DCIT (TDS)-2(3), MUMBAI, MUMBAI vs. TATA PLAY LIMITED, MUMBAI

आयकर अपीलीय अिधकरण �याय पीठ मुंबई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JM & SHRI ARUN KHODPIA, AM I.T.A. No.5623/Mum/2025 (Assessment Year: 2016-17) DCIT (TDS)-2(3), Mumbai Tata Play Limited Room No. 320, 3rd Floor, Unit No. 301 to 305, Windsor, Opp Cumballa Hill, MTNL Building, Vs. C.S.T Road, Kalina, Santacruz East, Peddar Road, Mumbai-400026 Mumbai-400098 PAN: AAGCS9294M Revenue-अपीलाथ� / Appellant Assessee- ��यथ� / Respondent :

Assessee by : Shri J. D. Mistri Revenue by : Shri Hemanshu Joshi, Sr. DR Date of Hearing 11.12.2025 : Date of Pronouncement : 02.01.2026

O R D E R Per Arun Khodpia, AM: The aforesaid appeal is filed by the Revenue, against the order of ADDL/ JCIT Commissioner of Income Tax (Appeals)-7, Kolkata, [for short “ld. CIT(A)”] dated 15.07.2025 for the AY 2017-18, which in turn arises from the assessment order passed under section 201(1)/201(1A) of the Income Tax Act, 1961 (the Act) dated 21.03.2023, passed by OSD, TDS Circle 2(3), Mumbai.

ITA No. 5623/Mum/2025 Tata Play Limited 2. The grounds of appeal filed by the Revenue in the present appeal are extracted, as under: “1. "Whether, the AddI/JCIT(A) was justified in law and on facts, in deleting the addition made u/s 194H, without appreciating the facts that the relationship between the assessee company and its distributors was in the nature of principle- agent relationship and hence the payment made by the company to its distributors in the form of discount falls within the meaning of section 194H of the Income Tax Act, as he was providing the services offered by the DTH service provider to the consumer and these are serviced, guaranteed and warranted by the DTH provider only even after sale of said services." 2. "Whether, the Ld. Addl./JCIT(A) was justified in law and on facts in deleting the addition made by AO by holding that the payments made to Installation Service Providers (ISP) fall within a purview of section 194C & not under the Provision of section 194) of the I.T. Act, without appreciating the factual 2 perspective which clearly shows that the payment made by the assessee deductor is on account of specialized technical service as installation of DTH apparatus necessarily involves technical expertise, the use of specialized equipment, signal verification, system configuration and explanation, as well as post-installation support." 3. "Whether, on facts and the circumstances, the Ld. Addl./JCIT(A) was justified in not confirming the order of the AO treating the assessee as an 'assessee-in- default' u/s 201(1) for short deduction of TDs in respect of payments made towards 3 document management fees' without appreciating the fact that the nature of services received by the assessee requires certain parameters of technical/managerial skill of highly qualified specialized competency and falls within the purview of Section 194J and not u/s. 194C of the I.T. Act, 1961?" 4. Whether, the Ld. AddI./JCIT(A) erred in law and on facts in deleting the interest u/s. 201(1A) on the issue of short deduction of TDS on discounts on sale of Tata Sky Starter Kits & Recharge Coupons, issue of TDS on payments made for installation service provider and on the issue of document management fee as these short deductions have been deleted by him without appreciating that the same are also the subject matter of further appeal, as mentioned above." 5. Whether, the Learned CIT(A) has erred, both in law and on facts, in deleting the interest levied under Section 201(1A) on year-end provisions of expenses amounting to Rs. 53,04,600/-, without appreciating the fact that WHARE the concerned parties were identifiable, the obligation to deduet TDS arose, and consequently, the levy of interest under Section 201 (1A) was fully justified and ought to have been upheld 6. Whether, the Learned CIT(A) has erred, both in law and on facts, in deleting the interest levied under Section 201(1A) on year-end provisions of expenses, without appreciating the fact 6 that the Assessing Officer has correctly noted that

