ACIT 16(1), MUMBAI vs. UTV ENTERTAINMENT TELEVISION LTD(NOW KNOWN AS M/S.DISNEY BROADCASTING (INDIA) LIMITED), MUMBAI

आयकर अपीऱीय अधिकरण “F” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI C.N PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER आयकर अपीऱ सं./I.T.A. No.5958/Mum/2017 (नििाारण वर्ा / Assessment Year: 2012-13) बिाम/ ACIT 16(1) UTV Entertainment R.No. 439, Aayakar Television Ltd. (Now Bhavan, M.K Marg, Known as M/s. Disney v. Mumbai 400020 Broadcasting (India) Ltd.) 11, Solitaire Corporate Park, Guru Hargovind Marg, Chakala , Mumbai-400093 स्थायी ऱेखा सं./ PAN: AACCV4782D (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. Revenue by: Shri. Charanjeet Singh Gulati (CIT-DR) Shri. Abhishek Tilak Assessee by: सुनवाई की तारीख /Date of Hearing : 11.03.2019 घोषणा की तारीख /Date of Pronouncement : 06.06.2019 आदेश / O R D E R PER RAMIT KOCHAR, Accountant Member: This appeal, filed by revenue, being ITA No. 5958/Mum/2017, is directed against appellate order dated 16.06.2017, passed by learned Commissioner of Income Tax (Appeals)-4, Mumbai (hereinafter called “the CIT(A)”), for assessment year 2012-13, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 15.03.2016 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) r.w.s. 144C(3) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2012-13.

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provisions of Section 194J of the 1961 Act. The assessee was asked by the AO to explain reasons for short deduction of income-tax at source @2% by invoking provisions of Section 194C instead of deducting income-tax at source @10% u/s 194J of the 1961 Act. 3.2 The assessee submitted that the assessee did deducted income-tax at source @2% u/s 194C of the 1961 Act on payments made towards Channel Placement/Carriage Fees. It was submitted that Section 40(a)(ia) of the 1961 Act can be invoked for making disallowance of expenses only when there is no deduction of income-tax at source. It was claimed that in case there is a shortfall in deduction of income- tax at source, Section 40(a)(ia) of the 1961 Act has no applicability. The assessee also submitted before the AO that placing of channel on particular band which is otherwise also distributed through the network is not a right transferred , information imparted , allowed use of patent , invention , model , design , trademark etc. . It was submitted that the assessee did not receive any information, technical knowledge , experience or skill . It was also submitted by assessee before the AO that the assessee had also not granted right to use any right, information or intellectual property or any equipment. The assessee claimed before the AO that the payment of carriage fees does not comes within definition of royalty and hence Section 194J of the 1961 Act has no applicability. The assessee relied upon decision of ITAT, Mumbai in assessee‟s own case for AY 2008-09, 2009-10 and 2010-11 , wherein the Mumbai tribunal had held in favour of the assessee that the deduction of income-tax at source was rightly made by assessee @ 2% u/s 194C of the 1961 Act. 3.3. The AO observed that Revenue has filed an appeal with Hon‟ble Bombay High Court against decision of Mumbai-tribunal holding in favour of the assessee on this issue as the decision of Mumbai- tribunal was not accepted by Revenue. The AO rejected the contentions of the assessee and held that provisions of Section 194J of the 1961 Act are applicable and the assessee ought to have

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deducted income-tax at source @10% u/s 194J of the 1961 Act instead of deducting income-tax at source @2% u/s 194C of the 1961 Act , wherein the AO made additions to the tune of Rs. 88,08,20,017/- under provisions of Section 40(a)(ia) of the 1961 Act on the ground that the assessee has infringed provisions of Section 194J read with Section 40(a)(ia) of the 1961 Act on payments made towards Channel Placement/Carriage Fees, vide assessment order dated 15.03.2016 passed by the AO u/s 143(3) read with Section 144C(3) of the 1961 Act, by holding as under: ―8.4 Revenue is under appeal on issue. The undersigned has considered the above submissions carefully, but the contention of the assessee cannot be accepted for following reason: 8.4.1. Channel Placement Fee: Channel Placement/ Carriage Fees are the charges paid by the broadcasters to the MSO for placing their channel on a particular frequency/bandwidth. These charges are paid to put the channel in prime band so that viewership as well as quality of channel can be increased. The carriage fee is a fee charged by broadcaster to carry the channel. As the channel capacity of MSO/LSO is limited whereas the channels are more, channels pay the charge to carry the signals. 8.4.2. Placing the particulars channel on a particular frequency or carrying a channel is ―INTEGRAL‖ part of Transmission or Broadcasting PROCEES. The Pictorial representation of the ―PROCESS‖ involved is depicted below‖

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8.4.3. From the above pictorial representation, it is evidently clear that placing or carrying a channel on a particular frequency is an INTEGRAL PART of Broadcasting PROCESS. Neither the Broadcaster nor the MSO can INDEPENDENTLY place a channel without the intervention of the entire Process involved. So, Placement or Carriage is nothing but a ―PROCESS‖ by which Broadcaster gets their channel placed at ―PRIME BAND OF FREQUENCY‖ and for this Process they pay Channel Placement Fee or Carriage Fee. 8.4.4. Taxability of Carriage Fees: In order to examine the Taxability of Placement Fee or Carriage fee, one needs to appreciate the Definition of the term ―ROYALTY‖ as contained in explanation 2 to section 9(1)(vi). The definition of the term ―ROYALTY‖ contained in sub clause (v) to Explanation 2 to section 9(1)(vi) is reproduced below: ―Royalty‖ means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head ―Capital gains‖ ) for- (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property: (ii) the imparting of any information concerning the working of or the use of a patent, invention, model,

