ACIT 16(1), MUMBAI vs. UTV ENTERTAINMENT TELEVISION LTD, MUMBAI

4. 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 disallowance u/s. 40(a)(ia) placing reliance on the decision of Calcutta High Court dated 10.12.2012 in CIT Vs S.K.Tekriwal [2014] without appreciating that the Honfale Kerala 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 decided the issue in favour of the Department after discussing in detail the judgment in the case of CIT Vs S.K.Tekriwal (supra).

5. 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 disallowance of commission payments without appreciating that the assessee has failed to submit any supporting details at the time of assessment proceedings and the purpose of such payments and its business exigencies were never proved by the assessee.

6. The appellant prays that the order of the Ld.CIT(A) on the above grounds be set-aside and that of the Assessing Officer be restored.”

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., 3. Ground Nos. 1, 2 and 4 relates to disallowance made u/s. 40(a)(ia) of the Act for non-deduction of TDS under the provisions of section 194J of the Act in respect of 'Carriage Fees/Channel Placement fees'.

4. Briefly stated the facts are that, during the assessment year under consideration assessee paid 'Carriage Fees/Channel Placement fees' by deducting TDS @2% u/s. 194C of the Act. However, Assessing Officer was of the view that 'Carriage Fees/Channel Placement fees' paid by the assessee is in the nature of royalty and therefore assessee should have deducted TDS under the provisions of section 194J of the Act. Accordingly, the Assessing Officer invoking provisions of section 40(a)(ia) r.w.s. 194J of the Act and disallowed 'Carriage Fees/Channel Placement fees' while computing the income of the assessee. Assessee carried the matter before the Ld.CIT(A) and the Ld.CIT(A) following the order of the Tribunal in assessee’s own case in ITA.Nos. 2699, 4204, 4205 & 2700/MUM/2012 dated 29.10.2014 wherein the Tribunal held that 'Carriage Fees/Channel Placement fees' comes under the ambit of provisions of section 194C of the Act and not u/s. 194H of the Act, deleted the disallowance made u/s. 40(a)(ia) of the Act.

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., 5. Ld. DR vehemently supported the orders of the Assessing Officer and the Ld. Counsel for the assessee placed reliance on the order of the Tribunal in assessee’s own case and supports the order of the Ld.CIT(A).

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., & Haryana while dealing with an identical question has held in para 13 to 18 as under: - “13. After hearing learned counsel for the parties, we are of the view that the contentions of the counsel for the appellant are liable to be rejected. Sec. 194C of the Act creates an obligation on a person responsible for paying any sum specifled therein to a person for carrying out any work, to deduct the tax at source.' Presently, we are concerned with the work' as referred to in cl(b) of Expln. III below s.194C(2)of the Act.

18. For the reasons recorded above. we have no hesitation in concluding that the Tribunal was correct in holding that the assessee was required to deduct tax at source in terms of s. 194C of the Act on payments made to the licensor for obtaining TV signals. cable TV network owned by the assessee.” 7. Thus after examination of the Explanation III to the then section 194C, the Hon'ble High Court held that the payment for obtaining the telecast licenses from the licensor falls under the provisions of section 194C. We find that the work of broadcasting/telecasting including production of programme or such broadcasting or telecasting falls under the definition of “work” as provided under clause (iv) of the Explanation to section 194C which reads as under:- “Explanation - For the purpose of this section – ********************************* ********************************* (iv) “work” shall include- (a) Advertising; (A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., (b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting (c) Carriage of goods or passengers by any mode of transport other than by railways; (d) Catering; (e) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, But does not include manufacturing or supplying a product according to the requirement of specification of a customer by using material purchased from a person, other than such customer.]”