ITA No. 5623/Mum/2025 Tata Play Limited the assessee company, having itself made a suo motu disallowance under Section 40(a)(ia), has thereby admitted the applicability of TDS on these provisions." 7. "Whether, the Learned CIT(A) has erred, both in law and on facts, in deleting the demand and consequential interest pertaining to the TDS default on rent payments amounting to Rs.2.03,904/- without supporting any cogent reasoning OR analysis."” Brief Facts of the case: 3. The Assessee is engaged in the business of providing Direct to Home services (‘DTH’). A DTH service is a mode by which television signals are provided directly at the home of the subscribers. It is observed by the AO that the assessee company has entered into a composite agreement with distributors for carrying out its activities which includes distribution of sale of recharge vouchers, top up vouchers etc. For installing the set top boxes and antenna, the assessee company has entered into agreement with Installation Service Provided. 4. Various services provided by the company are discussed by the Ld.AO in the order and had pointed out discrepancies default qua adhering to the provisions of chapter VXII under diffract sections for deduction of Tax at Source while making payment for these services. Such issues raising defaults are listed as under: i) Discount given for sale of Tata Sky Starter Kit (TSKs) and Recharge Coupon / Voucher (RCVs) but TDS was not deducted u/s.194H of the Act.

ITA No. 5623/Mum/2025 Tata Play Limited ii) Payment made to installation services providers, but TDS not deducted u/s. 194(c) of the Act iii) TDS on payment of document management charges, on which the assessee company has deducted TDS u/s. 194C, whereas the AO was of the view that such transactions are covered within the ambit of section 194J of the Act. iv) Year end provisions, on which TDS was to be deduction u/s. 194C/194J etc. but was not deducted at source. The assessee contended on the issue that the deduction and deposit of TDS was made in the subsequent months. The Assessee Company also submitted that the Hon’ble Mumbai Tribunal in the Company’s own case (MA No. 254 of 2020), has deleted the disallowance under Section 40(a)(ia) of the Act holding that TDS provisions are not applicable on year-end provisions created by the Company. The AO after verification of the fact that assessee company had duly deducted the TDS in the months when the invoices were received from the vendors, so accepted assessee’s contention, but have noticed that interest u/s. 201(1A) of the Act was to be considered. v) TDS default reported in Tax Audit report. vi) Default in within the meaning of section 201(1) of the Act and computation of the interest u/s. 201(1A) of the Act.

ITA No. 5623/Mum/2025 Tata Play Limited 5. The Ld.AO has discussed all the aforesaid issues and made respective disallowances in hands of the assessee. Thereby the assessee was directed to pay the total default amount of Rs. 88,59,63,679/-, bifurcated into two parts i.e., (a) Rs. 46,47,59,555/- u/s 201(1) and (b) Rs. 42,12,04,124/- default u/s. 201(A), vide the impugned order u/s. 201(1)/201(1A) of the act dated 21/03/2023.

“5.9 Tax deduction at source liability is a vicarious liability to pay tax on behalf of the person who is to be beneficiary of the payment or credit, with a corresponding right to recover such tax payable from the person to whom credit is afforded or payment is made. Thus, the whole scheme of tax deduction at source proceeds on the assumption that the person whose liability is to pay an income knows the identity of the beneficiary or the recipient of the income. It is a sine qua non for a vicarious Tax deduction liability that there has to be a principal tax liability in respect of the relevant income first, and a principal tax liability can come into existence when it can be ascertained as to who will receive or earn that income because the tax is on the income and in the hands of the person who earns that income. Therefore, tax deduction at source mechanism can be put into practice when identity of the person in whose hands it is includible as income can be ascertained.

5.10 The Assessee Company further contention in respect of the deduction and payment of TDS in subsequent months has been perused and verified. On verification 5

ITA No. 5623/Mum/2025 Tata Play Limited of the details, it is found that the Assessee Company has made deduction of TDS on the provision which were made on March 2016 in subsequent months and when the receipt of invoice from the vendors, however without taking consideration of Interest u/s 201(1A) of the Income Tax Act, 1961. It is also noticed that the Assessee Company has reversed the net provision after considering the invoices received. Since these provisions are reversed in the absence of invoices, there is no question of deduction of TDS on it.

