MUKESH MALHOTRA ,SHIMLA vs. INCOME TAX OFFICER, WARD-1, SHIMLA, SHIMLA

Briefly the facts of the case are that the assessee filed its original return of income for the Assessment Year 2009-10 declaring an income of Rs. 6,89,275/-, thereafter the case of the assessee was reopened under section 147 of the Income Tax Act, 1961, by issuing a notice under section 148 dated 26.06.2015. In response, the assessee submitted that the original return filed may be treated as the return filed in response to the notice under section 148.In addition to hotel business and other sources of income, assessee derives income from operation cable TV networks and has entered into various agreements for the purchase of cable TV network. The assessee has made payments to various pay channels for telecasting their programmes in and around Shimla.

1 Accordingly order u/s 143(3)/147 was completed on 26.12.2016 and determined the assessed income at Rs. 51,02,943/- after making addition of Rs. 37,25,543/- u/s 40(a)(ia) of the Act in respect of payment made to the various TV Channels without deduction the TDS and Rs. 6,88,125/- us/ 40(a)(ia) of the Act in respect of failure to deduct tax u/s 194H of the Act.

2 The assessee has engaged in the business of running Cable TV Network in the state of Himachal Pradesh. During the year assessee has paid as sum of Rs. 95,72,571/- to various TV Channels on account of pay subscription. The assessee was apprised that payment to various TV Pay Channels falls within the provision of section 194C of Act and during the assessment proceedings the AO issued show cause notice to the assessee and asked as to why TDS as required u/s 194C of the Act was not deducted on the payments to various pay channels. During assessment proceedings the assesseefiled details in respect of the parties to whom subscriptions payment are made after deduction of tax at source and payments made without deduction of Tax at source. ITA No. 825/Chd/2024 3

3 During the course of assessment proceedings, the AO noticed that the assesseewas liable to deduct tax at source on all payments made to various TV Channels.However the assessee has deducted tax at source on payments of Rs. 57,04,144/-only had fails to deduct tax on balance Rs. 37,25,543/- from the following parties: Sl. No. Name of the parties Total payment Amount of payment subject to TDS Balance on which TDS was not deducted 1. MSM Discovery Pvt. Ltd. 2630065 1324830 TDS- 38434 1305235 2. ESPN Software India Pvt. Ltd. 1237315 865000 TDS- 19572 372315 3. Zee Turner Ltd. 2753988 1698296 TDS- 1724 37370 4. UTV Global Broadcasting Ltd. 113370 76000 TDS- 1724 37370 5. Star Den Media Services Pvt. Ltd. 2635947 1681016 TDS- 38093 954931 6. INX Media Pvt. Ltd. 11818 12000 TDS-272 NIL 7. Mega Research Distribution (India) Pvt. Ltd. 47184 1200 TDS-272 Nil

4 The submissions filed by the assessee were considered but not accepted to the AO. Therefore, the Assessing Officer (AO) passed an order under section 143(3)/147 dated 26.12.2016, making the following disallowances:

Against the order of the AO the assessee went in appeal before the Ld. CIT(A) who has since sustained the order of the AO. ITA No. 825/Chd/2024 4

Feeling aggrieved by the order of the Ld. CIT(A) the assessee is in appeal before us and has raised the following grounds:

2 On perusal of the records, it is seen that order u/s 154 of the Act was passed on 09.05.2017 for AY 2009-10. On perusal of the order passed us/ 154 of the Act, it is seen that at the time of original assessment, it was noticed that assesse has made payment to 07 parties as pay channels amounting to Rs. 94,29,687/- out of which payments on which TDS was made were Rs. 57,04,114/- and balance Rs. 3,72,25,543/- were disallowed u/s 40(a)(ia) of the act. During the rectification proceedings, the appellant had furnished certificate only of two parties namely M/s. MSM Discovery (P) Ltd. And M/s. Stare Den Media Services as against 07 parties before AO. Therefore, total amount of Rs. 15,38,827/- was given relief while passing the order u/s 154 of the Act dated 09.05.2017. 5.3 During the appellate proceedings, the appellant has furnished copy of form 26A in the following parties in which payment was made to the appellant.

4 During the appellate proceedings, the appellant has furnished Form 26A but the appellant has not furnished any computation details in whether that revenue received from appellant has been offered in their ITRs or not? The appellant has not produced any computation sheet for the same. Hence, in absence of the complete details the addition made by the AO is hereby confirmed and ground of appeal no. 01 raised by the appellant is hereby rejected.