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design, secret formula or process or trade mark or similar property: (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property: (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill: (iva) the use of right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB: (v) the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting but not including consideration for the sale, distribution or exhibition of cinematographic films; or (vi) the rendering of any services in connection with the activities referred to in sub-clause (i) to (iv), (iva) and (v).‖

From the above definition it is amply clear that a ―PROCESS‖ is covered within the ambit of the definition of the term ―ROYALTY‖. In the facts of the case, the Carriage Fee, as already discussed above involves a ―PROCESS‖ as depicted above. Therefore, any payment towards Placement Fee or Transmission Fee is a payment for ―ROYALTY‖. The Legislature has always intended that a ―PROCESS‖ such as transmission by satellite (including up linking, amplification, conversion for down linking of any signal) cable, optic fiber or by any other similar technology, whether or not such process is a secret constituted and it embedded in the very definition of term ―ROYALTY‖. This is further fortified by the insertion of clarification by virtue of Explanation 6 in Section 9(1)(vi) w.e.f. 01.06.1976. It is reproduced as under:- ―For removal OF doubts, it is hereby clarified that the expression ―process‖ includes and shall by deemed to have always included transmission by satellite (including up-linking, amplification, conversion for down- linking of any signal), cable, optic fibre or by other similar technology, whether or not such process is secret.

It is highlighted here that it is an explicit CLARIFICATION provided w.r.t. to the interpretation of the term ―Process‖ as it was meant to be understood since inception. It is therefore, by no means any retrospective amendment. It is only clarificatory in nature by which the legislature has once again reiterated correct in respiration of the term. Royalty, the language of the Explanation 6 very clearly and

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unambiguously states that it is clarificatory insertion. It is not a retrospective amendment as stated by the assessee. It is always held by various courts, even before this clarification was made, that the transmission and broadcasting is a ―PROCESS‖ as defined in term Royalty. Reliance is placed on following judicial judgements: (a) Asia Satellite Telecommunications Co. Ltd. v. DCIT (ITA no. 131 & 134(2003) & 322 ITR 140 (Del) (2011). The Delhi bench of the Tribunal, in that case held that the satellite company‘s revenues fell within the purview of royalty u/s. 9(1)(vi) of the Act. In arriving at this conclusion, the Tribunal held that the TV channels were not merely using the facility, but were using the process as a result of which the signals after being received in the satellite were converted to different frequency and after amplification were relayed to the footprints area. (b) ACT v. Sanskar Info. T.V.P. Ltd. [24 SOT 87 (ITAT Mum) (2008)] In this case, the Mumbai Tribunal placed heavy reliance on the decision in the case of Asia Satellite Telecommunication Co. Ltd.v. DCIT and held that the payments are taxable as ‗royalty‘ under the Act. (c) New Skies Satellite N.V v. ADIT [121 ITD (Del) SB (2009)] The Delhi Special Bench held that revenues earned by the satellite operators are taxable as ‗royalty‘ both under the Act and various tax treaties. It held that the payments are for the ‗use‘ or ‗right to use‘ the process involved in the transponder and that for the purpose of determining the payments as ‗royalty‘ it is not necessary for the process to be ‗secret‘ under the act as well as the tax treaty. In the process of transmission, human intervention is possible only at few levels as depicted in the diagram only at the level of MSO/LSO to decide which channel will be placed on what frequency. Therefore, the Right to place or carry a Channel is vested with the MSO/LSO. The Channel Company or Broadcaster is paying to the MSO/LSO for using this right only. In effect therefore, the payment is made under the nomenclature of Transmission Fee or Carriage Fee or Placement Fee toward ―Right to use the Process‖ which is embedded in the definition of the term ―Royalty‖ as defined in Explanation 2 to Section 9(1)(vi) read together with the clarification inserted in Explanation 6 to Section 9(1)(vi). 8.5 The assesses has taken the plea that Section 40(a)(ia) of the Income Tax Act, 1961 cannot be invoked at all even if it is assumed

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(without admitting) that there is a short deduction of tax. In regards to this, it is necessary to mention the following. 1) The very provision of Section 40(a)(ia) refers to the deduction of Tax at source in accordance with the Provisions of Chapter XVII-B. 2) Chapter XVII-B of the Act r.w. the corresponding rules, specify and lay down series of Provisions, Procedures and Compliances including specification of the rates of applicable TDS in respect of different types of expenditure such as Section 192, 194A, 194C, 194J, 195 etc. 3) If the assessee is permitted to short deduct TDS, then the very intended purpose of the Provisions of Chapter XVII-B and the consequence prescribed u/s. 40(a)(i)/ 40(a)(ia) stand defeated. Further, if this be the case, an assessee who is liable to deduct TDS, say at 20% shall go scot free by applying a token rate of 1% TDS, and get away from True and Correct Compliance. This surely cannot be the intention of the legislators. 4) In fact, the Provisions of Section 40(a)(i)/ 40(a)(ia) have been inserted only to bound the Tax payers for True and Correct Compliance of the Provision of Chapter XVII-B. 8.6. The Section 40(a)(ia) clearly says that the deduction of Tax at source should be in accordance with the Provisions of Chapter XVII-B of the Income Tax Act. Any expenditure on which TDS is wrongly deducted i.e. wrong provisions of TDS are applied, then such expenditure cannot be allowed at all. Hence, the plea that proportionate allowance cannot be accepted. The entire expenditure due to wrong deduction of tax, as per provisions of Section 40(a)(ia) r.w.s. provisions of Chapter XVII-B of the Income Tax Act, 1961, are not allowable. 8.7. The assessee has deducted TDS as per provisions of section 194C. Section 194C covers Broadcasting and Telecasting work under the works contract and thus mentions that TDS to be deducted on such payments as per provisions of this section. The assessee does not give his content to a third party for broadcasting. Instead the assessee himself is the broadcaster of its own content. This broadcasting work is not covered under the provisions of section 194C. The assessee, moreover, uses a part of the integral process of broadcasting, which is covered under ‗Royalty‘. 8.8. The argument of assessee that section 40(a)(ia) of the income tax act has defined royalty by referring Explanation 2 to clause (vi) of Section 9(1) of the Income Tax Act. The assessee has also argued that ―Royalty‖ is covered under the provisions of section 194J of the Income Tax Act, 1961. Section 194J provides for deduction of TDS on payment 8 | P a g e