5.11 In view of the facts and discussed above, the Assessee Company is liable to pay the interest u/s. 201(1A) for the period from the date, provision is made in books to the date of payment of TDS and accordingly the interest u/s. 201(1A) is computed at Rs.53,04,600/-which is payable by the Assessee Company.”

ITA No. 5623/Mum/2025 Tata Play Limited section 201(1) of the Income-tax Act, the following orders: 1961 ('the Act') amounting to Rs. 1) Order of the Hon'ble Mumbai 32,27,16,682 on account of non- Tribunal in the Assessee's own case deduction of tax at source under dated 12 October 2018 (ITA Nos.6923 section 194H of the Act on discount to 6926/Mum/2012) (para 39 & 40 on on sale of RCVs and TSKs page 30 & 31) 2) Order under section 201 of the Act dated 30 March 2025 passed by the TDS officer for AY 2018-19 in the Assessee's own case (para 2.1.2 on page 3 & 4) 3) Bharti Cellular Ltd. [2024] 160 taxmann.com 12 (Supreme Court) (para 39 on page 41 & 42 and para 42 on page 43 & 44) 4) Idea Cellular Ltd. (ITA No. 1129 of 2017) (Bombay High Court) (para 5, 6 & 7 on page 2 & 3) 5) Reliance Communications Infrastructure Limited (ITA No. 702 of 2017) (Bombay High Court) (para 3 on page 3 & 4) 7.1 The relevant finding on the aforesaid issue from the Order of the Mumbai Tribunal in the Assessee's own case dated 12 October 2018 (ITA Nos.6923 to 6926/Mum/2012) (para 39 & 40 on page 30 & 31) are as under:

“39. A cohesive reading of the above case laws particularly that of the Hon'ble Bombay High Court in the case of Piramal Healthcare Lid. (supra), Qatar Airways (supra) and Intervet India (P.) Ltd. (supra) would show that the Id. Counsel of the assessee's plea that the assessee should not be visited with the liability to deduct TDS for non deduction of tax at source u/s, 194H on the difference between the discounted price at which it is sold to the distributors and the MRP upto which they are permitted to sell, is cogent and is sustainable view. As noted hereinabove the Hon'ble Jurisdictional High Court in the case of Piramal Healthcare Ltd. (supra) and Qatar Airways (supra) has found that the difference between MRP and the price at which item is sold to the distributor cannot be held to be commission or brokerage. Similarly in the case of Intervet India (P.) Ltd. (supra), the Hon'ble Bombay High Court has held that when the assessee had introduced sales promotion scheme for distributors to boost sale of its product when it passed on incentives to distributors/dealers/stockists through sale credit notes and claimed it, then since the relationship between assessee and distributors/stockists was that of principal to principal and infact distributors were customers of assessee to whom sales were effected either directly or through consignment agent, it cannot be treated as

ITA No. 5623/Mum/2025 Tata Play Limited commission payment under section 194H. Thus it follows on similar facts it has been held that the distributors are customers of the assessee to whom sales are affected. The discounts and credit notes credited cannot be considered to be commission payment u/s. 194H. Similarly we note that on similar facts, the Hon'ble Karnataka High Court in the case of Bharti Airtel Lad (supra) which has been duly followed by the ITAT Mumbai in Business Channels Ltd. (supra) has decided the same issue in favour of the assessee. Though we are aware that the Id. CIT(A) has referred to the decisions in favour of the Revenue on similar issue of Hon'ble Delhi High Court, but however as held by the Hon'ble Apex Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) if two views are possible, one in favour of the assessee should be adopted. Moreover, as we have already found that the ratios of decision of Hon'ble jurisdictional High Court as mentioned hereinabove are also in favour of the assessee. Hence, there is no question of taking a contrary view following the other high courts. The remarks of the Id. CIT(A) on the jurisdictional High Court decision are totally uncalled for, neither permissible nor sustainable.