1 It was contended by the Ld. AR despite the assessee filed the requisite Form 26A of the M/s Zee Turner Ltd., M/s ESPN Software India Pvt. Ltd. and M/s UTV Global Broadcasting Ltd. the Ld. CIT(A) has not deleted the disallowance made on account of alleged non deduction of taxes while making the payment to these concerns. It was submitted that once the Form 26A has been filed by the Asessee in the appellate proceedings it was incumbent upon the Ld. CIT(A) to grant the relief to the assessee. 6.2 The Ld. AR also argued that the Ld. CIT(A) erred in sustaining the disallowance under section 40(a)(ia) despite the submission of Form 26A, which proves that the deductees had paid the taxes.The Ld. AR has relied on the second proviso to section 40(a)(ia) of the Act which has been inserted by the Finance Act, 2012 w.e.f. 1.4.2013, which reads as under:- “Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of Section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso”

3 The Ld. AR has finally relied upon the decision of the Coordinate Chandigarh Bench of the Tribunal in the case of M/s Kurukshetra Darpan (P) Ltd, Kurukshetra v Addl CIT, in ITA No. 877/Chd/2008 dated 16.11.2015, whereby that the Coordinate Bench of the Tribunal while relying upon the decision of the Hon'ble Delhi High Court in the case of CIT v Ansal Landmark Township (P) Ltd in ITA No. 160/161 of 2015, vide its order dt. 26.8.2015. 7. Per contra, the Ld. DR relied on the order passed by the Ld. CIT(A). ITA No. 825/Chd/2024 6

We have heard the rival contention and perused the material available on the record. In the present case we find that the assessee had furnished Form 26A for the deductees, namely M/s. Zee Turner Ltd., M/s. ESPN Software India Pvt. Ltd., and M/s. UTV Global Broadcasting Ltd., which proves that the taxes had been deposited by the deductees. We also rely upon the judgement of Hon’ble Delhi High Court in case of CIT vs. Ansal Landmark Township (P) Ltd. (supra), wherein it was held as under: “4. In the above judgment, the Hon'ble Delhi High Court has held that that the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and should be given retrospective effect from 1st April 2005 being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. In the above decision the Hon’ble High Court has categorically held that no doubt, there is a mandatory requirement under Section 201 to deduct tax at source under certain contingencies, but the intention of the legislature is not to treat the Assessee as a person in default subject to the fulfillment of the conditions as stipulated in the first proviso to Section 201(1) of the Act. The first proviso to Section 201 (1) of the Act was inserted with effect from Ist July 2012. 5. The Hon'ble Delhi High Court has held that insertion of the second proviso to section 40(a)(ia) is also required to be viewed in the same manner. According to Hon'ble Delhi High Court this again is a proviso intended to benefit the assessee. The Hon’ble High Court ruled that the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and should be given retrospective effect from 1st April 2005. Respectfully following the judgement of the Hon'ble High Court, we delete the addition made by the Assessing officer and confirmed by the Ld. CIT(A).”

2 The assessee has provided the certificate of deposit of tax by (a) M/s. Zee Turner Ltd.(b) M/s. ESPN Software India Pvt. Ltd. and (c) M/s. UTV Global Broadcasting Ltd., before the Ld. CIT (A), however for the reason mentioned hereinabove benefit had not been granted by the Ld. CIT(A) by exercising his power under section 252 & 253 of the Act. 8.3 In the light of above we deem it appropriate to remand back the matter to the file of the AO with direction to verity whether the Form 26A has been issued by these parties or not, and in case, the AO found that the Form 26A has been issued by the parties then the consequential benefit shall be pass on to the assessee and no disallowance shall be made in the hands of the assessee. Needless to say the above said exercise shall be carried out by AO after affording the opportunity to assessee and following the principle of natural justice. 9. In light of the above the Ground No. 1 is allowed for statistical purposes. 10. With respect to other ground the Ld. AR did not vehemently argued has stated that the issue may be decided in accordance with law. 11. Ld. DR supported the order of the Ld. CIT(A). 12. We have heard the rival contention and perused the material available on record. The order passed by the Ld. CIT(A) is speaking order and has given valid reason therefore we find the same reasoning is require to be applied and accordingly following the same reasoning we dismiss this ground of appeal of the assessee. 13. In the result, appeal of the assessee is partly allowed.

Both the parties fairly submitted that the facts and circumstances of other appeals i.e; ITA No. 822/Chd/2024, 823/Chd/2024, 825/Chd/2024 & 824/Chd/2024 are exactly identical to the Appeal in ITA No. 821/Chd/2024 for A.Y. 2009-10 and similar contentions raised therein may be considered, therefore, our findings and directions ITA No. 825/Chd/2024 8

अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकरआयुƅ/ CIT 4. आयकरआयुƅ (अपील)/ The CIT(A) 5. िवभागीयŮितिनिध, आयकरअपीलीयआिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊफाईल/ Guard File