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for professional and technical fees and royalty. It also mentions that royalty shall have the same meaning as contained in Explanation 2 to clause (vi) of Section 9(1) of the Income Tax Act. Reference hasn‘t been made to Explanation 6 to the said section 9(1)(vi). The assessee contends that Explanation 6 cannot be applicable in its case. 8.9. This contention of the assessee is also not acceptable. Explanation 2 while defining ‗Royalty‘ uses the term ‗process‘. The meaning of ‗process‘ has been clarified in Explanation 6 to clause (vi) of section 9(1). Thus Explanation 2 has to be necessarily read with Explanation 6. 8.10. In view of the above discussions, the channel placement charges of Rs. 88,08,20,017/- on which TDS was not deducted under proper applicable provisions i.e., Section 194J is disallowed u/s. 40(a)(ia) of the Income Tax Act, 1961 and added back to the total income of the assessee. Penalty proceedings u/s. 271(1)(c) of the Income Tax Act, 1961 are being initiated separately for filing inaccurate particulars of income.” 4. Aggrieved by an assessment framed by the AO vide assessment order dated 15.03.2016 passed u/s 143(3) read with Section 144C(3) of the 1961 Act, the assessee filed first appeal with learned CIT(A) who was pleased to allow appeal of the assessee by following decision of ITAT-Mumbai in assessee‟s own case for earlier years wherein tribunal has held that Carriage Fees/Channel Placement Fees comes under ambit of provisions of Section 194C for deduction of income-tax at source and not under Section 194H of the 1961 Act. The learned CIT(A) also relied upon decision of his predecessor in AY 2010-11 and 2011-12 and decided the issue in favour of the assessee. The tribunal in ITA no. 2699/Mum/2012 for AY 2008-09 in assessee‟s own case, vide appellate orders dated 29.10.2014 held as under:-

―'6. We have considered the rival submissions and relevant material on record, There is no dispute that the payment in question was made by the assessee to the cable operators/ MSOs for placing the TV channels in the prime band in order to enhance the viewership and better advertisement revenue. In the case of Kurukshetra Durpans (P) Ltd. Vs. CIT (supra}, the Hon'ble High Court of Punjab & Haryana while dealing with on identical question with has held in para 13 to 18 us under.- 13. After hearing learned Counsel for the parties, we are of the view that the contentions of the counsel for

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the appellant are liable to be rejected. Sec. 194C of the Act creates an obligation on a person responsible for paying any sum specified 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 Clause (b) of Expln. III below Section 194C(2) of the Act. 14. In terms of the said Explanation, it is provided that expression work' shall include, inter alia, broadcasting and telecasting including production of programmes for such broadcasting and telecasting. By way of such Explanation, it is evident that where the payment is for a work involving broadcasting and telecasting, the same shall be subject to deduction of tax at source in terms of Section 194 of the Act. The assessee is a cable network operator through which it provides telecasting of programmes to the ultimate consumers/subscribers. The assessee in turn enters into a contract with the licensor of various TV channels. On the payment so made, Section 194C of the Act is attracted. This is for the reason that the licensor, is a person who is performing the work which is covered within the meaning of Clause (b) of Expln. III to Section 194C(2) of the Act. 15. It is also relevant to mention here that in the agreement between the assessee and the licensor, the licensor is referred to as 'company engaged in the business of distribution of satellite based television channel(s) services including the service and has exclusive rights to market and distribute the services in India to various customers and users of the service'. Further, the agreement refers to the assessee subscriber as a party, which is desirous to subscribe for and receive the telecast signals of the service from the company in order to further distribute the same to the customer(s). 16. From the recital of the agreement itself, it is clear that the service that the assessee subscriber is availing is the receipt of 'telecasting signals' from the licensor or the company. The expression 'service' has also been referred to mean the TV channel which is dealt with by the licensor or the company. Therefore, what the assessee has transacted for with the licensor or company certainly includes within its ambit broadcasting and telecasting facility. The essence of the contract is to obtain broadcasting and telecasting of TV channels and thereafter its distribution amongst ultimate customers through the cable network of the assessee.