2 Deletion of demand raised on account of short-deduction of tax source on payment to installation service providers (‘ISPs’) Deletion of demand raised under Covered in the favour of Assessee vide section 201(1) of the Act amounting to the following orders: Rs. 14,10,55,349 on account of deduction of tax at source under 1) Order of the Hon'ble Mumbai section 194C of the Act instead of Tribunal in the Assessee's own case 194J of the Act on payments made to dated 12 October 2018 (ITA Nos. 6923 ISPS to 6926/Mum/2012) (para 46 & 47 on page 34 & 35) 6) Bharat Business Channels Ltd. (ITA Nos. 7047 and 7048 of 2012) (Mumbai Tribunal) (para 10 on page 6 & 7)

7.2 The relevant finding on the aforesaid issue from the order of the Mumbai Tribunal in the Assessee's own case dated 12 October 2018 (ITA Nos.6923 to 6926/Mum/2012) (para 46 & 47 on page 34 & 35) are as under:

ITA No. 5623/Mum/2025 Tata Play Limited “46. We have heard both the Counsel and perused the records. The Id. Counsel of the assessee has inter alia placed reliance upon the order of the Id. CIT(A) and has submitted that its case is squarely covered by the decision of the Tribunal in the case of M/s. Bharat Business Channels Ltd. (ITA Nos. 7047 & 7048/Mum/2012). Bharat Business Channels Ltd is a DTH operator, same as the Assessee. In this case, Bharat Business Channels had also obtained services of Installation Service Providers to install Dish Antenna, Set-Top Box, etc. at the subscriber's premises similar to Tata Sky. That the Hon'ble Tribunal observed that the installation work does not require any special technical expertise and can be done by any sound person on reading through the installation manual. That the Hon'ble Tribunal also noted that the installation services providers were given basic training to make them understand the process of Installation. That having regard to the facts, the Hon'ble Tribunal held that the assessee had correctly deducted tax under section 194C of the Act and tax was not required to be deducted under section 194J of the Act.

The relevant para has been reproduced as under; "We observe that the work of installation of Set-Top Boxes and Antenna at the premises of the end-user is given as per the contract with Installation Service Providers (ISPs). The job of the Installation Service Provider is to go to the premises of the subscriber, to install Dish Antenna and Set-Top Box and connect them to the Television of the subscriber. The Installation Service Provider has to connect the Set- top Box to the Television by making few basic wiring connections. It does not require any special technical expertise or any technical degree and it can be done by any sound person on reading through the installation manual. Also, there is no specific qualification or recognized course required for installation Service Provider to become eligible for installation of Dish and Set Top Box. They are given basic training/instructions for a short period to make them understand the process of Installation so that they can apply the same at the place of the subscriber. Accordingly, the CIT(A) was justified in holding that assessee was required to deduct tax u/s.194C of the Act. The CIT(A) has dealt with the issue threadbare and after relying on various judicial pronouncements held that work of installation of Set-Top box amounts to 'works contract. The detailed finding so recorded by CIT(A) are as per material on record which has not been controverted by Id. DR by bringing any positive material. Accordingly, we do not find any reason to interfere in the order of CIT(A) holding that installation of Set-Top Box amounts to works contract and no technical expertise are required so as to make the assessee liable under the provisions of Section 194 Jofthe IT Act."

