ANY TIME AFTER GIVING ONE MONTH NOTICE IN WRITING. IT MAY HOWEVER BE OPEN FOR THE COMPANY TO WAIVE THE NOTICE PERIOD OR PART THER EOF IN THE EVENT OF YOUR RESIGNATION. IN THE CASE OF TERMINATION BY THE COMPAN Y IT WILL BE THE COMPANY'S OPTION TO PAY YOUR REMUNERATION IN LIEU OF NOTICE PERIOD. OTHER TERMS AND CONDITIONS: 1. CONFIDENTIALITY : DURING THE TENURE OF YOUR SERVICE OR LATER YOU WILL NOT DIVULGE TO ANY PERSON WHOMSOEVER ANY TRADE SECRETS OR PROCESS OR A NY INFORMATION REGARDING THE BUSINESS OR FINANCE OF THE COMPANY OR ANY DEALINGS, TRANSACTIONS OR AFFAIRS WHICH MAY COME TO YOUR KNOW LEDGE DURING THE COURSE OF YOUR EMPLOYMENT AND YOU SHALL EXERCISE YO UR BEST ENDEAVOR TO PREVENT THE PUBLICATION OR DISCLOSURE THEREOF. 2. COMMITMENTS AND DEALINGS: YOU WILL NOT ENTER INTO ANY COMMITMENTS OR DEALINGS ON BEHALF OF THE COMPANY FOR WHICH YOU HAVE NO EXPRESS AUTHORITY NOR ALTER OR BE A PARTY TO ANY ALTERATION OF ANY PRINCIPLE OR POLICY OF THE COMPANY OR EXCEED THE AUTHORITY OR DISCRETION VESTED IN YOU WI THOUT THE PREVIOUS 11 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 SANCTION OF THE COMPANY OR THOSE IN AUTHORITY OVER YOU. 3. NOTICES: ALL NOTICES AND OTHER COMMUNICATIONS WHICH ARE REQU IRED TO BE OR MAY BE GIVEN WILL BE IN WRITING AND WILL BE GIVEN I N PERSON OR WILL BE MAILED TO YOU AT YOUR OFFICE E-MAIL ADDRESS OR TO S UCH OTHER ADDRESS AS MUTUALLY DECIDED. IN ACCEPTANCE OF THE ABOVE TERMS AND CONDITIONS, PL EASE SIGN THE DUPLICATE COPY OF THIS LETTER. YOURS FAITHFULLY, FOR RED CHILLIES ENTERTAINMENTS PRIVATE LTD SD/- DIRECTOR I AGREE TO ACCEPT THE ABOVE TERMS AND CONDITIONS SD/- ( SANJIV CHAWLA) PERUSAL OF THE AFORESAID CONTRACT SHOWS THAT SHRI S ANJIV CHAWLA HAS BEEN APPOINTED AS PRODUCTION MANAGER FOR PERFORMING AL L THE DUTIES AS MAY BE ASSIGNED TO HIM FROM TIME TO TIME. IN THE CASE OF PROFESSIONAL, WHO IS ENGAGED ON INDEPENDENT BASIS, ASSIGNMENTS/DUTIES TO BE EXEC UTED ARE GENERALLY SPECIFIED IN ADVANCE WHEREAS IN THE CASE OF SHRI CH AWLA IT HAS BEEN CLARIFIED THAT HE SHALL PERFORM ALL THE DUTIES AS WILL BE ASS IGNED TO HIM FROM TIME TO TIME. THE INDEPENDENT PROFESSIONALS ARE ENGAGED IN SPECIFIC ASSIGNMENTS / JOBS WHEREAS EMPLOYEES ARE ASSIGNED WITH THE DUTIES WHICH ARE NOT FEASIBLE TO BE DEFINED IN SPECIFIC TERMS IN ADVANCE. ONLY DESI GNATION CAN BE GIVEN AND FUNCTIONAL PROFILE CAN BE ASSIGNED IN ADVANCE AND T HAT IS WHAT HAS BEEN DONE. 10. FURTHER, THE REMUNERATION HAS BEEN FIXED @ RS.60,00 0/- PER MONTH. THERE IS NO VARIATION CLAUSE OR ESCALATION CLAUSE I NDICATING THAT REMUNERATION SHALL BE INCREASED OR DECREASED DEPENDING UPON THE QUANTUM OF WORK. THUS, IT INDICATES THAT THE REMUNERATION HAS BEEN FIXED KEEP ING IN VIEW THE RELATIONSHIP OF AN EMPLOYEE AND EMPLOYER. IT IS ALSO WORTHWHILE TO NOTE HERE THAT SHRI CHAWLA HAS BEEN PROVIDED WITH A COMPANY CAR ALONG W ITH A MOBILE PHONE. 12 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 THESE PERKS HAVE BEEN PROVIDED AS ARE GENERALLY PRO VIDED IN THE CASE OF AN EMPLOYEE. THESE PERKS ALSO INDICATE THAT SHRI CHAW LA HAS BEEN ENGAGED ON FULL TIME BASIS AND THAT IS WHY THE ASSESSEE COMPANY WAS PLEASED TO PROVIDE THESE FACILITIES TO SHRI CHAWLA. 11. IT HAS ALSO BEEN NOTED THAT IT HAS BEEN STIPULATED IN THE AGREEMENT THAT SHRI CHAWLA SHALL ATTEND OFFICE ON DAILY BASIS TO P ERFORM THE DUTIES AS MAY BE ASSIGNED TO HIM FROM TIME TO TIME BY THE ASSESSEE C OMPANY. HE HAS ALSO BEEN PROVIDED WITH LEAVES OF AROUND 30 DAYS IN A YEAR. THUS, IMPLIEDLY, FOR THE REMAINING DAYS HE SHALL BE ATTENDING THE OFFICE. T HESE TYPES OF TERMS ARE KEPT IN THE CASE OF EMPLOYEES ONLY AND NOT IN THE CASE O F INDEPENDENT PROFESSIONALS. 12. A CONDITION HAS BEEN STIPULATED FOR TERMINATION OF EMPLOYMENT . THAT ITSELF SHOWS THAT THIS CONTRACT HAS BEEN DRAFTED KE EPING IN VIEW THE RELATIONSHIP OF EMPLOYER-EMPLOYEE. THUS, THE TOTALITY OF TERMS AND CONDITIONS OF THIS AGREEMENT CLEARLY INDICATES THAT THERE EXISTED AN E MPLOYER-EMPLOYEE RELATIONSHIP BETWEEN SHRI CHAWLA AND THE ASSESSEE C OMPANY AND HE WAS HIRED AS AN EMPLOYEE BY THE ASSESSEE COMPANY AND NOT IN T HE CAPACITY OF AN INDEPENDENT PROFESSIONAL. 