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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI G.S. PANNU & SHRI RAVISH SOOD
The captioned are two appeals by the Revenue pertaining to the same assessee for Assessment Years 2010-11 and 2012-13 and since they involve a common issue, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.
The common issue in both the appeals relates to the disallowance made by the Assessing Officer of the expenditure incurred
2 M/s. Siti Cable Network Ltd. & 6783/Mum/2016 on account of Pay channel charges by invoking Sec. 40(a)(ia) of the Act. We may first take up the appeal in Assessment Year 2012-13 which is directed against the order of CIT(A)- 4, Mumbai dated 18.08.2016, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 16.03.2015 under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).
Notably, assessee is a Multi System Operator (MSO) and engaged in distribution/telecasting/broadcasting of television channels through cable operators on its analog and digital cable distribution network, primary internet and allied services. The assessee earns subscription charges from cable operators and, in turn, pays Pay channel charges to the TV channels and the difference is retained by the assessee towards distribution costs. Be that as it may, while making payment to TV channels for the Pay channel charges, assessee deducted tax at source in terms of Sec. 194C of the Act. The Assessing Officer was of the opinion that the payments made by the assessee towards Pay channel charges were liable for deduction of tax at source u/s 194J of the Act. During the Assessment Year 2012-13, assessee has debited Pay channel charges of Rs.95,26,42,167/-. The Assessing Officer noticed that out of the total debit to the Profit & Loss Account of Rs.95,26,42,167/- on account of Pay channel charges, assessee had made some payments to parties who had issued Certificate u/s 197 for NIL rate of tax deduction at source and that assessee had already disallowed a sum of Rs.2,75,66,796/- u/s 40(a)(ia) of the Act in the computation of total income, and in this manner he deduced that the balance of Rs.85,62,23,223/- was the expenditure debited in the Profit & Loss
3 M/s. Siti Cable Network Ltd. & 6783/Mum/2016 Account on which the requisite tax was not deducted at source in terms of Sec. 194J of the Act and, therefore, he disallowed the said amount by invoking Sec. 40(a)(ia) of the Act. In coming to such a decision, the Assessing Officer was following the stand of the assessing authority in the assessee’s own case for the earlier assessment years.
Before the CIT(A), assessee made varied submissions, inter-alia, pointing out that the Tribunal in assessee’s own case for Assessment Years 2006-07, 2007-08 and 2008-09 has upheld the stand of the assessee that tax was liable to be deducted u/s 194C of the Act on the payments made to the TV channels towards Pay channel charges. The CIT(A) followed the decision of the Tribunal and set-aside the action of the Assessing Officer and deleted the disallowance made u/s 40(a)(ia) of the Act of Rs.85,62,23,223/-. Against such a decision, Revenue is in appeal before the Tribunal.
Before us, it was a common point between the parties that the controversy is no longer res integra inasmuch as it has already been decided by the Tribunal vide its order dated 24.02.2016 in assessee’s own case being to 2385/Mum/2013 for Assessment Years 2006-07 to 2008-09. It was also a common point between the parties that the said precedent, which has been followed by the CIT(A), continues to hold the field and has not been altered by any higher authority.
In this view of the matter, we are unable to find any reason to interfere with the decision of the CIT(A). So however, in order to impart
4 M/s. Siti Cable Network Ltd. & 6783/Mum/2016 completeness to the order, we may briefly reproduce the relevant observations of the Tribunal in its order dated 24.02.2016 (supra) whereby the applicability of Sec. 194C of the Act on the payments made by way of Pay channel charges has been upheld, which are as under :-
“3.6 ..................... In our considered opinion these payments shall be covered in the specific provisions contained u/s 194C, wherein it has been provided in the explanation III(b) to section 194C ( prior to amendment by the Finance Act,2009 wef 1.10.2009) that ‘work’ shall include broadcasting and telecasting etc. Even in post amended section, situation remains same, as clarified by explanation (iv) to section 194C, wherein similar definition has been given to explain scope and meaning of the term ‘work’. It is well established rule of interpretation of law that when a particular situation is covered in a specific provision of law then its inclusion in the general provisions of the law is ruled out. Therefore, the contention of the Revenue that impugned payments should be covered u/s 194J under the head ‘royalty’ is not acceptable. It is noted that in the explanation to section 194J, it has been mentioned in explanation (ba) that ‘royalty’ shall have the same meaning as given in explanation 2 to clause (vi) of sub section (1) of section 9. When we refer to the said provision, we find that the AO appears to have applied clause (iva) of explanation 2 (of Section 9(1)(vi)), which provides that ‘royalty’ means consideration for the use or right to use any industrial, commercial or scientific equipment. It has been contended by Ld. DR that payment made by the assessee should be covered in the aforesaid provisions defining nature and scope of payments that would be covered under the head royalty.
3.7. We are not able to accept the arguments of Ld. DR for the simple reason that the dominant purpose of the impugned payment is not for the purpose of use of the equipments provided to the assessee. But the dominant purpose is transmission, broadcasting and telecast of the programme contents. A careful analysis of the plain provisions clearly indicates that Assessee’s case fall u/s 194C. We further find that this issue is no more res-integra.”
5 M/s. Siti Cable Network Ltd. & 6783/Mum/2016
After observing so, the Tribunal thereafter relied upon the judgments of the Hon'ble Delhi High Court in the case of CIT vs. Prasar Bharati (Broadcasting Corporation of India), 292 ITR 560 (Delhi) and the Hon'ble Punjab & Haryana High Court in the case of Kurukshetra Darpans (P) Ltd. vs. CIT, 217 CTR 326 (P&H) to support its conclusion that the tax has been rightly deducted by the assessee u/s 194C of the Act, and that Sec. 194J of the Act had no application. Since the facts and circumstances of the instant year are similar to those considered by the Tribunal in its order dated 24.02.2016 (supra), following the said precedent we, therefore, affirm the order of the CIT(A) and accordingly, Revenue fails in its appeal.
In the result, appeal of the Revenue in Assessment Year 2012-13 is dismissed.
It was a common point between the parties that the facts and circumstances in for Assessment Year 2010-11 are pari materia to those considered by us in Assessment Year 2012-13, therefore, our decision therein shall apply mutatis mutandis in the said appeal also.
Resultantly, both the appeals of the Revenue are dismissed.
Order pronounced in the open court on 3rd October, 2017.