ITA No. 5623/Mum/2025 Tata Play Limited

3 Deletion of demand raised on account of short-deduction of tax at source on payment of Document Management Charges (‘DMCs’) Deletion of demand raised under Covered in the favour of Assessee vide section 201(1) of the Act amounting to the following orders: Rs. 8,77,898 on account of deduction 1) Order of the Hon'ble Mumbai of tax at source under section 194C of Tribunal in the Assessee's own case the Act instead of 194J of the Act on dated 12 October 2018 (ITA Nos. 6923 payment of DMCS to 6926/Mum/2012) (para 52 to 54 on page 37 & 38) 7) Reliance Life Insurance Co. Ltd. (ITA No. 604 of 2017) (Bombay High Court) (para 4 on page 3 & 4) 8) Reliance Life Insurance Co. Ltd. (ITA No. 3009 to 3011 of 2013) (Mumbai Tribunal) (para 9 on page 9 & 10) 7.3 The relevant finding on the aforesaid issue from the Order of the Mumbai Tribunal in the Assessee's own case dated 12 October 2018 (ITA Nos.6923 to 6926/Mum/2012) (para 52 to 54 on page 37 & 38) are as under: “52. We have heard both the counsel and perused the records. The Id. Counsel of the assessee inter alia placed reliance upon the order of the Id. Commissioner of Income tax(Appeals) and has submitted that this issue is also covered in its favour by the Hon'ble Jurisdictional Mumbai Tribunal in the case of Reliance Life Insurance Co. Ltd. (ITA No. 3009 to 3011/M/2013). That in this case, the assessee was engaged in the life insurance business. That it had obtained document management services which inter alia included document management services, document delivery and collection services and document storage, etc. That the assessee had deducted tax under section 194C while making payment for these services and the Income-tax Authorities alleged that these are technical / managerial services and should be subject to TDS under section 194J of the Act. That on appeal, the CIT(A) had held in favour of the assessee. That on appeal by the Income-tax Authorities to the Tribunal, the Hon'ble Tribunal noted that the work assigned to the service provider was not a technical or professional work which required special skills but simple,

ITA No. 5623/Mum/2025 Tata Play Limited basic and repetitive nature of work and accordingly subject to tax under section 194C of the Act. 53. The relevant observations of the Hon'ble Tribunal are reproduced herein below: "The assessee made the payment for these services after deducting TDS under the provisions of section 1 94C of the Act believing these are basic type of services involving no technical or professional qualification whereas the AO came to the conclusion that these are technical services and were required to be subjected to TDS under the provisions of section 194J of the Act and finally treated the assessee in default under the provisions of section 201(1) of the Act and raised the demand accordingly. The Id CIT(A) after having examined and perused agreements with the service providers and after going into the various services provided reached a conclusion that the outsourced services do not require any kind of technical and professional expertise and are just simple and repetitive nature of work such as document storage, documents delivery and collection services and documents management services. The Id CIT(A) examined the contract with Writer Information Management Services and found that very basic services were contracted and rendered by the said party involving no special technical skill or professional qualification. On the basis of the rival arguments and perusal of the various records as placed before us we find that the work assigned to the service provider was not a technical or professional work which required special skills but simple, basic and repetitive nature of work and we are inclined to opine that the order of CIT(A) is correct and deserved to be upheld. In view of the above facts, we dismiss the ground no 1 raised by the revenue by upholding the order of FAA on this point. 54. Upon careful consideration we find ourselves in agreement with the finding of the Id.CIT(A), which is also in consonance with the ITAT decision as mentioned above. Hence, we uphold the order of Id.CIT(A) on this issue.”

4 Deletion of interest under section 201(1A) of the Act on account of non/short deduction of tax at source pertaining to ground nos. 1 to 3 Deletion of interest under section In view of the arguments in respect of 201(1A) of the Act amounting to Rs. Ground Nos. 1 to 3, the Assessee should 41,58,05,246 on the issue of non- not be held as 'assessee-in-default under deduction of tax at source on discount section 201. Accordingly, the question of on sale of RCVs & TSKs, short- interest under section 201(1A) should deduction of tax at source on not arise. payments to ISPs and short-deduction of tax at source on payment towards DMCs.