“We are unable to agree with this submission. We observe that Explanation III, which was introduced simultaneously with section 194J, is very specific in its application to not only broadcasting and telecasting but also include "production of programmes for such broadcasting and telecasting". If, 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. It is not, therefore, possible to accept the contention of the Revenue that programmes produced for television, including "commissioned programmes", will fall outside the realm of section 194C, Explanation III of the Act. We find no infirmity in the view taken by the Income-tax Appellate Tribunal which we hereby affirm.

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., “1261. Payment of any sum shall be liable for deduction of tax only under one section . It has been brought to the notice of the Board that in some cases persons responsible for deducting tax at source are deducting such tax by applying more than one provision for the same payment. In particular, it has been pointed out that the sums paid for carrying out work of advertising are being subjected to deduction of tax at source under section 194C as payment for work contract as also under section 1941 as payments of fees for professional services.

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., Ltd., v. DCIT in ITA.Nos. 170 & 171/Mum/2019 dated 17.09.2020. Thus, we do not see any infirmity in the order passed by the Ld.CIT(A). Grounds raised by the revenue on this issue are dismissed.

8. Ground No. 3 of grounds of appeal is relating to deleting the disallowance made u/s. 40(a)(ia) of the Act in respect of editing expenses. The Assessing Officer while completing the assessment noticed that assessee has debited ₹.8,20,650/- under the head editing expenses on which TDS was deducted @2% u/s. 194C of the Act. However, the Assessing Officer was of the view that assessee should have deducted TDS @10% as applicable for professional fees u/s. 194J and not as contract u/s. 194C. Therefore, since the assessee has deducted TDS @2% u/s. 194C instead u/s. 194J @10%, the amount debited by the assessee towards editing charges was disallowed u/s. 40(a)(ia) of the Act.

9. On appeal Ld.CIT(A) following the decision of the Hon'ble Calcutta High Court in the case of S.K. Tekriwal and the decision of the Coordinate Bench in the case of Chandanbhoy & Jassobhoy [49 SOT 448 (Mum. Trib.) deleted the disallowance u/s. 40(a)(ia) of the Act, as it was held that no disallowance can be made u/s. 40(a)(ia) of the Act in respect of short

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., deduction and provisions of section 40(a)(ia) of the Act applies only for non-deduction of TDS.

10. Ld. DR vehemently supported the orders of the Assessing Officer and the Ld. Counsel for the assessee submits that this issue is decided by the Hon'ble High Court in favour of the assessee as observed by the Ld.CIT(A) in Para No. 5.1 and he placed reliance on the order of the Ld.CIT(A).

8. In the case of ACIT v. M/s. TV 18 Home shopping Network Ltd., in ITA.Nos. 4725 & 4726/Mum/2018 dated 19.02.2020 the Coordinate Bench of the Tribunal held as under: - “2. Briefly stated the facts are that during these two assessment years the assessee incurred expenses towards channel placement fees on which assessee deducted TDS @2% as per provisions of section 194C of the Act. However, the Assessing Officer was of the view that these expenses were in the nature of “Royalty” and TDS is liable to be deducted @10% u/s. 194J of the Act. The assessee was required to explain as to why the provisions of section 194J are not applicable. The assessee has submitted a detailed reply as to non-applicability of why the provisions of section u/s.194J of the Act. The assessee also contended that no disallowance U/s.40(a)(ia) of the Act should be made for short deduction of TDS. Not convinced with the reply filed by the assessee the Assessing Officer disallowed channel placement fees of ₹.10,20,88,270/- and ₹.8,40,82,020/- for the A.Ys. 2013-14 & 2014-15 respectively u/s. 40(a)(ia) of the Act treating these payments as Royalty. 3 On appeal the Ld.CIT(A) following the decision of the Mumbai Bench in the case of DCT v. Cox & Kings (I) Ltd & Anr [160 DTR 201] and Dish TV Indai Ltd v. ACIT [159 DTR 257] deleted the disallowance made u/s.40(a)(ia) of the Act. In these decisions the Coordinate Bench held that when there is a short deduction of TDS there cannot be any disallowance u/s.40(a)(ia) of the Act.