13. IT HAS BEEN ARGUED BY LD. COUNSEL THAT THERE WAS NO PAYMENT OF PF, ESI, GRATUITY, BONUS, ETC. IN OUR OPINION, PAYMENT OF T HESE INCENTIVES IS ONE OF THE INDICATORS OF EXISTENCE OF EMPLOYER-EMPLOYEE RELATI ONSHIP BUT NOT THE CONCLUSIVE OR THE ONLY INGREDIENT. IT DEPENDS UPON THE OVERALL FINANCIAL TERMS ENTERED INTO BETWEEN THE EMPLOYER AND EMPLOYEE. IN THE CASE BEFORE US, THE OVERALL REMUNERATION OF RS.60,000/- PER MONTH HAS B EEN FIXED KEEPING IN VIEW THIS FACTOR THAT THESE INCENTIVES SHALL NOT BE PAID BY THE ASSESSEE TO SHRI CHAWLA. 14. FURTHER, DESPITE OUR SPECIFIC QUERIES, LD. COUNSEL WAS NOT ABLE TO SHOW 13 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 ANYTHING CONTRARY TO THE NATURAL INFERENCE THAT CAN BE DRAWN FROM THE PERUSAL OF THE AGREEMENT. NOTHING HAS BEEN SHOWN TO PROVE THAT SHRI CHAWLA WAS NOT ENGAGED ON FULL TIME BASIS OR HE WAS WORKING ON PAR T TIME BASIS WITH THE COMPANY AS AN INDEPENDENT PROFESSIONAL AND HE WAS F REE TO TAKE UP OTHER ASSIGNMENTS. NO COGENT REASON COULD BE GIVEN BEFOR E US AS TO WHY THE DESIGNATION OF PRODUCTION MANAGER WAS ASSIGNED IF H E WAS ACTING SIMPLY AS AN INDEPENDENT PROFESSIONAL. THUS, IN OUR CONSIDERED OPINION, THE FACTS AND THE EVIDENCES BROUGHT BEFORE US DULY ESTABLISH THAT THE RE EXISTED AN EMPLOYER- EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE COMPANY AND SHRI CHAWLA. SIMILARLY IN THE CASE OF OTHER PERSONS, IT IS NOTED THAT ALL THE TERMS AND CONDITIONS ARE IDENTICAL. MS. SUSHMA CHITNIS DESIGN ATED AS EXECUTIVE ASSISTANT TO THE CHAIRMAN, SHRI BLESSON OOMEN HAS BEEN DESIG NATED AS MANAGER CUM ACCOUNTS & FINANCE, SHRI AMITABH SHUKLA DESIGNATED AS AVID INCHARGE, SHRI VISHAL PUNJABI DESIGNATED AS PRODUCTION EXECUTIVE , AND SHRI RAJESH WANMALI DESIGNATED AS PRODUCTION ASSISTANT. THE REMAINI NG TERMS AND CONDITIONS IN THE CASE OF ALL THESE PERSONS WERE SAME. THUS, THE FACTS AND THE EVIDENCES BROUGHT BEFORE US CLEARLY ESTABLISH THAT THERE EXIS TED AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THESE PERSONS AND THE ASSESSEE AND THUS, THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S 192 BECAUSE THE REMUNE RATION PAID TO THEM CONSTITUTED SALARY. THE JUDGMENTS RELIED UPON BY THE LD. COUNSEL ARE NOT APPLICABLE ON THE FACTS OF THE CASE BEFORE US. THE SE JUDGMENTS WERE DELIVERED ON THE BASIS OF PECULIAR FACTS OF THOSE CASES AND W ERE BASED UPON THE CONTRACTS ENTERED IN THOSE CASES. THEREFORE, KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THIS CASE AS DISCUSSED ABOVE, THES E GROUNDS ARE REJECTED. 15. GROUNDS 5 & 6 WERE NOT PRESSED, THEREFORE THESE ARE DISMISSED AS SUCH. 16. GROUNDS 7 TO 10 AND GROUND 11 & 12 INVOLVE A COMMON ISSUE THAT ON THE 14 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 VARIOUS EXPENSES INCURRED BY THE ASSESSEE WHICH WER E PART OF POST PRODUCTION ACTIVITIES, THE ASSESSEE DEDUCTED TAX AT SOURCE U/S 194C TREATING THEM AS CONTRACTUAL WORK WHEREAS THE AO WAS OF THE OPINION THAT SERVICES RENDERED TO THE ASSESSEE BY THE PAYEES WERE PROFESSIONAL SERVIC ES, THEREFORE, ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE U/S 194J. LD. CIT(A) CONFIRMED THE ORDER OF THE AO ON THIS ISSUE. 17. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWER AUTHORITIES AND ALSO GONE THROUGH THE SUBMISSIONS MADE BY THE LD. C OUNSEL IN THIS REGARD. THE ASSESSEE HAS PAID PROCESSING CHARGES BY ADLABS FILM S PVT LTD AMOUNTING TO RS.34,93,624 WHICH INCLUDED A SUM OF RS.23,79,972 T OWARDS PRINT AND PROCESSING CHARGES FOR WHICH CREDIT WAS GIVEN TO TH E SAID PARTY. IT HAS BEEN SUBMITTED THAT TAKING OUT OF THE FINAL NEGATIVE OF THE FILMS DOES NOT INVOLVE RENDERING OF ANY TECHNICAL OR PROFESSIONAL SERVICES . THEREFORE, TDS IS REQUIRED TO BE DEDUCTED U/S 194C. IN ANY CASE, PRINTING AN D PROCESSING OF FILM IS A PART OF POST PRODUCTION ACTIVITY. THUS, TDS SHOULD BE D EDUCTED U/S 194C. SIMILARLY, THE ASSESSEE HAS PAID AMOUNT FOR DIGITAL MIXING, WH ICH IS ALSO PART OF POST PRODUCTION ACTIVITIES. 