ITO (TDS), WARD-58(3), KOLKATA, KOLKATA vs. M/S. MEDIA WORLDWIDE PVT. LTD., KOLKATA

The assessee in the present case is a Company, which is engaged in the business of Media Broadcasting. A survey under section 133A of the Act was carried out in its business premises on 20.06.2011. As found during the course of survey, the assessee-company while making the ./2014 Assessment year: 2011-2012 Page 2 of 6 payment towards channel carriage fees, up-linking charges and Bandwidth charges to the various parties had deducted tax at source at 2% as per the provisions of section 194C. According to the Assessing Officer, the said payments made by the assessee were covered by section 194J and the assessee, therefore, was required to deduct tax at source at 10% instead of 2%. He, therefore, issued a notice under section 201(1) of the Act requiring the assessee to show-cause as to why it should not be treated as an assessee in default for short deduction of tax from the payments made on account of channel carriage fees, up-linking charges and Bandwidth charges. In reply, it was submitted on behalf of the assessee that the payment of channel carriage fees, up-linking charges and Bandwidth charges were not in the nature of payment for any technical services and the same being in the nature of contractual payment, tax at source was deductible at 2% as per the provisions of section 194C. Reliance in support of this contention was placed by the assessee on the decision of the Hon’ble Delhi High Court in the case of CIT –vs.- Estel Communications Pvt. Limited reported in 318 ITR 185. The Assessing Officer, however, found the said case law relied upon by the assessee to be distinguishable on facts. According to him, the provisions of section 194C were general in nature, while the provisions of section 194J being special covering specific situation, the assessee was required to deduct tax at source at 10% instead of 2%. He, therefore, treated the assessee as in default in respect of short deduction of tax under section 201(1) of the Act and also charged interest under section 201(1A) of the Act. Accordingly, total demand of Rs.1,68,08,795/- was raised by the Assessing Officer against the assessee vide an order dated 22.03.2013 passed under section 201(1)/201(1A) of the Act.

Against the order passed by the Assessing Officer under section 201(1)/201(1A), an appeal was preferred by the assessee before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), various submissions were made by the assessee in support of its case that the amount in question paid towards channel carriage ./2014 Assessment year: 2011-2012 Page 3 of 6 fees, up-linking charges and Bandwidth charges was not in the nature of technical services as envisaged in section 194J and the same being contractual payments, TDS was rightly deducted at 2% as per the provisions of section 194C. Various judicial pronouncements were also cited on behalf of the assessee in support of this contention. The submissions made by the assessee were forwarded by the ld. CIT(Appeals) to the Assessing Officer seeking remand report and after considering the remand report filed by the Assessing Officer, the submissions made by the assessee as well as other material available on record, the ld. CIT(Appeals) cancelled the demand raised by the Assessing Officer on the assessee vide an order passed under section 201(1)/201(1A) for the following reasons given in his impugned order:- “It is clear that firstly these services in the nature of Channel Charges, Bandwidth charges and uplinking charges paid by the Appellant were not specifically covered u/s 194J, prior to amendment introduced by Finance Act, 2012 by introduction of Explanation 6 to section 9(1)(VI) and further that these provisions did not apply retrospectively on liability to deduct TDS, as the period in question for the Appellant was Financial Year 2010-11. Therefore, the Submissions of the Appellant are found to be valid in this context and the demand raised by the A.O. on grounds that TDS was to be deducted under section 194J is held to be not justified and the same is deleted”.

Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. As agreed by the ld. representatives of both the sides, the issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by the decision of this Tribunal in assessee’s own case for the immediately preceding year, i.e. AY 2010-11 rendered vide its order dated 29.08.2014 in whereby the order passed by the ld. CIT(Appeals) cancelling the demand raised by the Assessing Officer against the ./2014 Assessment year: 2011-2012 Page 4 of 6 assessee under section 201(1)/201(1A) for the alleged short deduction of tax at source from the similar payments made by the assessee was upheld by the Tribunal vide paragraph no. 8 of its order, which reads as under:-

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on May 12, 2017.