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., Thompson Associated Pvt. Ltd., (supra) Coordinate Bench observed as under: - “5. We have heard the rival contentions and perused the orders of the authorities below and the decision of the Co-ordinate Bench in assessee’s own case for Assessment Years 2008-09 and 2009-10. The Co-ordinate Bench for the Assessment Year 2009-10 in dated 19.02.2016 considered similar issue and held that provisions of Sec. 40(a)(ia) have no application when there is short deduction of tax observing as under: “We have heard the rival submissions and perused the material before us. We find that the Hon’ble Kerala High Court in the case of P V S Memorial Hospital(supra), has held that deduction of TDS under wrong provision of law will not save assessee from disallowance u/s. 40(a)(ia)of the Act. However, the Kolkata High Court in the matter of Samir Tekriwal(supra), has held that expenses are not liable to be disallowed u/s.40(a)(ia)on account of short deduction of tax. The Hon’ble jurisdictional High Court has not decided the issue. Thus, we are faced with two diagonally opposite views about applicability of the provisions of section 40 (a)(ia)of the Act. We find that the Hon’ble Bombay High Court has in the case of Ashok Kumar Parekh (186 IT R212)has dealt with the binding precedence of the High Court judgments.Here,we would also like to reproduce the a portion of the judgment delivered by the Hon’ble Bombay High Court in the case of Siemens India Ltd.(156ITR11) and same reads as under : “So far as the legal position is concerned, the ITO would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is (functioning), irrespective of the pendency of any appeal or special leave application against that judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision would be to cause grave prejudice to the assessee. Where there is a conflict between different High Courts, he must follow the decision of the High Court within whose jurisdiction he is (functioning), but if the conflict is between decisions of other High Courts, he must take the view which is in favour of the assessee and not against him. Similarly, if the Tribunal has decided a point in favour of the assessee, he cannot ignore that decision and take a contrary view, because that would equally prejudice the assessee.”

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., Considering the above, we are taking the view which is in favour of the assessee. We are following the judgment of Samir Tekriwal (supra)of the Hon’ble Kolkata High Court as well as the orders of the Mumbai Tribunal delivered by it for the earlier years. Effective ground of appeal is decide against the AO.” Respectfully following the said order, we uphold the order of the Ld. CIT(A) on this issue and dismiss the Revenue’s appeal.”

6. Similarly, in the case of ACIT v. M/s. UBJ Brodcasting Pvt. Ltd., (supra) the Coordinate Bench held as under: - “5. We have carefully considered the submissions and material on record including the decisions cited before us. The undisputed position that emerges is that the assessee has suffered impugned disallowance u/s 40(a)(ia) for want of deduction of tax at source at higher rate i.e. 10%. It is undisputed fact that the assessee has deducted tax @2% and the additions have been made for short- deduction of tax as per Section 40(a)(ia). We find that the facts of the present case are squarely covered by the cited decision of this Tribunal rendered in ACIT Vs. M/s T.V.Vision Ltd. [supra] wherein the co-ordinate bench, after considering various decisions, decided the issue in assessee’s favor, in the following manner:-

7. We notice that the Ld. CIT(A) has deleted the disallowance in question holding that carriage fees does not come within the ambit of the definition of Royalty. Therefore, the assessee was not required to deduct the tax at source u/s 194J. Further the Ld. CIT(A) has held that 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 decision of the Hon’ble Calcutta High Court rendered in CIT vs S. K. Tekriwal 48 SOT 515 and the decisions of coordinate Bench of the Tribunal in the cases of CIT vs M/s Star Den Media Services pvt .Ltd( and Chandabhoy & Jassobhoy vs DCIT 49 SOT 448 (Mumbai ITAT). As pointed out by the Ld. counsel for the assessee this issue is covered by the judgment of the Hon’ble Bombay High Court delivered in CIT vs. M/s UTV Entertainment Television Ltd. in Income Tax Appeal (supra) in favour of the assessee. Similarly, the Hon’ble Gujarat High Court in CIT vs. Prayas Engineering Ltd., (supra) and the Karnataka High Court in CIT vs. Kishore Rao & others (HUF) (supra) have held that in case of shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, (A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., no disallowance can be made by invoking provisions of 40(a)(ia) of the Act. Respectfully following the same, we confirm the stand of first appellate authority in the impugned order.”

7. As could be seen from the above decisions wherein the Coordinate Benches have held that when there is a short fall in deduction of TDS there cannot be any disallowance u/s.40(a)(ia) of the Act. Undoubtedly in the case on hand the assessee deducted TDS @2% u/s 194C of the Act on the channel placement fees paid. However, the Assessing Officer was of the view that provisions of section 194J would apply and therefore the TDS would have been deducted @10% as against 2%. Therefore, this is a case of short deduction of TDS. Thus, respectfully following the said decisions, we uphold the order of the Ld.CIT(A) and reject the ground raised

by the revenue.

8. In the result appeals of the revenue are dismissed.”

9. Undoubtedly in the appeals before us the Assessing Officer made disallowance on the ground that assessee made short deduction of TDS. Therefore, this decision squarely applicable to the facts of the case. Respectfully following the said decision, we delete the disallowance made u/s. 40(a)(ia) of the Act.”

13. The ratio of the above decision applies squarely to the facts of the case. Since in the case on hand also there is short deduction of TDS as the assessee had deducted TDS @2% as against 10%, it is a case of short deduction of TDS and not non-deduction of TDS. In the circumstances no disallowance is attracted u/s. 40(a)(ia) of the Act. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the revenue on this issue.

(A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., 14. Coming to last ground i.e. Ground No. 5 of grounds of appeal which relates to deletion of disallowance made towards commission expenses, we observed that Assessing Officer while completing the assessment noticed that assessee has paid commission of ₹.13,93,805/- and claimed as deduction. However, commission paid by the assessee was disallowed by the Assessing Officer stating that the assessee has not filed any details and not substantiated incurring of expenses. On appeal, Ld.CIT(A) deleted the disallowance as the assessee has given detailed breakup of the expenditure incurred towards commission.

15. Ld. DR vehemently supported the orders of the Assessing Officer and whereas the Ld. Counsel for the assessee placed reliance on the order of the Ld.CIT(A). Ld. Counsel for the assessee further submits that, Assessing Officer did not point out any defects in the Books of Accounts. The books were not rejected and Assessing Officer has made only an adhoc disallowance without rejecting Books of Accounts which is not proper and justified.

16. We have heard the rival submissions, perused the orders of the authorities below. The issue has been considered by the Ld.CIT(A) with reference to the submissions of the assessee and the averments made by (A.Y: 2011-12) M/s. UTV Entertainment Television Ltd., the Assessing Officer in Assessment Order and deleted the disallowance observing as under: - “9.2 I have considered the issue under appeal, carefully. I find that the Ld. Assessing Officer has disallowed the expenditure without any contrary evidences in possession. It is very evident from the assessment order itself that by letter dated 07.03.2014, the Assessee has submitted detailed break-up of the expenses. The Assessing Officer has not demonstrated as to why this commission expenditure is ingenuine and is not allowable. Since the Assessing Officer has not substantiated his reasoning and has not pointed out any defect in the claim of the Appellant, such disallowance of commission expenditure cannot be sustained. The Assessing Officer is therefore, directed to delete the disallowance of commission expenditure of Rs.13,93,805/-.”

17. On a perusal of the order of the Ld.CIT(A), we do not find any valid reason to interfere with the findings of the Ld.CIT(A) on this issue. Thus the same is sustained. Ground raised by the revenue on this issue is rejected.

Order pronounced on 11.12.2020 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board.