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"But does not included manufacturing or Supplying a product according to the requirement of specification of a customer by using material purchase from a person other them such customer" 8. The Hon'ble Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting Corporation of India)(supra), has observed In para 11 as under: "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 ITAT which we hereby affirm." 9. The Hon'ble Delhi High Court has made it clear that when two provisions are simultaneously introduced in the Act, one is specific and another is more general in terms then the resort must be to the specific provision. Therefore, when the, work of broadcasting and' telecasting of the programmes specifically falls under the ambit of provisions of section 194C, then In view of the decision of Hon‘ble Delhi High Court (supra), the provisions of section 194J con not be applied on such payments. The CBDT Circular No. 720 dated 30.08.1995.also supports this view as it was clarified in the said circular as under- "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 case persons responsible for deduction tax at source are deducting tax by applying more than one provision for the same payments. In particular, it has been pointed out that the sum paid for carrying out work of advertising are subjected to deduction of tax at source under section 194C as payment for work contract as also under section 194j as payments of fees for professional services. 2. It is hereby clarified that each section, regarding TDS under Chapter XVII, deals with a particular kind of payment to the exclusion of all other sections is this Chapter. Thus, payment of any sum shall be

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liable for deduction of tax only under one section. Therefore, a payment is liable for tax deduction only under one section. In view of the above discussion as well as the decisions of Hon'ble Punjab & Haryana High Court and Hon‘ble Delhi High Court, we do not find any error or illegality in the impugned order of CIT(A) qua this issue." 5. Now Revenue is aggrieved by the decision of Ld. CIT(A) allowing relief to the assessee and has filed an appeal with tribunal. The Ld. CIT-DR at the outset submitted that the assessee has paid Carriage Fees/Channel Placement Fees on which income-tax was deducted at source by assessee u/s. 194C by applying rate of 2% , although it ought to have been deducted at source by assessee u/s. 194J of the 1961 Act by applying rate of 10%. It was submitted that these payments made by assessee are Royalty payments within provisions of Section 194J of the 1961 Act. Our attention was drawn to para 8.4.1. of the assessment order passed by the AO. Our attention was drawn by learned CIT-DR to Explanation 2 and Explanation 6 to Section 9(1)(vi) of the 1961 Act. It was submitted that in view of the aforesaid Explanations , these payments are Royalty payments in nature and hence income-tax was deductible at source u/s. 194J of the Act. It was submitted that learned CIT(A) gave relief to the assessee based on earlier year order of ITAT,Mumbai Benches. Our attention was drawn to circular issued by CBDT no. 4/2016 File no. 275/07/2016-IT(B) dated 29.02.2016. Our attention was also drawn to decision of tribunal in ITA no. 1584/Mum/2010 for AY 2009-10 in the case of Viacom 18 Media Private Limited v. ADIT(E), wherein tribunal decided the issue of transponder fees in favour of Revenue by holding the same to be Royalty u/s 9(1)(vi) of the 1961 Act. 5.2. The learned counsel for the assessee on the other hand relied upon the decision in assessee‟s own case for AY 2011-12 of Hon‟ble Bombay High Court in CIT v. UTV Entertainment Television Limited reported in (2017) 88 taxmann.com 214 (Bom) , dated 11.10.2017 wherein Hon‟ble Bombay High Court held that carriage fee/Channel 13 | P a g e

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Placement Fees are paid for standard fee or Channel Placement Fee for broadcasting of channel on any frequency and the same cannot be held to be in the nature of Commission or Royalty. The learned counsel for the assessee also relied upon decision of Hon‟ble Bombay High Court in the case of CIT v. Zee Entertainment Enterprises Limited reported in (2018) 92 taxmann.com 30(Bom.) , wherein Hon‟ble Bombay High Court held that payments towards Channel Placement Fees and Carriages Fees paid to cable operators and MSO/DTH operators are payments for work contract and would be covered for deduction of income-tax at source u/s 194C of the 1961 Act and not under Section 194J of the 1961 Act. The AY before Hon‟ble Bombay High Court were AY‟s 2006-07 to 2010-11 in the case of Zee Entertainment(supra) . The Hon‟ble Bombay in the above case of Zee Entertainment(supra) decided the issue in favour of the tax- payer by relying on its earlier decision in assesee‟s own case in CIT v. UTV Entertainment Television Ltd. reported in (2017) 88 taxmann.com 214(Bom) and held that no substantial question of law arose in this appeal. The learned counsel for the assessee relied upon decision of Hon‟ble Bombay High Court in the case of PCIT v. Genex Entertainment Ltd., in ITA no. 1110 of 2015 dated 26.03.2018. The learned counsel for the assessee also relied on the decision of Hon‟ble Bombay High Court in the case of CIT(TDS) v. Genx Entertainment Ltd., in ITA no. 155 and 156 of 2016 judgment dated order dated 26.03.2018 which was later rectified on 13.04.2018. The assessee also relied on the decision of Hon‟ble Bombay High Court in CIT,TDS v. UTV News Ltd., in ITA no. 1384 , 1437-1448 and 1446 of 2016 , judgment dated 18.01.2019. The learned counsel for the assessee submitted that Hon‟ble Bombay High Court has decided this issue consistently in favour of the assessee/taxpayers vide above judgments. It was prayed that judgments of Hon‟ble Jurisdictional High Court be followed to maintain judicial discipline. It was submitted that aforesaid circular of CBDT dated 29.02.2016 relied upon by learned CIT-DR is not applicable to factual matrix of the case.

