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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI R.C. SHARMA, AM & SHRI RAVISH SOOD, JM
PER RAVISH SOOD, JUDICIAL MEMBER :
The present appeal of the revenue arises from the order of the CIT(A)-12, Mumbai, dated 10/06/2014, which in itself has arisen from the assessment order passed by the ITO (TDS)-1(1), Mumbai under Section 201(1) & 201(1A) of the Income Tax Act, 1961(in short ‘Act’), dated. 10/03/2011. The revenue has assailed the order of the CIT(A) by raising the following grounds of appeal before us:-
“ 1.(i). On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee was liable to deduct tax at source from the payment made under film production agreement u/s. 194C instead of section 194J of the Act, as held by the Assessing Officer. (ii). On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO u/s 194J of the Act without appreciating the fact that the nature of work carried out by the payees amounts to nothing less than professional and managerial services and fall within the ambit of technical services u/s 194J of the Act. (iii). On the fact and circumstances of the case and in law, the Ld. CIT(A) has erred in not confirming the order passed by the AO u/s 201(1)/201(1A) of the Act in respect of the amount of short deduction of tax and consequential interest, resulting from the action of the assessee in deducting tax at lower rate u/s 194C instead of section 194J of the Act.
2. Appellant craves to leave to amend or alter or add any ground a new ground which may be necessary at the time of the hearing of the case or thereafter.
3. The order of the Ld. CIT(A) being erroneous be set aside and the Ld. A.O’s order be restored.”
Briefly the facts of the case are that the assessee is engaged in the business of celebrity endorsement, events promotion & management, production of telefilms, ad films and promotion of motion pictures. That during the year survey action u/s. 133A of the Income-tax act, 1961 (for short ‘Act’) was conducted at the premises of the assessee. During the course of the survey proceedings and subsequent thereto the A.O noticed that the assessee had made payments aggregating to Rs. 2,75,00,000/- to 5 parties for production of complete films, against which tax was deducted at source by the assessee u/s 194C. The A.O holding a strong conviction that as the aforesaid payments were in the nature of payments for professional or technical services, therefore the assessee was liable to deduct tax at source under Sec. 194J and not under Sec. 194C of the ‘Act’, thus held the assessee as being in default u/s 201(1) for short deduction of tax at source, as well as raised demand towards interest u/s 201(1A).
The assessee being aggrieved with the order passed by the ITO u/ss. 201(1)/201(1A), therein carried the same in appeal. The CIT(A) being of the view that the payments made by the assessee to the 5 parties for production of films by them was rightly subjected to deduction of tax at source by the assessee u/s 194C, as such an obligation was specifically contemplated under the said statutory provision, thus allowed the appeal of the assessee.
That the revenue being aggrieved with the order of the CIT(A), had thus carried the matter in appeal before us. The Ld. Departmental representative (for short ‘D.R’) placed heavy reliance on the order of the ITO (TDS), and therein submitted that as the fees paid by the assessee to the 5 parties for production of films was well within the definition of ‘fees for professional services’ as the same involved considerable managerial capabilities and professional skills, therefore the ITO(TDS) had rightly held that the assessee remained under a statutory obligation to deduct tax at source u/s 194J. The Ld. D.R submitted that as the CIT(A) had erred in setting aside the well reasoned order of the ITO(TDS), therefore the same be set aside and the order of the ITO(TDS) be restored. That on the other hand the Ld. Authorized representative (for short ‘A.R’) for the assessee relied on the order of the CIT(A). The Ld. A.R further relied on the order of the Hon’ble High Court of Delhi in the case of : CIT Vs. Prasar Bharti Broadcasting Corporation of India (2007) 292 ITR 580 (Del) and submitted that the proposition under consideration was squarely covered by the said judgment, and had rightly been appreciated and followed as such by the CIT(A).
We have heard the Ld. Representatives of both the parties, perused the orders of the lower authorities as well as the material available on record. We are of the considered view that in the backdrop of the conceded fact that the assessee had made payments to 5 parties for production of complete films, we have been called upon to adjudicate as to whether the payments so made were liable for deduction of tax at source under Sec. 194C or would fall within the scope and gamut of Sec. 194J of the ‘Act’.
