ACIT 16(1), MUMBAI vs. ZOOM ENTERTAINMENT NETWORK LTD., MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य सद�य राजे�� राजे�� केकेकेके अनुसार अनुसार PER RAJENDRA, AM- लेखा लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order dated 29/02/2016, of the CIT (A)-4, Mumbai, the Assessing Officer(AO) has filed the present appeal.Assessee-company,engaged in the business of Bollywood based specialty and lifestyle television segment, filed its return of income on 28/09/2010,declaring LOSS of Rs. 10.91 crores.The AO completed the assessment, u/s. 143 (3) of the Act,on 28/03/ 2013,determining its income at Rs. 14.99crores. 2.Effective ground of appeal is about deleting the disallowance made u/s. 40(a)(ia) read with section 194J of the Act,of Rs. 7.27 crores, being program, production and acquisition expenses and of Rs.17.05 crores,being channel placement fee or carries fee.During the assessment proceedings,the AO found that the assessee had deducted tax at source u/s. 194C of the Act. However,he was of the opinion that payments were subject to deduction of tax at source u/s. 194J of the Act. Accordingly,invoking the provisions of section 40(a)(ia),he made the disallow - ance of Rs.7,24,85,194/-and Rs.17, 05, 53, 761/-under the heads program/production expenditure and carriage fees respectively. 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA) and made elaborate submissions. It relied upon certain case laws also.After considering the assessment order and the submission of the assessee,he held that the decisions 3384/M/16-Zoom Entertainment relied upon by the assessee support the view that where tax had been deducted at source,under a particular section already no disallowance would arise u/s. 40(a)(ia) even if in the opinion of the AO tax ought to have been deducted under a different section. He referred to the case of S. K.Takriwal(361ITR432) wherein the Hon’ble Calcutta High Court had held that no disallowance was warranted u/s.40(a)(ia)in a case where the tax had been deducted under a particular section. He also referred to the case of Prasar Bharti(292 ITR 580). In that matter, the Hon’ble Delhi High Court had held that payment made towards programs produced for broadcasting fell within the expression were, as defined in the explanation to section 194C of the Act he further held that in assessee’s own case the tribunal had held that tax had been correctly deducted at source on payment to cable operators u/s. 194C, that it had correctly deducted tax at source on payment made both for production program and on carriage fees. Finally, he deleted the additions made by the AO u/s. 40(a)(ia) of the Act. 4.In the course of hearing before us, the Departmental Representative (DR) stated that matter could be decided on merits.The Authorised Representative (AR) supported the order of the FAA and referred to the cases of Nimbus Commutation Ltd.(ITA/1424/Mumbai/2014-AY.2009-10, dated 09/02/2016). He relied upon the order of the Tribunal in assessee’s own case for the AY.s.2008-09 and 2009-10(ITA/671-72/Mumbai/2012, dated 27/07/2015). 5.We have heard the rival submissions and perused the material before us.We find that the appeal has been filed as the AO was of the opinion that the assessee had should have deducted tax under a particular provision i.e.194J of the Act and not as per the provisions of section 194C of the Act.We find that in the matter of Samir Tekriwal the Hon’ble Calcutta High Court has dealt with the issue of applicability of the provisions of section 40(a)(ia).In that matter the assessee had deducted tax u/s. 194C(2) of the Act, from payments made to sub-contractors. According to the Revenue, the payments were in the nature of machinery hire charges falling under the head “rent” and the provisions of section 194-I were applicable. On the ground that the assessee had deducted tax at 1% u/s. 194C(2),as against the actual deduction to be made at 10% u/s.194-I the payments were disallowed proportionately invoking the provisions of section 40(a)(ia).The Tribunal held that where tax was deducted by the assessee, though under a bona fide wrong impression under wrong provisions, the provisions of section 40(a)(ia) could not be invoked and that if there was any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various tax deduction at source provisions, the 3384/M/16-Zoom Entertainment