18. OUR ATTENTION WAS BROUGHT ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS YASHRAJ FILMS PVT LTD 160 ITD 626 (MUM) WHEREIN IT WAS HELD THAT TAKING OUT A FINAL NEGATIV E OF FILM DOES NOT INVOLVE ANY TECHNICAL OR PROFESSIONAL SERVICE, THEREFORE, TDS S HOULD BE DEDUCTED U/S 194C. OUR ATTENTION HAS ALSO BEEN BROUGHT ON THE FOLLOWIN G JUDGMENTS WHEREIN ALL POST PRODUCTION ACTIVITIES HAVE BEEN HELD COVERED W ITHIN THE DEFINITION OF WORK AS PROVIDED U/S 194C:- CIT V. PRASAR BHARATI [2007] 292 ITR 580 (DELHI H C) - THE HON'BLE DELHI HIGH COURT HELD THAT EXPLANATION (III) TO SEC . 194C WHICH WAS INTRODUCED ALONG WITH SEC. 194J IS VERY SPECIFIC IN ITS APPLICATION TO 15 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 NOT ONLY BROADCASTING AND TELECASTING BUT ALSO INCL UDES PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING AND TELECASTING. THE HIGH COURT HELD THAT WHEN THERE AR E TWO PROVISIONS ONE GENERAL AND ONE SPECIFIC, THE SPECIFIC ONE MANI FESTS THE INTENTION OF THE LEGISLATURE AND SHOULD BE FOLLOWED. NITIN M PANCHAMIYA V. ACIT [2012] 50 SOT 468 (MUMBAL) AS AFFIRMED BY CIT V. NITIN M PANCHAMIYA [2015] 228 TAXMAN 259 (BOMBAY HC)(MAG) - THE HON'BLE ITAT HELD THAT CINEMATOGRAPHIC FILMS CA N BE COVERED UNDER THE AMBIT OF 'PRODUCTIONS OF PROGR AMS FOR BROADCASTING AND TELECASTING' AND THAT THE PAYMENT MADE FOR PRODUCTION OF SUCH FILMS WOULD FALL FOR CONSIDERATI ON U/S 194C OF THE ACT (PG. 20 - CASE LAW PB 3). THE SAID GROUND W AS NOT APPEALED BY THE REVENUE BEFORE THE HON'BLE HIGH COURT AND HENCE CAN BE SAID TO HAVE BEEN ACCEPTED BY THE REVENUE. ACIT V. SAHARA ONE MEDIA & ENTERTAINMENT LTD. [2014 ] 41 TAXMANN.COM 488 (MUMBAI-TRIB) - DUBBING EXPENSES PRINT PROCESSING FEES ARE IN THE NATURE OF A PART OF PROD UCTION OF PROGRAMMES AND ARE COVERED U/S 194C ACIT V. ZEE ENTERTAINMENT ENTERPRISES LTD. [2014] 5 1 TAXMANN.COM 231 (MUMBAI - TRIB) -EQUIPMENT, LABOUR AND OPERATORS HI RED FOR PRODUCTION PURPOSES. CIT(A) ALSO EXAMINED THE ISSUE OF HIRING OF EQUIPMENT U/S 1941 OF THE ACT AND FOUND IN FAVOUR O F THE ASSESSEE. THE HON'BLE ITAT RENDERED A CONSIDERED OPINION THAT THE RE WAS NO ERROR IN THE CIT(A) ORDER. 19. WE HAVE GONE THROUGH THESE JUDGMENTS AND FIND THAT CASE OF THE ASSESSEE IS SQUARELY COVERED IN ITS FAVOUR. THE IM PUGNED EXPENSES INCURRED BY THE ASSESSEE ARE IN THE NATURE OF POST PRODUCTION A CTIVITIES. THEREFORE, THE ASSESSEE WAS OBLIGED TO DEDUCT TDS U/S 194C ONLY AN D NOT U/S 194J. AS A RESULT, THESE GROUNDS ARE ALLOWED. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. 21. NOW WE SHALL TAKE UP APPEAL FILED BY THE ASSESSEE I N ITA NO.92/MUM/2015 FOR A.Y. 2005-06 AGAINST THE ORDER O F THE CIT(A) DATED 01-10- 16 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 2014 PASSED AGAINST THE ORDER U/S 201(1) / 201(1A) R.W.S. 263 OF THE ACT DATED 30 TH JANUARY, 2014 FOR A.Y. 2005-06 ON THE FOLLOWING GR OUNDS:- 1. THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THAT THE PAYMENT OF RS. 8,46,838/- MADE TO VHQ SPTE LTD. WAS LIABLE TO DEDUCTION OF TA X U/S 194J AMOUNTING TO RS. 1,90,053/-, IGNORING BOTH THE SUBM ISSIONS MADE BY THE APPELLANT COMPANY AND ALSO THE FACT THA T THE RECIPIENT WAS A NON RESIDENT TO WHOM THE PROVISIONS OF SECTION 194J DO NOT APPLY. 2. WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO 1 A S STATED ABOVE, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIA TING THE FACT THAT AS PER THE PROVISION OF SECTION 194J, THE TAX WAS D EDUCTIBLE AT THE RATE OF 5% PLUS APPLICABLE SURCHARGE AND CESS AND THEREF ORE, THE TAX DEDUCTIBLE, IF ANY, U/S 194J AMOUNTED TO RS.47,508/ - AND NOT RS.1,90,053/- AS INCORRECTLY ASSESSED BY THE ASSESS ING OFFICER. 