DCIT 8(3)(1), MUMBAI vs. TIMES GLOBAL BROADCASTING CO.LTD, MUMBAI

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ITA 2522/MUM/2015Status: DisposedITAT Mumbai31 May 2017AY 2011-125 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the deletion of the disallowance by the CIT(A). It ruled that the payments made for carriage fees were indeed subject to TDS under Section 194C, not Section 194J, and thus, the disallowance under Section 40(a)(ia) was misplaced.

What were the facts?

The Assessing Officer disallowed expenditure claimed by the assessee under Section 40(a)(ia) of the Income Tax Act, 1961, due to alleged shortfall in Tax Deducted at Source (TDS). The AO believed TDS should have been deducted under Section 194J instead of Section 194C.

What were the issues?

Whether the payments made for carriage fees attracted TDS under Section 194C or Section 194J, and consequently, whether the disallowance under Section 40(a)(ia) was justified.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194C,Section 194J

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI G.S. PANNU & SHRI RAVISH SOOD

For Appellant: Shri Ajai Pratap Singh
For Respondent: Shri V. Mohan
Hearing: 31/05/2017Pronounced: 31/05/2017

The captioned appeal by the Revenue is directed against the order of CIT(A)-14, Mumbai dated 25.2.2015, pertaining to the Assessment Year 2011-12, which in turn has arisen from the order passed by the Assessing Officer dated 28.1.2014 under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

In its appeal, Revenue has raised the following Grounds of appeal:-

2 M/s. Times Global Broadcasting Co. Ltd.

“(i) The Learned CIT(A) has erred on facts and in law in deleting disallowance made by the AO of Rs.35,31,11,238/-, under section 40(a)(ia) of Income Tax Act, without properly appreciating the factual and legal matrix of the case as clearly brought out by the Assessing Officer in the assessment order.

(ii) The Learned CIT(A) has erred on facts and on law in deleting the disallowance made by the AO U/s 40(a)(ia) for short fall in TDS without appreciating the fact that provision of Section 194J is attracted in the case of the assessee instead of Section 194C of the I.T. Act, 1961.

2. The Ld. CIT(A)’s order is contrary in law and on facts and deserves to be set aside and A.O’s order may be restored.”

3.

At the time of hearing, the learned representative for the respondent-assessee, at the outset, pointed out that the issue raised in this appeal by the Revenue is no longer res integra and has indeed been decided by the Tribunal in assessee’s own case for the Assessment Years 2008-09, 2009-10, 2010-11 and 2011-12 vide separate orders dated 27.3.2015 and 27.5.2015 vide & 670/Mum/2012 and 4809 & 4807/Mum/2013 respectively in proceedings arising out of orders passed by the income-tax authorities u/s 201(1) and 201(1A) of the Act. The said factual matrix has not been disputed by the ld. DR, but he has placed reliance on the order of the Assessing Officer in support of the stand of the Revenue.

4.

In order to impart completeness to the order, we may briefly refer to the controversy before us. The respondent-assessee before us is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of providing and 3 M/s. Times Global Broadcasting Co. Ltd.

broadcasting news programme through its satellite television channel called “Times Now”. The Assessing Officer noted that assessee had claimed expenditure of Rs.44,13,89,048/- under the head ‘Carriage fee’ on which tax was deducted at source u/s 194C of the Act @ 2%. The payment by way of Carriage fee was made to the cable operators in pursuance to a contractual understanding with them and it was towards the services rendered by them in carrying the programmes on various frequencies by receiving, re-distributing and re-transmitting the audio- visual signals to the television viewers. The Assessing Officer was of the view that the payment in question fell within the scope of Sec.194J of the Act and, therefore, tax ought to have been deducted at source @ 10%. Accordingly, the Assessing Officer inferred that tax was short- deducted at source by the assessee and, therefore, the corresponding expenditure was liable to be disallowed in terms of Sec. 40(a)(ia) of the Act. Therefore, out of the total expenditure of Rs.44,13,89,048/-, the Assessing Officer computed the amount proportionate to the shortfall in deduction of tax at source and disallowed the same thereby resulting in disallowance of Rs.35,31,11,238/- u/s 40(a)(ia) of the Act.

5.

Before the CIT(A), one of the points raised by the assessee was that a mere shortfall in deduction of tax at source would not justify invoking of Sec. 40(a)(ia) of the Act in order to disallow the expenditure. The CIT(A) accepted the aforesaid plea and accordingly directed the Assessing Officer to delete the disallowance made u/s 40(a)(ia) of the Act.

4 M/s. Times Global Broadcasting Co. Ltd.

6.

We find that the Tribunal vide its order dated 27.3.2015 (supra) was considering the stand of the Revenue that payment made to the cable operators as Channel Subscription Fee was liable for deduction of tax at source u/s 194J of the Act. The Tribunal noted the earlier decision of the Tribunal in assessee’s own case dated 29.10.2014 in 4204 & 4205/Mum/2012 and 2700/Mum/2012 for Assessment Years 2008-09 to 2011-12 and held that such payments were liable for deduction of tax at source u/s 194C of the Act and not u/s 194J of the Act, as canvassed by the Revenue. The aforesaid precedents continue to hold the field as the same have not been altered by any higher authority and, therefore, in this view of the matter, it has to be held that the Assessing Officer was wrong in concluding that there was a default on the part of the assessee in deducting tax at source on the impugned payment u/s 194C of the Act so as to trigger Sec. 40(a)(ia) of the Act. Thus, invoking of Sec. 40(a)(ia) of the Act by the Assessing Officer is misplaced. In this view of the matter, we deem it fit and proper to uphold the ultimate decision of the CIT(A) in deleting the addition, albeit on a different ground.

7.

Resultantly, appeal of the Revenue is dismissed as pronounced in the open court in the presence of both the parties at the conclusion of hearing on 31st May, 2017.

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