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5.3. The Ld. CIT-DR in rejoinder submitted that Carriage Fees/Channel Placement fees will fall under „Process‟ as defined under Section 9(1)(vi) read with Explanation 2 and 6 and the aforesaid payments as made by assessee are in-fact Royalty and the assessee ought to have deducted income-tax at source u/s 194J by applying rate of deduction at source of 10% instead of 2% u/s 194C of the 1961 Act. The learned CIT-DR would rely on the amendments made to Section 9(1)(vi) of the 1961 Act wherein Explanation 6 was inserted by Finance Act, 2012 w.e.f. 01.06.1976. Thus it was contended by learned CIT-DR that in all the aforesaid decisions of Hon‟ble Bombay High Court relied upon by learned counsel for the assessee , the aforesaid amendment to Section 9(1)(vi) of the 1961 Act by insertion of Explanation 6 was not discussed . The Ld. CIT-DR relied upon the decision of Mumbai tribunal in ITA no. 1584/Mum/2010 for AY 2009- 10 in the case of Viacom 18 Media Private Limited v. ADIT(Int. Tax) , wherein transponder fees were held to be Royalty keeping in view Explanation 6 to section 9(1)(vi). The learned CIT DR also placed reliance on the decision of Hon‟ble Kerala High Court in the case of CIT v. PVS Memorial Hospital Limited in ITA no. 2 of 2012 and 16 of 2014 judgment dated 20/07/2015 reported in (2015) 60 taxmann.com 69 (Ker. HC) and it was submitted that if income-tax is deducted at source under Chapter XVII-B by invoking wrong provisions of the 1961 Act leading to short deduction of income-tax at source, the additions are required to be made by invoking provisions of Section 40(a)(ia) of the 1961 Act . It was submitted by learned CIT DR that these payments are royalty payments keeping in view Explanation 2 and 6 to section 9(1)(vi) of the 1961 Act and hence the assessee ought to have deducted income-tax at source @10% u/s 194J of the 1961 Act. 5.4 The Ld. Counsel for the assessee on the other hand in rebuttal to learned CIT(A) submitted that in the case of Viacom 18 Media Private Limited v. ADIT (Int. Tax.) in ITA no. 1584/Mum/2010 for AY 2009-

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10, the taxpayer had made payments towards transponder fees and the payments were not made for Carriage Fees/Channel Placement Fees. The assessee relied upon the decision of ITAT, Mumbai in the case of Viacom 18 Media Private Limited v. ADIT(Int. Tax.) for AY 2013-14 to 2015-16 in ITA no. 599 to 614/Mum/2016 , common order dated 09.07.2018, wherein decision is taken by tribunal in favour of the tax-payer as the said payments were held to be not exigible to income-tax in India in the hands of non resident recipient . The assessee submitted that decision of Hon‟ble Bombay High Court in the case of Zee Entertainment Enterprises Ltd.(supra), is in favour of the tax-payer wherein payments towards Carriage Fee/Channel Placement Fee were held to be subject to deduction of income-tax at source u/s 194C of the 1961 Act and it was submitted that once Hon‟ble Jurisdictional High Court has decided the issue in favour of the assessee , the tribunal ought to followed the same to maintain judicial discipline and hence prayers were made to upheld the appellate order passed by learned CIT(A) and dismiss the appeal filed by Revenue. 9. We have considered rival contentions and perused the material on record including cited case laws. We have observed that the assessee is engaged in the business of advertisement and subscription. The assessee owns and operate four channels namely UTV Movies, UTV World Movies, UTV Stars and UTV Action Telugu. The assessee has paid Channel Placement Fees/Carriage Fees of Rs. 88,08,20,017/- during the previous year relevant to impugned assessment year , on which the assessee has deducted income-tax at source u/s. 194C of the Act on such payment at the rate of 2% , while the AO was of the view that the income-tax ought to have been deducted at source @ 10% under the provisions of Section 194J of the 1961 Act. The AO made additions to the income of the assessee to the tune of Rs. 88,08,20,017/- on aforesaid short deduction of income- tax deducted at source by invoking provisions of Section 40(a)(ia) of

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the 1961 Act read with Section 194J of the 1961 Act. The tribunal has decided this issue in favour of the assessee for AY 2008-09 to 2011-12 by holding that Carriage Fees/Channel Placement Fees are covered under the definition of „work‟ as specified u/s. 194C and the assessee rightly deducted income-tax at source u/s. 194C of the Act. We also note that those decisions were rendered in context of provisions of Section 201(1) and 201(1A) of the 1961 Act . The tribunal in ITA no. 2699/Mum/2012 for AY 2008-09 in assessee‟s own case ( common order passed by tribunal for AY 2008-09 to 2011-12) , vide appellate orders dated 29.10.2014 held as under:-

―'6. We have considered the rival submissions and relevant material on record, There is no dispute that the payment in question was made by the assessee to the cable operators/ MSOs for placing the TV channels in the prime band in order to enhance the viewership and better advertisement revenue. In the case of Kurukshetra Durpans (P) Ltd. Vs. CIT (supra}, the Hon'ble High Court of Punjab & Haryana while dealing with on identical question with has held in para 13 to 18 us 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 specified 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 Clause (b) of Expln. III below Section 194C(2) of the Act. 14. In terms of the said Explanation, it is provided that expression work' shall include, inter alia, broadcasting and telecasting including production of programmes for such broadcasting and telecasting. By way of such Explanation, it is evident that where the payment is for a work involving broadcasting and telecasting, the same shall be subject to deduction of tax at source in terms of Section 194 of the Act. The assessee is a cable network operator through which it provides telecasting of programmes to the ultimate consumers/subscribers. The assessee in turn enters into a contract with the licensor of various TV channels. On the payment so made, Section 194C of the Act is attracted. This is for the reason that the licensor, is a person who is performing the work which is covered within the meaning of Clause (b) of Expln. III to Section 194C(2) of the Act.

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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; {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 included manufacturing or Supplying a product according to the requirement of specification of a customer by using material purchase from a person other them such customer" 8. The Hon'ble Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting Corporation of India)(supra), has observed In para 11 as under: "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 ITAT which we hereby affirm."