ITA No. 5623/Mum/2025 Tata Play Limited

5&6 Deletion of interest under section 201(1A) of the Act on year-end provisions Deletion of interest under section Covered in the favour of Assessee vide 201(1A) of the Act amounting to Rs. the following orders: 53,04,600 in respect of late deduction and payment of tax at source on year- 9) Order of the Hon'ble Mumbai end provisions Tribunal in the Assessee's own dated 5 January 2021 (MA No. 254/Mum/2020) (para 3 & 4 on page 2 & 3) 10) Mahindra & Mahindra Ltd. (ITA No. 7382/Mum/2017) (Mumbai Tribunal) (para 7.2 & 7.3 on page 17 & 18) 11) Sanghi Infrastructure Limited (ITA No. 404 of 2018) (Gujarat High Court) (para 4 on page 3) 12) Sanghi Infrastructure Limited (ITA No. 2576/Ahd/2012)(Ahmedabad Tribunal) (para 17 on page 17 & 18) 13) Mahindra & Mahindra Limited (ITA No. 8597/Mum/2010) (Mumbai Tribunal) (para 19.3 on page 62 & 63) 14) Aditya Birla Novu Limited (ITA no. 8427 of 2010) (Mumbai Tribunal) (para 3.2 on page 4) 15) Mahindra & Mahindra Limited (ITA no. 1956 of 2014) (Mumbai Tribunal) (para 23 on page 18)

7.4 The relevant finding on the aforesaid issue from the Order of the Hon'ble Mumbai Tribunal in the Assessee's own dated 5 January 2021 (MA No. 254/Mum/2020) (para 3 & 4 on page 2 & 3) are as under: “3. We find that this Tribunal while disposing off the appeal in ITA No.3214/Mum/2014 for A.Y.2009-10 dated 10/09/2020 in para 14 & 15 of its order had rejected the contentions of the assessee and upheld the disallowance made u/s.40(a)(ia) of the Act. But we find that a contrary view has already been taken by this Tribunal in the case of Mahindra and Mahindra vide its order dated 19/06/2020. Non-following of the said order constitute mistake apparent on record within the meaning of Section 254(2) of the Act. Hence, in order to maintain 12

ITA No. 5623/Mum/2025 Tata Play Limited judicial consistency, we deem it fit and appropriate to modify para 15 of our order dated 10/09/2020 in the case of the assessee before us as under:- "15. We find that the issue in dispute has already been addressed by the Co-ordinate Bench of this Tribunal in the case of Mahindra & Mahindra Ltd., in ITA No.7382/Mum/2017 dated 19/06/2020 wherein the very same issue had been disposed off as under:-

7.2. We find that the ld. AO had observed that the expenses are liable to TDS and are squarely covered by the provisions of Chapter XVII-B of the Income- tax Act, 1961. The assessee's contention that it is not crediting party account during the year which would have made the payments liable to TDS is not tenable on the ground that once the assessee is debiting profit and loss account, it automatically is crediting the party account based on matching principle. The accounting principles cannot be left to the judgement of the assessee as to what entries it passes in his own books to suit its taxability or otherwise. 7.3. This action of the ld. AO was upheld by the Id. DRP. We find that this Tribunal in assessee's own case for the A.Y.2009-10 vide para 23 had deleted the disallowance made u/s.40(a)(ia) of the Act. The copy of the order was placed on record by the Id. AR. The Id. DR submitted that the assessee has not submitted the break-up of Rs.33.78 Crores being year end provision made for various expenses. But we find that the entire break-up had been duly submitted by the assessee before the lower authorities and the same are enclosed in page 234 of the paper book and the figures mentioned thereon are fairly ascertainable and are not mere adhoc provisions. Respectfully following the said decision of the Tribunal in assessee's own case for A.Y.2009-10, we have no hesitation in directing the Id. AO to delete the disallowance u/s. 40(a)(ia) in the sum of Rs.33,78,54,976/-. Accordingly, the concise ground No.5 raised by the assessee is allowed."

ITA No. 5623/Mum/2025 Tata Play Limited

ITA No. 5623/Mum/2025 Tata Play Limited by the decision of Tribunal in assessee’s own case. Under such circumstances, we do not find any infirmity in the order of Ld. CIT(A), who had followed such decision (referred to supra) and granted relief to the assessee. We, thus, de hors any contrary submissions by the revenue qua the facts or decisions to dislodge the aforesaid finding of Ld. CIT(A), have no hesitation to concur with the decision in impugned appellate order by Ld. CIT(A), we thus, upheld the same.

Order pronounced in the open court on 02-01-2026.

Sd/- Sd/- (ANIKESH BANERJEE) (ARUN KHODPIA) Judicial Member Accountant Member Mumbai, Dated : 02-01-2026. Poonam Mirashi Stenographer Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai