ORIENT CABLES, MUMBAI V. DCIT 12(3), MUMBAI

ITA 6665/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4960 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND RAJENDRA (AM) . . , , ./I.T.A. NO.6665/MUM/2011 ( / ASSESSMENT YEAR:2008-09) M/S ORIENT CABLES EROS CINEMA BUILDING, J.TATA ROAD, MUMBAI-400020 / VS. DY.COMMISSIONER OF INCOME TAX -12(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( & / APPELLANT) .. ( ' & / RESPONDENT) ./ ./PAN/GIR NO. : AAAFO0492L & / APPELLANT BY : SHRI NITESH S JOSHI ' & * /RESPONDENT : SHRI PRADEEP KUMAR SINGH * - / DATE OF HEARING : 22.8.2013 * - /DATE OF PRONOUNCEMENT : 22.8.2013 / O R D E R PER B.R.MITTAL, JM: THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2008-09 AGAINST ORDER DATED 8.7.2011 OF LD CIT(A)-XXIII, MUMBAI IN WHICH IT HAS RAISED THE ISSUE OF CONFIRMING AN ADDITION U/S 40A(IA) IN RESPECT OF NON-DEDUCTIN G OF TDS IN RESPECT OF CABLE CONNECTION FEED CHARGES PAYABLE. 2. RELEVANT FACT OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN DECLARING TOTAL INCOME OF RS.11,11,660/- ON 30.9.2003. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS PAID CABLE CONNECTIO N FEED CHARGES TO THE TUNE OF RS.26,38,536/-. AO ASKED THE ASSESSEE WHETHER TDS W AS DEDUCED ON THE CABLE CONNECTION FEED CHARGES AND TO FURNISH THE SAME FOR VERIFICATION. IN REPLY, VIDE LETTER DATED 14.12.2010 THE ASSESSEE CONTENDED THAT TDS PROVISIONS ARE NOT APPLICABLE TO THE PAYMENT OF CABLE CONNECTION FEED CHARGES AS THESE P AYMENTS ARE NOT MADE TO THE CONTRACTORS NOR DO THEY MANUFACTURE ANY THING. THE ASSESSEE FURTHER CONTENDED THAT THIS IS ONLY AKIN TO LOCAL DISTRIBUTION AND THEREFO RE THE ARRANGEMENT BETWEEN THE I.T.A. NO.6665/MUM/2011 2 ASSESSEE AND THE CABLE OPERATOR ARE ESSENTIALLY IN THE NATURE OF SUPPLIERS OF SIGNAL. THE ASSESSEE CONTENDED THAT THERE IS NO CONTRACTUAL RE LATIONSHIP BETWEEN MULTISYSTEM OPERATOR (MSO) AND CABLE OPERATORS (CO). THEREFORE , TDS PROVISIONS OF SECTION 194C OF THE INCOME TAX ACT, 1961 (THE ACT) ARE NOT APPL ICABLE TO THE PAYMENTS MADE BY THE ASSESSEE. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE CONTRACT CAN BE EITHER WRITTEN OR ORAL; THAT T HESE ARE IN THE NATURE OF SUPPLY OF SIGNALS IS NOT CORRECT BECAUSE THESE ARE NOT GOVER NED BY ANY PURCHASE AND SALES TRANSACTIONS OF ANY TANGIBLE ITEMS. THE PAYMENTS M ADE BY THE ASSESSEE ARE ESSENTIALLY BASED ON THE CONTRACTUAL UNDERSTANDING BETWEEN MSO AND CO. CABLES CONNECTION FEED CHARGES CANNOT BE CONSTRUED AS THE SUPPLY BY SALES AND CABLE CONNECTION FEED CHARGES ARE THEREFORE CERTAINLY ATTRACT IN THE PROVISIONS O F SECTION 194C OF THE ACT. IN VIEW OF ABOVE, THE AO WAS OF THE VIEW THAT ASSESSEE FAILED TO DEDUCT TDS ON RS.26,38,536/- U/S 194C. ACCORDINGLY, HE DISALLOWED A SUM OF RS. 26,38,536/- U/S 40(A)(IA) R.W.S.194C OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE A UTHORITY. 3. BEFORE THE LD. CIT(A), ASSESSEE REITERATED THE S AME SUBMISSIONS AS MADE BEFORE THE AO AND SUBMITTED THAT THE RELATIONSHIP BETWEE N THE MSO AND CO WAS THAT OF PRINCIPAL TO PRINCIPAL BASIS AND NOT THAT OF CONTR ACTOR-CONTRACTEE. THE STANDARD TECHNICAL AND INTERCONNECTION AGREEMENT ACCOUNTING AND ADMINISTRATIVE DUTIES. THUS, THE PAYMENT DOES NOT FORM UNDER THE PROVISIONS OF S ECTION 194C OF THE ACT. IT IS FURTHER SUBMITTED THAT DISALLOWANCE SHOULD BE REST RICTED TO RS.14,88,536/- AS THE TAX OF RS.26,059/- WAS DEDUCTED U/S 194C OF THE ACT ON ACT UAL PAYMENTS OF RS.11,50,000/- MADE BY THE ASSESSEE TO MSO AND PAID INTO THE GOVE RNMENT TREASURY DURING THE SAME FINANCIAL YEAR. COPY OF THE SAME WAS ALSO SUBMITTED TO THE AO. 4. THE LD. CIT(A), AFTER CONSIDERING THE MATERIALS AVAILABLE BEFORE HIM, HELD THAT STANDARD TECHNICAL AND INTERCONNECTION AGREEMENT CL EARLY STATES THAT THE MSO SHALL MAKE AVAILABLE CHANNELS TO THE AFFILIATE WHICH IS DEFINED UNDER THE PROVISIONS OF SERVICE AND WOULD FALL UNDER THE DEFINITION OF WORK. ACCO RDINGLY, HE HELD THAT AO IS RIGHT IN INVOKING THE PROVISIONS OF SECTION 194C R.W.S.40(A) (IA) OF THE ACT. HENCE, HE CONFIRMED THE ACTION OF THE AO. HE FURTHER DIRECTED THE AO TO VERIFY THE FACTS OF PAYMENT OF TAX OF RS.26,059/- ON ACTUAL PAYMENT OF RS.11,50,000/- CLAIMED BY THE ASSESSEE AND AFTER VERIFICATION OF FACT ALLOW THE RELIEF TO THE ASSESS EE AS PER LAW. HENCE, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. I.T.A. NO.6665/MUM/2011 3 5. AT THE TIME OF HEARING, LD. AR VIDE LETTER DAT ED 22.8.2013 SUBMITTED THAT THE ASSESSEE HAS MADE PAYMENT TO HATHWAY CABLE WHICH HAS INCLUDED IN THEIR TAX RETURN. A COPY OF LETTER DATED 12.9.2012 ISSUED BY HATHWAY MEDIA VISION PVT. LTD. IS ON RECORD SHOWING THAT THE PAYEE HAS PAID RS.26,83,560/-. 6. LD.DR SUBMITTED THAT THIS IS AN ADDITIONAL EVIDE NCE FILED BEFORE THE TRIBUNAL AND NEEDS VERIFICATION AT THE LEVEL OF AO. 7. AFTER HEARING LD. REPRESENTATIVES OF THE PARTIE S AND PERUSAL OF CERTIFICATE PROPOSED TO BE FILED BEFORE US, WE FIND THAT THIS CERTIFICATE WAS NOT AVAILABLE WITH THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. HE NCE, WE TAKE THE SAME ON RECORD. HOWEVER, IT NEEDS VERIFICATION. ACCORDINGLY, WE SE T ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THIS MATTER TO THE FILE OF AO TO DECID E THE ISSUE AFRESH AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND CONS IDERING THE EVIDENCES AS MAY BE FILED BEFORE HIM, AS PER LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND AUG, 2013 * SD SD ( /RAJENDRA ) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 3 DATED 22/ 08/2013 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. & / THE APPELLANT 2. ' & / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- CONCERNED 4. 4 / CIT CONCERNED 5. 5 '7 , - 7 , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) - 7 , /ITAT, MUMBAI