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Bombay High Court in assesse‟s own case in ITA no. 525,732,741 and 1035 of 2015 for AY 2008-09 to 2011-12 vide common order dated 11.10.2017 in CIT v. UTV Entertainment Television Ltd., reported in (2017) 399 ITR 443 (Bom) ; (2017) 88 taxmann.com 214 (Bom) wherein Hon‟ble Bombay High Court held that payments made towards carriage Fees/Channel Placement Fees by the assessee are subject to deduction of income-tax at source u/s 194C of the 1961 Act, by holding as under:-

“9. We have given careful consideration to the submissions. Firstly, it will be necessary to advert to the facts of the case. For that purpose, it will be necessary to make a reference to the order passed by the Income Tax Officer. Paragraph 3 of the order reads thus :

―3. During the Survey, on perusal of the books of accounts of the assessee company, it was found that for Financial Years 2010-11, the year under consideration the assessee company has debited an amount of Rs. 33,24,56,189/- on account of ―carriage fees‖ , Rs.8,20,650/- on account of Editing expenses and Rs.12,95,400/- on account of Dubbing Charges. The assessee was asked to give the details of the Carriage Fees, Editing Expenses and Dubbing Charges paid by the company and the services rendered to them along with copies of Agreements made in this regard. The assessee has deducted TDS as per the provisions of section 194C of the I.T.Act on such payment. On further perusal of the Agreements submitted by the assessee it is seen that these payments are given to MSO/Cable Operators to retransmit and/or carry the service of the channels on 'S' Band in their respective territories. The services provided by these MSOs / Cable Operators does not come within the purview of section 194C of the I. T. Act, as placing the service of the channel on 'S' Band is a Technical Service for which the TDS is required to be deducted as per the provisions of Section 194J of the I.T.Act instead deducted by the assessee company as per the provisions of section 194C of the I.T.Act, 1961.‖ 10. Thus, we are concerned with three categories of charges i.e. carriage fees, editing expenses and dubbing charges. It is to be noted that the respondent- assessee had deducted TDS as per the provision of Section 194C of the said Act. The show-cause-notices were issued to the assessee for the 21 | P a g e

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Financial Years 2007-08, 2008-09, 2009-10 and 2010-11. 11. The Assessing Officer held that the placement charges will be governed by Section 194J. Similarly in case of dubbing charges, the same finding was recorded. Even the same view was taken in respect to editing expenses. As stated earlier, the Commissioner (Appeals) (the first appellate authority) interfered in the appeal preferred by the assessee. 12. The first Appellate Authority has made in-depth consideration of the factual aspects. Reference to the factual aspects will be necessary to understand technicalities associated with carriage fees, editing expenses and dubbing charges. Firstly, it will be necessary to consider the nature of carriage fees or placement fees in the context of the nature of business carried on by the respondent. 13. The Commissioner (Appeals) has recorded a finding of fact after having perused the copies of the agreements entered into between the respondent- assessee and the cable operators/ Multi System Operators (MSOs), that the cable operators pay a fee to the respondent for acquiring rights to distribute the channels. It is pointed out that the cable operators face bandwidth constraints and due to the same, the cable operators are in a state to decide which channel will reach the end viewer at what frequency (placement). Accordingly, broadcasters make payments to the cable operators to carry their channels at a particular frequency. Fee paid in that behalf is known as ―carriage fee‖ or ―placement fee‖. The payment of placement fee leads to placement of channels in prime bands, which in turn, enhances the viewership of the channel and it also leads to better advertisement revenues to the TV channel. 14. The Commissioner (Appeals) has given a finding of fact on the perusal of sample copies of the agreements. The agreements are entered into with the respondent by the cable operators for placement of channels on agreed frequencies on which the respondent wishes to place a particular channel. The placement fee is the consideration for providing choice of the desired placement of the channels. That is how, channel placement charges are paid to the cable operators under the agreement. Under the agreement, the cable operators agree for placing a particular channel on agreed frequency band. As stated earlier, the respondent has deducted tax at the rate of 2% at source by invoking Section 194C of the Income Tax Act while making payment towards placement fees to the cable operators/ MSOs. If Section 194J is to be applied, the deduction would be of 10%. The Commissioner (Appeals) has also gone through the method followed by the cable operators/ MSOs. The Commissioner (Appeals) has also gone into the submission of the Revenue that, in fact, Section 194J would apply. In substance, the argument is that placement charges are basically for rendering technical service. The Commissioner (Appeals) has

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recorded a finding of fact on the basis of material on record that the placement charges are consideration for placing the channels on agreed frequency bands. It was found that, as a matter of fact, by agreeing to place the channel on any preferred band, the cable operator does not render any technical service to the distributor/ TV channel. Reference is made to the standard fee paid for basic broadcasting of a channel at any frequency. The Commissioner (Appeals) has considered clause (iv) of the explanation to Section 194C which incorporates inclusive definition of ―work‖. Clause (iv) includes broadcasting and telecasting including production of programmes for such broadcasting and telecasting. The Commissioner (Appeals) rightly found that if the contract is executed for broadcasting and telecasting the channels of the respondent, the same would be covered by Section 194C as it falls in clause (iv) of the definition of ―work‖. Therefore, when placement charges are paid by the respondent to the cable operators/ MSOs for placing the signals on a preferred band, it is a part of work of broadcasting and telecasting covered by sub-clause (b) of clause (iv) of the explanation to Section 194C. As a matter of fact, it was found by the Commissioner (Appeals) that whether the payment is towards a standard fee or placement fee, the activities involved on the part of the cable operators/ MSOs are the same. When placement fee is received, a channel is placed on a prime band. It was found that by an agreement to place the channel on a prime band by accepting placement fee, the cable operator/ MSO does not render any technical service. As far as Appellate Tribunal is concerned, again the definition of work in clause (iv) of the explanation to Section 194C was looked into. We must note here that a grievance was made by the learned counsel appearing for the appellant that there are no detailed findings recorded by the Appellate Tribunal. However, the Commissioner (Appeals) has recorded detailed findings on the basis of material on record and by referring to the findings, the Appellate Tribunal has expressed general agreement with the findings recorded by the first Appellate Authority. While affirming the judgment of the first Appellate Authority, it is open for the Appellate Tribunal to express such general agreement. 15. Now, turning to the second grievance regarding subtitling charges, again the Commissioner (Appeals) has gone into the details of the factual aspects. Subtitles are textual versions of the dialogs in the films and television programmes which are normally displayed at the bottom of the screen. Sometimes, it is a textual version of the dialogs in the same language. It can also be a textual version of the dialogs in a particular language other than the language of the film or the TV programme. Again the stand of the Revenue was that this will be covered by Section 194J and not by Section 194C. We must note here that in this appeal, the Revenue has not made any grievance regarding applicability of Section 194C to dubbing charges. The finding of fact recorded by the Commissioner 23 | P a g e

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(Appeals), which is confirmed by the Appellate Tribunal, is that work of subtitling will be covered by the definition of ―work‖ in clause (iv) of explanation to Section 194C. Reliance is placed by the Commissioner (Appeals) on the CBDT notification dated 12th January 1977. The said notification includes editing in the profession of film artists for the purpose of Section 44AA of the Income Tax Act. However, the service of subtitling is not included in the category of film artists. As noted earlier, sub-clause (b) of clause (iv) of the explanation to Section 194C covers the work of broadcasting and telecasting including production of programmes for such broadcasting or telecasting. The work of subtitling will be naturally a part of production of programmes. Apart from confirming the finding of fact recorded by the Commissioner (Appeals) on both the aspects on placement fee and subtitling charges, the Appellate Tribunal has noted that both Sections 194C and 194J having introduced into the Income Tax Act on the same day, it is observed that the activities covered by Section 194C are more specific and the activities covered by Section 194J are more general in terms. Therefore, for the activities covered by Section 194C, Section 194J cannot be applied being more general out of the two. 16. In the alternative, a submission was canvassed by the learned counsel for the appellant that the carriage fees or the placement charges are in the nature of commission or brokerage as defined in explanation to Section 194H of the Income Tax Act. Further, in the alternative, it was submitted that carriage fees/ placement charges were in the nature of royalty covered by Section 194J of the Income Tax Act. 17. We have already discussed in detail the findings of fact recorded by the Commissioner (Appeals) as regards placement fees/ carriage fees. We have agreed with the findings of fact based on material on record that when the payment is made towards standard fee or placement fee, the activity involved is the same in both cases. As stated earlier, when services are rendered as per the contract by accepting placement fee or carriage fee, the same are similar to the services rendered against the payment of standard fee paid for broadcasting of channels on any frequency. In the present case, the placement fees are paid under the contract between the respondent and the cable operators/ MSOs. Therefore, by no stretch of imagination, considering the nature of transaction, the argument of the appellant that carriage fees or placement fees are in the nature of commission or royalty can be accepted. 18. Thus, as far as both the grounds of challenge are concerned, there are findings of fact recorded by both the authorities. We concur with the view taken by the Appellate Tribunal. In our view, no question of law arises in these appeals. There is no merit in the appeals and the same are dismissed with no order as to costs.‖

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9.3 Thus, in assessee‟s own case Hon‟ble Bombay High Court for AY 2008-09 to 2011-12 has held Carriage Fee/Channel Placement Fees to be covered within scope of „Work‟ defined under sub-clause (b) to clause (iv) of the Explanation to Section 194C of the 1961 Act. We have also observed that Hon‟ble Bombay High Court in the case of CIT v. Times Global Broadcasting Co. Ltd., (2019) 105 Taxmann.com 313 (Bom) has held Carriage Fees/ Channel Placement Fees paid to cable operators /MSO/DTH operators being payment for work contract covered u/s 194C of the 1961 Act by relying on the decision of Hon‟ble Bombay High Court in the case CIT v. UTV Entertainment Television Ltd. (supra) wherein Hon‟ble Bombay High Court held that no substantial question of law arose in the said appeal of Times Global(supra), by holding as under:- “ 1. This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act) challenges the common order dated 27th March, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is a common order for Assessment Years 2008-09 and 2009-10. This appeal relates to AY 2009-10. 2. The appellant has urged only the following question of law for our consideration :- (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the placement fees / carriage fees paid to cable operators / MSO / DTH Operators are payments for work contract covered u/s 194C and not fees for technical service u/s 194J, without appreciating that the service received by the assessee are technical in nature? 3. Mr. Suresh Kumar, learned Counsel appearing for the Revenue very fairly states that the impugned order of the Tribunal relied upon the order of its co-ordinate bench in the case of Asst. Commissioner of Income Tax (TDS) Vs. UTV Entertainment Television Ltd., dated 29th October, 2014, relating to Assessment Year 2008-09 to 2011-12, while dismissing the Revenue's appeal. Mr. Suresh Kumar further states that being aggrieved with the order dated 29th October, 2014 passed by the Tribunal in the case of UTV Entertainment Television Ltd. (supra), the Revenue filed appeals being Income Tax Appeal Nos. 525, 732, 741 and 1035 of 2015 to this Court. All the above appeals filed by the Revenue were dismissed by orders dated 10th / 11th October, 2017.