3.THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THAT T HE PAYMENT OF RS. 14,59,514/- MADE TO KBW LTD. WAS LIABLE DEDUCTI ON OF TAX U/S 194J AMOUNTING TO RS.81,874/-; IGNORING BOTH THE SU BMISSIONS MADE BY THE APPELLANT COMPANY AND THE FACT THAT THE RECIPIENT WAS A.NON RESIDENT TO WHOM THE PROVISIONS OF SECTIO N 194J DO NOT APPLY. 4. THE LEARNED CIT (A) HAS ERRED IN CONCLUDING THAT THE PAYMENT OF RS.2,80,000/- MADE TO JAI MAHAL PALACE HOTEL WAS LIABLE TO DEDUCTION OF TAX U/S 1941 AMOUNTING TO RS.61,832 /-; IGNORING THE SUBMISSIONS MADE BY THE APPELLANT COMPANY INCLUDING THE FACT THAT A PART OF THE AMOUNT WAS PAID FOR FOOD. 5. THE LEARNED CIT (A) HAS ERRED IN CONCLUDING THAT THE PAYMENT OF RS.1,69,146/- MADE TO HOTEL TEEJ WAS LIABLE TO DEDU CTION OF TAX U/S 194I AMOUNTING TO RS.37,956/-; IGNORING THE SUB MISSIONS MADE BY THE APPELLANT COMPANY INCLUDING THE FACT THAT A PART OF THE AMOUNT WAS PAID FOR FOOD. 6.THE LEARNED CIT (A) HAS ERRED IN CONCLUDING THAT THE PAYMENT OF RS.5,24,873/- MADE TO HOLIDAY INN HOTEL WAS LIABLE TO DEDUCTION OF TAX U/S 1941 AMOUNTING TO RS. 1,17,815/-: IGNORI NG THE SUBMISSIONS MADE BY THE APPELLANT COMPANY INCLUDING THE FACT THAT A 17 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 PART OF THE AMOUNT WAS PAID FOR FOOD. 7.THE LEARNED CIT (A) HAS ERRED IN CONCLUDING THAT THE PAYMENT OF RS.3,68,557/- MADE TO ROOP NIWAS PALACE HOTEL WAS L IABLE TO DEDUCTION OF TAX U/S 194I AMOUNTING TO RS.82,704/-; IGNORING THE SUBMISSIONS MADE BY THE APPELLANT COMPANY INCLUDING THE FACT THAT A PART OF THE AMOUNT WAS PAID FOR FOOD. 8.THE LEARNED CIT (A) HAS ERRED IN CONCLUDING THAT THE PAYMENT OF RS. 1,76,727/- MADE TO GRAND HOTEL WAS LIABLE TO DE DUCTION OF TAX U/S 1941 AMOUNTING TO RS.39,658/-; IGNORING THE SUBMISS IONS MADE BY THE APPELLANT COMPANY INCLUDING THE FACT'THAT A PAR T OF THE AMOUNT WAS PAID FOR FOOD. 9. THE LEARNED CIT (A) HAS ERRED IN CONCLUDING THAT TH E PAYMENT OF RS.3,12,933/- MADE TO ALFA PROPERTIES & INVESTMENT PVT. LTD. WAS LIABLE TO DEDUCTION OF TAX U/S 1941 AMOUNTING TO RS.70,223 /-; IGNORING THE SUBMISSIONS MADE BY THE APPELLANT COMPANY INCLUDING THE FACT THAT A PART OF THE AMOUNT WAS PAID FOR FOOD. 10.THE LEARNED CIT (A) HAS ERRED IN CONCLUDING THAT TH E PAYMENT OF RS.6,19,000/- MADE TO CROSS COUNTRY HOTEL WAS LIABL E TO DEDUCTION OF TAX U/S 1941 AMOUNTING TO RS.1,38,904/-; IGNORING T HE SUBMISSIONS MADE BY THE APPELLANT COMPANY INCLUDING THE FACT THAT A PART OF THE AMOUNT WAS PAID FOR FOOD. 22 . GROUNDS 1 & 2: THE BRIEF BACKGROUND OF THE ISSUE IS THAT DURING THE F.Y. 2004-05, THE ASSESSEE PAID A SUM OF RS.8,46,83 8/- TO M/S VHQ SINGAPORE WITHOUT DEDUCTING TAX ON THE SAME. THE AO WAS OF T HE OPINION THAT THIS AMOUNT WAS IN THE NATURE OF PROFESSIONAL FEE AND, T HEREFORE, ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THE APPLICABLE RATES. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE RECIPIENT COMPANY WAS LOCATED IN SINGAPORE AND IT DID NOT HAVE A PERMANENT ESTABLISHMENT (PE) IN INDIA. THE SAID COMPANY HAD RENDERED POST PRODUCTION SERVICES IN SINGAPORE FOR THE PURPOSE OF AN ADVERTISEMENT FILM AND THE WORK WAS EXECUTED WHOLLY OUTSIDE INDIA AND, 18 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 THEREFORE, THE ASSESSEE COMPANY WAS NOT LIABLE TO D EDUCT TDS ON THE SAME. HOWEVER, AO WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND WAS OF THE OPINION THAT SINCE PAYMENT WAS MADE FOR PROCESSING OF A FILM, ASSESSEE WAS LIABLE TO DEDUCT TAX U/S 194J AND ACCORDINGLY, HE H ELD THE ASSESSEE IN DEFAULT U/S 201 / 201(1A) OF THE ACT. DURING THE COURSE OF APPEAL BEFORE CIT(A), THE ASSESSEE SUBMITTED AS UNDER:- A PAYMENT OF RS.8,45,838/- WAS MADE TO VHQ SPTE LTD ., WHICH WAS A COMPANY LOCATED IN SINGAPORE. THE SAID COMPANY HAD NO PERMANENT ESTABLISHMENT IN INDIA. TH E AMOUNT WAS PAID TOWARDS STUDIO HIRE