We find that the CIT(A) while disposing of the appeal had followed the judgment of the Hon’ble Delhi High Court in the case of Prasar Bharti Broadcasting (supra), and an order of a coordinate bench of the ITAT, Mumbai, in the case of Nitinin M. Panchamiya Vs. ACIT (ITA No. 3874/Mum/2009, as well as was persuaded to adopt the view of his predecessor who had allowed the appeals of the assessee involving the same issue for A.Y(s). 2006-07 & 2007-08, and had allowed the appeal of the assessee by observing as under:- “I have considered the averments made in the impugned order and also the written and oral submissions of the learned A.R of the appellant and also the judicial pronouncements and order of the learned CIT(A)-14, Mumbai relied upon by the learned A.R. It immensely transpires that the issue in dispute is squarely covered by the decision of the Hon’ble Delhi High Court in the case of CIT Vs. Prasar Bharti Broadcasting Corporation of India [2007] 292 ITR 580 and a decision of the Hon’ble Mumbai ITAT in the case of Nitinin M. Panchamiya vs. ACIT [vide order dated. 17.02.2014 in and also decision of the ld. CIT(A)-14, Mumbai in the appellants own case for A.Ys 2006-07 & 2007-08 wherein relief has been allowed to the appellant on this count. In the facts and circumstances of the case, I do not find any reason to differ from the view taken on the instant issue by the ld. CIT(A)- 14, Mumbai (having original jurisdiction over TDS appeals). Accordingly the relevant grounds of appeal
stand allowed.”
7. We have heard the Ld. Authorized representatives and have perused the orders of the lower authorities, the records available before us, as well as given a thoughtful consideration to the facts of the case in the backdrop of the relevant statutory provisions under consideration. We find that the scope of Sec. 194C was broadened by the legislature, vide the Finance Act, 1995, w.e.f 01.07.1995, by incorporating therein an ‘Explanation III’, which reads as under:- “Explanation III. – For the purposes of this section, the expression ‘work’ shall also include- (a). advertising (b). broadcasting and telecasting including production of programmes for such broadcasting or telecasting. (c). carriage of goods and passengers by anny mode of transport other than by railways ; (d). catering.” That interestingly, vide the same finance act, viz Finance Act, 1995, the statutory obligation to deduct tax at source with respect to ‘fees for professional or technical services’ was also made available on the statute by incorporating Sec. 194J. The term “Professional services” was specifically defined in the said newly inserted statutory provision viz Sec. 194J, as under:- “Explanation. – For the purposes of this section, - (a). ‘Professional services’ means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of Section 44AA or of this section”
8. We are of the considered view that in the backdrop of the fact that though the legislature had vide the Finance Act, 1995, therein specifically earmarked a separate statutory provision in the form of Sec. 194J to regulate the obligation of an assessee to deduct tax at source in respect of fess for professional and technical services, however interestingly we find that the legislature in all its wisdom had simultaneously broadened the scope and gamut of Sec. 194C and had brought ‘production of programmes for such broadcasting or telecasting’ within the sweep of Sec. 194C. The aforesaid specific earmarking of the ‘production of programmes for such broadcasting or telecasting’ in the body of Sec. 194C, in light of the aforesaid legal juxtaposition can thus safely be concluded to have been carried out with a purposive intent of making the same as an exclusive subject matter of Sec. 194C. We are of the considered view that the very insertion of the ‘Explanation III’ to Sec. 194C by the Finance Act, 1995, alongwith a simultaneous insertion of Sec. 194J, can safely be held to be a conscious, purposive and intentional act on the part of the legislature, in order to avoid any doubt or debate as regards the statutory provision which would regulate the deduction of tax at source as regards the services contemplated therein. We are of the considered view that in light of the fact that the legislature had clearly brought ‘production of programmes for such broadcasting or telecasting’ within the sweep of Sec. 194C, therefore the deduction of tax at source as regards the services rendered therein would inescapably be a subject matter of Sec. 194C, and the same would not fall within the sweep and domain of the provisions of the newly inserted Sec. 194J. We find that the issue under consideration before us, had came before the Hon’ble High Court of Delhi in the case of : CIT Vs. Prasar Bharti Broadcasting (2007) 292 ITR 580 (Del), which had held as under:- “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 Income-tax Appellate Tribunal which we hereby affirm” We are persuaded to subscribe to the observations of the Hon’ble High Court of Delhi in the case of Prasar Bharti Broadcasting (supra) that 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, then resort must be had to the specific provision which manifests the intention of the legislature. We thus in the backdrop of our aforesaid observations are of the considered view that the assessee had rightly deducted the tax at source under Sec. 194C at the time of making of payments to the 5 parties. We thus in light of our aforesaid observations, finding no reason to dislodge the well reasoned order of the CIT(A), therefore uphold the same and dismiss the appeal of the revenue.
The appeal filed by the revenue is dismissed. Order pronounced in the open court on 08/02/ 2017.