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concerned with Carriage Fees/ Channel Placement Fees paid by the assessee to cable operators for putting channel on certain frequency to enhance viewership of the said channel. These payments were held by Hon‟ble Bombay High Court to be standard fees paid for broadcasting channel on certain frequency. We have also observed that Hon‟ble Jurisdictional High Court has consistently held that payments of Carriage Fees/ Channel Placement Fees are covered under the definition of „work‟ under sub-clause (b) to clause(iv) to Explanation to Section 194C of the 1961 Act and income-tax is deductible at source u/s 194C of the 1961 Act. Reference is drawn to decision of Hon‟ble Bombay High Court in the case of CIT v. Zee Entertainment Enterprises Limited reported in (2018) 92 taxman.com 30(Bombay) , wherein Hon‟ble Bombay High Court held as under:

“1. These appeals under Section 260-A of the Income Tax Act, 1961 (the Act) challenge the common order dated 20th February, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order relates to Assessment Years 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11. These four appeals relate to Assessment Years 2007-08, 2008-09, 2009-10 and 2010-11. 2. The Revenue has urged the following substantial questions of law four our consideration :- (i) Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the placement fees / carriage fees paid to Cable Operators / MSO / DTH Operators are payments for work contract covered under section 194C and not fees for technical services under section 194J, without appreciating that the services received by assessee are technical and managerial in nature? (ii) **** 3. Regarding question no.(i) :— (a) Mr. Suresh Kumar, learned Counsel for the appellant - Revenue very fairly states that the impugned order of the Tribunal while dismissing the Revenue's appeal placed reliance upon the decision of its co-ordinate bench in ACIT v. UTV Entertainment Television Ltd. [IT Appeal No.2699 (Mum.) of 2012, dated 29-10- 2014] to hold in favour of the respondent assessee. The Revenue being aggrieved by the order of the Tribunal in UTV Entertainment Television Ltd. (supra) had preferred an appeal to this Court being CIT v. UTV Entertainment Television Ltd. [2017] 88 taxmann.com 214/399 ITR 443 (Bom.) and by its order the appeal of the Revenue was dismissed. (b) In the above view, the question (i) as proposed does not give rise to any substantial question of law. Thus, not entertained.‖ 9.5 Similarly, in the case of CIT v. UTV News Limited in ITA no. 1384, 1437, 1446 and 1448 of 2016, vide judgment dated 18.01.2019

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dismissed the tax-appeals filed by Revenue by holding that no substantial question of law arises in those appeal by following the decision of Hon‟ble Bombay High Court in the case of CIT v. UTV Entertainment Television Limited(supra) wherein it was held that payments towards Carriage Fees/Channel Placement Fees are subject to income-tax deduction at source u/s 194C of the 1961 Act. Similar view was taken by Hon‟ble Bombay High Court in the case of CIT v. Genx Entertainment Limited in ITA no. 155 and 156 of 2016 vide judgment dated 26.03.2018 ( judgment later modified vide order dated 13.04.2018). The Hon‟ble Bombay High Court has also upheld deletion of additions to the income of the tax-payer made by Revenue u/s 40(a)(ia) of the 1961 Act on account of Carriage Fees/Channel Placement Fees by holding that correct provision for deductibility of income-tax at source is u/s 194C and not provisions of Section 194J in PCIT v. Genex Entertainment Limited in ITA no. 1110 of 2015 vide judgment dated 26.03.2018. We are bound by the decisions of Hon‟ble Bombay High Court being jurisdictional High Court. These decisions as are rendered by Hon‟ble Bombay High Court are recent decision as late as 18.01.2019 in the case of UTV News Limited(supra). The SLP in the case of Times Global Broadcasting Company Limited(supra) was dismissed on 25.02.2019. The Revenue has claimed before us to be aggrieved as to non consideration of definition of „Process‟ vide Explanation 6 to Section 9(1)(vi) which was inserted by Finance Act, 2012 wef 01.06.1976 in all these decisions rendered by Superior Courts. Our Hon‟ble Jurisdictional High Court in assessee‟s own case in CIT v. UTV Entertainment Television Limited(supra) has held in para 17 based on appreciation of material on record that when the services are rendered as per the contract by accepting Channel Placement Fee or carriage fee, the same are similar to the services rendered against the payment of standard fee paid for broadcasting of channels on any frequency. The Hon‟ble Bombay High Court observed that channel placement fees are paid under the contract between assessee and the cable operators /MSO‟s and the said payments by

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way of carriage fees or channel placement fees cannot be considered to be in the nature of commission or royalty. Now, for Revenue to contend before us that none of the Superior Courts in series of judgments passed as much as recently in February 2019 have not considered Explanation 6 to Section 9(1)(vi) is too far fetched and not acceptable. Even if it is so, then the right course for Revenue is to file Review/curative petition(s) before Superior Courts . We are afraid that there is no presumption that in series of judgments passed by Superior Courts as late as in February 2019, the Superior Courts were not aware of the amendment made by Finance Act, 2012 w.e.f. 01.06.1976 wherein Explanation 6 was inserted to Section 9(1)(vi) of the 1961 Act . Thus, we are not inclined to accept this argument of learned CIT-DR that in none of the judgments of Superior Courts rendered as recent in February 2019, the Superior Courts were ignorant of Explanation 6 to Section 9(1)(vi) of the 1961 Act. Thus, Respectfully following the decisions of Hon‟ble Bombay High Court in assessee‟s own case for AY 2008-09 to 2011-12, we decide this issue in favour of the assessee and dismiss the appeal of the Revenue. We order accordingly. 10. The appeal of the Revenue in ITA no. 5958/Mum/2017 for AY 2012-13 stands dismissed. Order pronounced in the open court on 06.06.2019. आदेश की घोषणा खुऱे न्यायाऱय में ददनांकः 06.06.2019 को की गई Sd/- Sd/- (C.N PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, dated: 06.06.2019

Nishant Verma Sr. Private Secretary

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copy to… 1. The appellant 2. The Respondent 3. The CIT(A) – Concerned, Mumbai 4. The CIT- Concerned, Mumbai 5. The DR Bench, 6. Master File // Tue copy// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI

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