CHARGES IN SING APORE FOR POST PRODUCT/ON WORK FOR AN ADVERTISEMENT FILM PROD UCED BY THE APPELLANT COMPANY. AS PER THE PROVISIONS OF DTA A BETWEEN INDIA AND SINGAPORE , , THE APPELLANT COMPANY DID NOT DEDUCT ANY TAX ON THE PAYMENTS MADE TO THE VHQ SPTE LTD. AS IT HAD NO PERMANENT ESTABLISHMENT IN INDIA. IN THE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER DID NOT RAISE ANY DEMAND ON ACCOUNT OF TDS FOR THIS PAYMENT AS HE WAS CONVINCED FROM THE VERIFICATION OF BILLS/ VOUCHERS, THAT NO TAX WAS DE DUCTIBLE ON ACCOUNT OF THESE PAYMENTS. HOWEVER, WHILE COMPLETIN G THE ASSESSMENT U/S 201(1)1 201(1 A) R.W.S 263 OF THE IN COME TAX ACT, 1961, THE THEN ASSESSING OFFICER CONSIDERED THE PAY MENT TO THE PARTY LIABLE FOR DEDUCTION OF TAX U/S 194I. HE MEN TIONED THAT AS THE PAYMENT IS MADE FOR PROCESSING OF THE FILM, IT WAS LIABLE FOR DEDUCTION U/S 194J ATTRACTED FOR SUCH PAYMENTS. FUR THER, AS PER THE DTAA BETWEEN INDIA AND UK, AS THE PARTY DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA, IT WAS NOT LIABLE TO DEDUCTION OF TAX FOR THIS PAYMENT. IT MAY BE APPREC IATED FROM THE BILLS THAT THE SERVICES WERE RENDERED BY A NON- RESIDENT COMPANY TO WHICH THE DTAA BETWEEN THE TWO COUNTRIES APPLIES. FURTHER, EVEN AS PER THE CERTIFICATE ISSUE D IN ANNEXURE B BY A CHARTERED ACCOUNTANT, NO TAX WAS LI ABLE TO BE DEDUCTED ON THIS PAYMENT. IN LIGHT OF THE ABOVE SUB MISSIONS AND THE BILLS/ VOUCHERS SUBMITTED, WE REQUEST YOUR HONOUR TO DELETE THE DEMAND OF RS.81,878/- MADE ON AC OF THE PAYMENT TO KBW LTD. BY THE ASSESSING OFFICER AND OBLIGE. 23. HOWEVER, LD. CIT(A) DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE. IT 19 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 WAS HELD BY HIM THAT AMENDMENT WAS BROUGHT IN SECTI ON 9(1) WHEREIN IT WAS PROVIDED THAT SITUS OF RENDERING SERVICES WAS NOT RELEVANT IN DETERMIN ING THE TAXABILITY OF THE INCOME OF THE PAYEE U/S 9 OF THE ACT AS FAR AS PAYMENT ON ACCOUNT OF FTS WAS CONCERNED. IT WAS HELD THAT SER VICES RENDERED IN SINGAPORE FOR PRODUCTION OF ADVERTISEMENT FILM WAS USED IN IN DIA, THEREFORE, THE SAME WAS TAXABLE IN INDIA AND ACCORDINGLY THE ORDER OF T HE AO WAS UPHELD. 24. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSEL OF THE ASSESSEE VEHEMENTLY CONTESTED THIS ISSUE. THE ARGUMENTS MAD E BY HIM ARE SUMMARIZED AS UNDER:- 1. 'VHQ.' MERELY CARRIED OUT POST PRODUCTION ACTIVITY . IN THE PROCESS NO TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESS AS ENVISAGED BY ARTICLE 12 OF THE INDIA SIN GAPORE DTAA WAS MADE AVAILABLE TO THE APPELLANT. HENCE, THE TRA NSACTION CANNOT BE HELD TO BE A FEE FOR TECHNICAL SERVICES A S ENVISAGED BY ARTICLE 12 (4)(A) OF THE SAID DTAA. (PG. 60 - 61 - CASE LAW PB 3) 2. HENCE, AS PER THE INDIA SINGAPORE DTAA, THE FEES PA ID TO 'VHQ' WERE BUSINESS PROFITS AS PER ARTICLE 7 OF THE INDIA SINGAPORE DTAA AND COULD BE TAXED ONLY IN THE SINGAPORE AS 'V HQ' DID NOT CARRY OUT ANY BUSINESS VIA ANY PERMANENT ESTABLISHM ENT IN INDIA. (PG. 62 - CASE LAW PB 3) 3. IT IS A SETTLED POSITION OF LAW THAT IN CASE OF AN INTERNATIONAL TRANSACTION GOVERNED BY A DTAA, THE SPECIFIC PROVIS IONS OF THE DTAA SHALL OVERRIDE THE GENERAL PROVISIONS OF THE A CT. THIS IS AMPLY DEMONSTRATED BY CIRCULAR NO. 333 [F NO. 506/42/81-F TD] DATED 2-4- 1982 THAT STATES THAT 'WHERE A DOUBLE TAXATION AVOI DANCE AGREEMENT PROVIDES FOR A PARTICULAR MODE OF COMPUTA TION OF INCOME, THE SOME SHOULD BE FOLLOWED, IRRESPECTIVE O F THE PROVISIONS IN THE INCOME-TAX ACT. WHERE THERE IS NO SPECIFIC PROVISION IN THE AGREEMENT, IT IS BASIC LAW, I.E., THE INCOME-TAX ACT, THAT WILL GOVERN THE TAXATION OF INCOME.' THE CIRCULARS OF THE CBDT ARE BINDING UPON THE DEPARTMENT. RELIANCE PLACED UPON CIT V. HERO CYCLES PVT. LTD. [ 228 ITR 463 (SC), 20 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 K.P. VARGHESE V. ITO 131 ITR 597 (SC) AND UOL V. AZ ADI BACHAO ANDOLAN 263 ITR 706 (SC). 4. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T V. SIEMENS AKTIONGESELLSCHAFT [20091 310 ITR 320 (BORN) HELD T HAT WHERE THE PROVISIONS OF THE DTAA ARE MORE BENEFICIAL THAN PRO VISIONS OF THE ACT, THE PROVISIONS OF THE DTAA WOULD PREVAIL. 5. FOR ARTICLE 12 OF SINGAPORE - INDIA DTAA TO APPLY, TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESS N EEDS TO BE 'MADE AVAILABLE'. GENERALLY SPEAKING, TECHNOLOGY WO ULD BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRI NG THE SERVICE IS ENABLED TO APPLY THE TECHNOLOGY AS WAS A LSO HELD IN: MC. KINSEY & CO., INC. (PHILIPPINES) V. ADIT 99 ITD 549 (MUMBAI) ICICI BANK LTD. V. DIT 20 SOT 453 (MUMBAI) ANAPHARM INC., IN RE 305 ITR 394 (AAR) AS THE PAYMENT MADE TO 'VHQ' IS NOT TAXABLE IN INDI A, ASSESSEE CANNOT BE HELD TO BE AN ASSESSEE IN DEFAULT. 25. PER CONTRA, LD. DR VEHEMENTLY SUPPORTED THE ORDER O F THE LD. CIT(A) AND AO AND SUBMITTED THAT SINCE PAYMENT HAS BEEN MADE F OR THE WORK USED IN INDIA, THE ASSESSEE SHOULD DEDUCT TDS U/S 194J. 26. WE HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ORDERS PASSED BY THE LOWER AUTHORITIES. THE UNDISP UTED FACT IS THAT VHQ, I.E. THE RECIPIENT MERELY CARRIED OUT POST PRODUCTION AC TIVITIES. NOTHING HAS BEEN BROUGHT BEFORE US TO INDICATE OR SHOW THAT IN THE P ROCESS OF CARRYING OUT ANY WORK, WHETHER ANY TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESS WAS MADE AVAILABLE TO THE ASSESSEE. VHQ IS RESIDEN T OF SINGAPORE. THIS IS ALSO AN ADMITTED FACT THAT IT HAD NO PE IN INDIA. THIS AMOUNT COULD BE BROUGHT TO TAX IN INDIA ONLY SUBJECT TO THE PROVISIONS OF DOUB LE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND SINGAPORE. SINCE THIS ACTIVITY WAS NOT CARRIED OUT THROUGH ANY PE IN INDIA, IT CANNOT BE TAXED AS BUSINESS PROFIT OF VHQ UNDER 21 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 ARTICLE 7 OF INDIA SINGAPORE DTAA. THEREFORE, WE H AVE TO EXAMINE ITS TAXABILITY UNDER ARTICLE 12 OF INDIA SINGAPORE DTAA WHICH PROV IDES FOR TAXABILITY OF FEE FOR TECHNICAL SERVICES. IT HAS BEEN STIPULATED IN ARTICLE 12(4)(B) OF INDIA SINGAPORE DTAA THAT FEES FOR TECHNICAL SERVICES M EANS PAYMENT TO ANY PERSON IN CONSIDERATION FOR SERVICES OF MANAGERIAL, TECHNICAL OR CONSULTANCY NATURE FEE, IF SUCH SERVICES MAKE AVAILABLE TECHNIC AL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESS WHICH ENABLES THE PERSON AVAILING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN. IN THE FACTS OF THE CASE BEFORE US, VHQ HAS CARRIED OUT POST PRODUCTION JOB. IN THIS PROCESS, NO TECHNOLOGY OR SKILL HAS BEEN MADE AVAILABLE TO THE ASSESSEE. IN CASE ASSESSEE WOULD NEED SIMILAR JOB AGAIN, THEN HE WILL HAVE TO GO BACK TO VHQ TO GET THIS JOB DONE. NO REPLICATION OR REPETI TION IS POSSIBLE AT THE END OF THE ASSESSEE AT ITS OWN. THUS, THE REQUISITE MANDA TORY CONDITION OF MAKE AVAILABLE OF TECHNICAL KNOWLEDGE OR KNOW-HOW OR SK ILL IS MISSING IN THIS CASE. THEREFORE, IN OUR CONSIDERED OPINION, THIS AMOUNT C ANNOT E BROUGHT TO TAX AS FTS UNDER INDIA-SINGAPORE DTAA. THE JUDGMENTS RELI ED UPON BY THE LD. COUNSEL IN HIS SUBMISSIONS HAVE TAKEN SIMILAR VIEW. IT IS ALSO NOTED THAT AS PER PROVISIONS OF SECTION 90(2) OF THE ACT, MOST BENEFI CIAL PROVISION SHALL BE AVAILABLE TO THE ASSESSEE BETWEEN PROVISIONS OF THE ACT AND THE PROVISIONS OF THE DTAA. THEREFORE, WE FIND THAT THIS AMOUNT WAS NOT TAXABLE IN THE HANDS OF VHQ IN INDIA. THEREFORE, ASSESSEE WAS NOT OBLIGED TO DEDUCT TAX AT SOURCE ON THE PAYMENT MADE TO VHQ. AS A RESULT, THESE GROUND S ARE ALLOWED. 27. GROUND 3: IN THIS GROUND, IT WAS HELD BY THE AO THAT AMOUNT P AID BY THE ASSESSEE TO M/S KWB, UK FOR PROVIDING DANCERS, WHO HAD RENDERED SERVICES IN INDIA FOR ADVERTISEMENT FILMS USED IN INDIA WAS TAXABLE IN INDIA AND, THEREFORE, ASSESSEE WAS LIABLE TO DEDUCT TDS U/S 19 4J FOR PROFESSIONAL OR 22 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 TECHNICAL SERVICES. LIMITED PRAYER OF THE LD. COUN SEL BEFORE US IS THAT SINCE THE PAYMENT WAS MADE FOR PRODUCTION OF THE PROGRAMME FO R BROADCAST, THEREFORE, TDS SHOULD HAVE BEEN DEDUCTED U/S 194C AND NOT U/S 194J. 28. PER CONTRA, LD. DR DID NOT MAKE ANY OBJECTION TO TH IS. 29. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWER AUTHORITIES AND FIND THAT THE CONTENTION OF THE LD. COUNSEL THAT AM OUNT WAS PAID FOR PRODUCTION OF A PROGRAMME FOR BROADCAST IS FACTUALL Y CORRECT. THEREFORE, TDS WAS REQUIRED TO BE DEDUCTED U/S 194C IN VIEW OF THE SPECIFIC PROVISION CONTAINED IN SECTION 194C IN THIS REGARD. THEREFOR E, IT IS HELD THAT TDS SHOULD HAVE BEEN DEDUCTED U/S 194C AND NOT U/S 194J. ACCO RDINGLY, THIS GROUND IS PARTLY ALLOWED. 30. GROUNDS 4 TO 10: THESE GROUNDS DEAL WITH THE ISSUE OF NON-DEDUCTION OF TAX AT SOURCE ON THE HOTEL EXPENSES INCURRED BY THE ASSESSEE. IT WAS HELD BY THE AO THAT ASSESSEE SHOULD HAVE DEDUCTED TAX AT SO URCE U/S 194I FOR RENT OF HOTEL EXPENSES INCURRED DURING SHOOTING DONE AT VAR IOUS LOCATIONS. LD. CIT(A) AGREED WITH THE CONTENTION OF THE ASSESSEE PARTLY A ND HELD THAT BILLS FOR THE HOTEL EXPENSES ALSO INCLUDE EXPENSES ON ACCOUNT OF FOOD ON WHICH TDS SHOULD NOT BE MADE AND, THEREFORE, HE REDUCED THE AMOUNT O F FOOD EXPENSES FROM THE BILLS OF HOTELS AND ALSO IN THOSE CASES WHERE THE E XPENSES ON HOTEL STAY DID NOT EXCEED AGGREGATE AMOUNT OF RS.1,20,000/- AS PRESCRI BED U/S 194I. THEREFORE, HE PROVIDED RELIEF TO THE ASSESSEE. HOWEVER, FOR A LL THOSE HOTELS, WHERE THE STAY EXPENSES AFTER DEDUCTION OF THE FOOD EXPENSES WAS MORE THAN RS.1,20,000, IT WAS HELD BY HIM THAT TDS WAS REQUIR ED TO BE DEDUCTED U/S 194I ON THE WHOLE OF SUCH AMOUNT. 31. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE CBDT CIRCULAR NO.5 OF 2002 DATED 30-07-200 2 WHEREIN IT WAS CLARIFIED 23 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 THAT WHERE EARMARKED ROOMS ARE LET OUT FOR SPECIFIE D RATE AND SPECIFIED PERIOD, ONLY THEN, THEY WILL BE CONSTRUED TO BE ACCOMMODATI ON MADE AVAILABLE ON REGULAR BASIS WHEREAS THE FACTS OF THE ASSESSEES C ASE ARE THAT THERE WAS NO PRIOR CONTRACT WITH THE HOTELS. THE ROOMS WERE HIR ED ON AS AND WHEN AVAILABLE BASIS, CORRESPONDING TO THE DATE OF SHOOTING. THER E WAS NO CONTRACT FOR ANY SPECIFIC RATES OR PERIOD AND THUS TDS WAS NOT REQUI RED TO BE MADE U/S 194I. 32. WE HAVE GONE THOUGH THE ORDERS PASSED BY THE LOWER AUTHORITIES AND FACTS BROUGHT BEFORE US ON THE BASIS OF BILLS OF HO TELS AND OTHER EVIDENCES. IT IS NOTED THAT NOTHING HAS BEEN BROUGHT BEFORE US TO SH OW THAT ASSESSEE HAD ENTERED INTO ANY PRIOR CONTRACT WITH THE HOTELS FOR ANY SPECIFIC ROOM OR ROOMS FOR ANY SPECIFIC RATES OR ROOMS FOR ANY SPECIFIC PE RIOD. THE ROOMS WERE HIRED ON AS AND WHEN AVAILABLE BASIS AT THE REGULAR TARIF F RATES SUBJECT TO THE DISCOUNTS AS AGREED AT THE TIME OF BOOKING OF ROOMS . UNDER THESE CIRCUMSTANCES, THE ASSESSEE DESERVES TO BE GIVEN TH E BENEFIT OF THE CIRCULAR ISSUED BY THE BOARD PROVIDING THAT UNDER THESE CIRC UMSTANCES, TDS WILL NOT BE REQUIRED TO BE MADE U/S 194I. THEREFORE, IT IS HEL D THAT NO TDS WAS REQUIRED TO BE MADE IN THIS CASE. AS A RESULT, THESE GROUNDS A RE ALLOWED AND THIS APPEAL IS PARTLY ALLOWED. 33. NOW, WE SHALL TAKE UP APPEAL FILED BY THE ASSESSEE IN ITA NO.6656/MUM/2014 FOR A.Y.2006-07 AGAINST THE ORDER OF CIT(A) DATED 14-08- 2014 PASSED AGAINST THE ORDER U/S 201(1) OF THE ACT DATED 24-03-2011 ON THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT (A) ERRED IN UPHOLDING THAT THE FEES P AID TO VARIOUS PROFESSIONALS AS BEING LIABLE FOR DEDUCTION OF TAX U/S 192 OF THE ACT THOUGH THE APPELLANT COMPANY HAS RIGHTFULLY DEDUCTED THE APPROPRIATE TAX ON SUCH PAYMENTS U/S 194J OF THE ACT. 24 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 2. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GR OUND OF APPEAL, THE LEARNED CIT (A) ERRED IN UPHOLDING THAT THE SIX PROFESSIONALS NAMELY MR. SANJIV CHAWLA. MS. SHUSHMA CHITNIS, MR. B LESSON OORNRNEN, MR. AMITABH SHUKIA, MR. VISHAL PANJABI AND MR. RAJES H WANMALI HAD AN EMPLOYER- EMPLOYEE RELATIONSHIP WITH THE APPELLAN T COMPANY. 3. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GR OUND OF APPEAL, THE LEARNED CIT (A) ERRED IN NOT APPRECIATI NG THAT THE DEMAND OF RS. 7,33,978/- FOR ALLEGED SHORT DEDUCTION OF TAX (BEING THE DIFFERENCE OF TAX DEDUCTED AS BETWEEN PROVISIONS OF SEC 194J AND 192 OF THE ACT) AS MADE BY THE ASSESSING OFFICER IS ERRONEOUS AND HAD IN LAW. 4. WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL AS TA KEN BY APPELLANT, THE LEARNED CIT (A) ERRED IN UPHOLDING T HAT IN THIS PARTICULAR CIRCUMSTANCE WHERE THE SIX PROFESSIONALS HAVE PAID THEIR DUE TAXES, INTEREST U/S 201(A) WILL REMAIN CHARGEABLE TILL DAT E OF FILING OF RETURN BY THE PAYEE AND IN DIRECTING THE ASSESSING O FFICER TO RECOMPUTE THE SAME. 5. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER GR OUND OF APPEAL, THE LEARNED CIT (A) ERRED IN UPHOLDING THAT PAYMENT S MADE FOR VARIOUS ACTIVITIES OF POST PRODUCTION WORK AGGREGAT ING TO RS. 47,60,935/- WERE FEES FOR PROFESSIONAL OR TECHNICAL SERVICES AND LIABLE FOR DEDUCTION U/S194J AS OPPOSED TO CONTRACTS LIABL E FOR DEDUCTION U/S 194C AS ACTUALLY DEDUCTED BY THE APPELLANT. 6. ALTERNATIVELY AND WITHOUT PREJUDICE TO ANY OTHER G ROUND OF APPEAL, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE VA RIOUS ACTIVITIES OF POST PRODUCTION WORK (ANNEX-A) ARE MERELY WORK CONTRACTS WHICH DO NOT REQUIRE ANY PROFESSIONAL OR SPECIALIZED TECHNIC AL KNOWLEDGE AND HENCE ARE LIABLE FOR DEDUCTION U/S 194C. 7. WITHOUT PREJUDICE TO ANY OTHER GROUND OF APPEAL TAK EN BY APPELLANT, THE LEARNED CIT(A) ERRED IN UPHOLDING THAT IN THIS PARTICULAR CIRCUMSTANCE WHERE THE VARIOUS ENTITIES WHICH TOOK PART IN THE POST PRODUCTION PROCESS HAVE BEEN ASSESSED TO AND PAID T HEIR DUE TAXES, INTEREST U/S 201(A) WILL REMAIN CHARGEABLE TILL DAT E OF FILING OF RETURN BY THE RESPECTIVE PAYEES AND IN DIRECTING THE ASSES SING OFFICER TO RECOMPUTED THE SAME. 34. GROUNDS 1 TO 4 : THESE GROUNDS PERTAIN TO DEDUCTION OF TAX AT SOUR CE ON THE 25 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 AMOUNT PAID TO PROFESSIONALS ENGAGED BY THE ASSESSE E WHERE TAX WAS DEDUCTED U/S 194J WHEREAS THE AO WAS OF THE OPINION THAT THESE P ERSONS WERE EMPLOYEES OF THE ASSESSEE AND THEREFORE, TDS SHOULD HAVE BEEN DEDUCT ED U/S 192 OF THE ACT. DURING THE COURSE OF HEARING, IT WAS JOINTLY STATED THAT T HESE GROUNDS ARE IDENTICAL TO GROUNDS 1 TO 4 OF ITA NO.6655/MUM/2014. FACTS AND LEGAL PO SITION REMAIN THE SAME. THEREFORE, FOLLOWING OUR ORDER IN APPEAL IN ITA NO. 6655/MUM/2014, THESE GROUNDS ARE DECIDED AGAINST THE ASSESSEE. 35. GROUNDS 5 TO 7: THESE GROUNDS DEAL WITH THE ISSUE OF REQUIREMENT OF DEDUCTION OF TAX U/S 194C VS 194J ON BEHALF OF PROD UCTION EXPENSES. IT HAS ALREADY BEEN HELD IN ITA NO. 6655/MUM/2014 THAT TDS IS REQU IRED TO BE DEDUCTED ON THESE EXPENSES U/S 194C AND NOT U/S 194J. THEREFORE, FOL LOWING OUR ORDER, THESE GROUNDS ARE ALLOWED IN FAVOUR OF THE ASSESSEE. 36. AS A RESULT, THIS APPEAL IS PARTLY ALLOWED. 37. APPEALS IN ITA NO.93/MUM/2015 FOR A.Y. 2006-07 AND ITA NO.6657/MUM/2014 FOR A.Y. 2007-08 INVOLVE IDENTICAL GROUNDS WHICH HAVE ALREADY BEEN DECIDED IN AFORESAID APPEALS. THE AO IS DIREC TED TO FOLLOW OUR ORDER OF AFORESAID APPEALS WHICH SHALL APPLY MUTATIS MUTANDIS ON THE GROUNDS RAISED IN THIS APPEAL ALSO. 38. IN THE RESULT, ALL THE APPEALS ARE PARTLY ALLOWED I N TERMS OF OUR DIRECTIONS CONTAINED IN THE ORDERS PASSED IN THE AFORESAID APP EALS. 39. ORDER PRONOUNCED IN THE COURT ON THIS 28 TH DAY OF FEBRUARY, 2017. SD/- SD/- (D.T. GARASIA) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 28TH FEBRUARY, 2017 26 ITA 6655-6657/MUM/2014 ITA 92 & 93/MUM/23015 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , H-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES