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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: S/SHRI B. R. BASKARAN & AMARJIT SINGH]
PER AMARJIT SINGH, JM: All these four appeals filed by the Revenue are directed against different orders dated 31-01-2012 and 30-03-2012 passed under Section 201/201(A) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] by the learned Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as „the CIT(A)] relating to the aforementioned assessment years. The facts being similar and the question of law involved therein being common and identical in all the assessment years, therefore are AYs: 2008-09, 2009-10, 2010-11 and 2011-12 being taken up for adjudication. All the appeals are being heard together and are being disposed of by this common order.
For adjudicating the common identical issues involved in these appeals, we are taking the Revenue‟s appeal in ITA No.2697/Mum/2012 for assessment year 2008-09. The common grounds raised in all these four appeals are reproduced herein below from the appeal for assessment year 2008-09:-
(i) The Ld. CIT(A) has erred on facts in law and not correctly appreciating the nature of the services rendered by the cable operators/ MSOs for which placement charges are paid and holding that such charges come within the purview of section 194C whereas such placement charges are in nature of technical fee within the meaning of section 194J of the Income-tax Act, 1961. (ii) The Ld. CIT(A) has erred on facts and in law in not appreciating that for placing the channel of broadcaster in prime band, for which placement charges are paid, application of human mind by a technical person is essential and the same cannot be done merely by mechanical means. Therefore, the payment on account of placement charges is in nature of technical fee within the meaning of section 194J and section 194C has no application to the facts of the case. Accordingly, CIT(A) has erred in law and on facts in holding to the contrary. (iii) Without prejudice to the first two grounds of appeals as above, since providing the services of preferred channel placement on account of which placement charges are paid requires use of industrial, commercial or scientific equipment within the meaning of sub clause (iv a) to Explanation to sub clause (vi) of section 9(1) of the Income-tax Act, 1961, the said payment is payment on account of royalty and therefore, section 194J is clearly applicable. Accordingly, CIT(A) has erred in law and on facts in not appreciating this factual and legal position and in giving relief to the assessee. (iv) CIT(A) has further erred on facts and in law in not appreciating that in any case the nature of services rendered by the cable operator / multi service operators consists in facilitating delivery of products of broadcaster to the viewer and in view of implied agency, such payment on account of carriage fee is in nature of commission or brokerage as defined in Explanation to section 194H of the Income-tax Act. (v) CIT(A) has further erred in law and on facts in holding that section 194C applies to the payment of placement charges without appreciating the correct nature of these charges, as is clearly brought out in the statement of fact annexed to the ground of appeal and the order u/s. 201(1) of the Income- tax Act,1961. 2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary at the time of hearing of the case or thereafter. AYs: 2008-09, 2009-10, 2010-11 and 2011-12
The order of the CIT(A) being erroneous be set aside and Ld. A.O‟s order be restored.”
The brief facts of the case are that the assessee is a Company, in the name and style of M/s. UTV News Ltd. engaged in broadcasting of English Business News. Survey action u/s 133A of the Act was conducted on 10-02-2012 in the case of the assessee company to verify whether the assessee company was complying with the provisions of Chapter XVII B of the Act and also to verify whether the assessee company in respect of the payments debited to its profit & loss account on which appropriate TDS compliance is made under the provisions of the Act. On appraisal of the profit & loss account of the assessee company, it was found by the Assessing Officer [hereinafter referred to as “the AO”] that the assessee company has debited an amount of Rs.1,49,69,250/- during the financial year 2007-08 on account of carriage fees. The assessee was asked to give the details of the payments made against carriage fees and the services rendered to them along with copy of the agreement entered into. The assessee company had deducted TDS under the provisions of Section 194C of the Act. The AO found that the payments were made to MSO/Cable Operators to retransmit and/or carry out services of the channels on „S‟ Band in their respective territories. The AO took the view that the services rendered by MSO/Cable Operators do not fall within the purview of Section 194C of the Act, because placing the service of the channel on „S‟ Band is a Technical Service for which TDS is required to be deducted under the provisions of Section 194J, instead of that the assessee has deducted the TDS as per the provisions of Section 194C @1% or 2% on the payments made to the concern contractors as mentioned therein; whereas in view of the provisions contained in Section 194J of the Act, TDS was required to be deducted @10% on the payments made. The AO issued show-cause notices to the assessee for the financial year 2007-08, 2008-09, 2009-10 and 2010-11 and ultimately, he held that the tax is required to be deducted on the amount payable by the assessee to AYs: 2008-09, 2009-10, 2010-11 and 2011-12 the contractors/MSO/Cable Operators as per the provisions of Section 194J of the Act and accordingly the demand for shortfall of the TDS amount along with interest was raised on the assessee by virtue of the orders mentioned above and the AO noted this fact that the penalty proceedings would be initiated u/s 271C of the Act for the shortfall in deduction.
Subsequently, the assessee came in appeal before the learned CIT(A) and the learned CIT(A) arrived at the conclusion that the case of the assessee falls within the purview of Section 194C of the Act instead of Section 194J. Hence, he set aside the order of the AO in this regard. Being aggrieved, the Revenue is in appeal before the Tribunal.
The learned Departmental Representative [hereinafter referred to as “the DR”] has argued that the assessee made payment in lieu of technical services provided to it by the MSO/Cable Operators; hence the case of the assessee comes within the ambit of “fees” for technical services which comes within the ambit of the provisions contained in Section 194J of the Act and accordingly, TDS was required to be deducted, but the assessee deducted TDS as per the provisions of Section 194C of the Act wrongly,therefore, the order of the AO passed u/s 201/201(A) of the Act dated 18-03-2011 is quite legal and in accordance with law. But, the learned CIT(A) has wrongly arrived at his conclusion that the case of the assessee falls within the ambit of the provisions of Section 194C of the Act. Hence, the order of the learned CIT(A) dated 31- 12-2012 is not liable to be sustainable in the eyes of law and submitted that the order of the AO may be restored by setting the order in question.
On the other hand, the learned Representative of the assessee [hereinafter referred to “the AR”] argued that the assessee company is engaged in the business of broadcasting business news through TV Channels and submitted that the payment is covered specifically under the provisions of section 194C. AYs: 2008-09, 2009-10, 2010-11 and 2011-12 He has referred to the Explanation to section 194C and submitted that as per clause (iv) of the Explanation, “the work” shall include inter alia Broadcasting and Telecasting including production of programme for such Broadcasting and Telecasting. Therefore, he has submitted that when the payment is in relation to broadcasting work which is specifically provided u/s 194C, then the general provisions u/s 194J cannot be applied. He has further referred to the CBDT Circular No. 720 dated 30.08.1995, wherein it was clarified that each section under chapter XVII, deals with a particular kind of payment to the exclusion of all other sections in this chapter. The payment of any sum shall be liable for tax deduction only under one section. In support of his contention he has relied upon the decision of Hon‟ble Punjab & Haryana High Court in the case of Kurukshetra Darpans (P) Ltd. Vs. CIT (supra) and submitted that the Hon'ble High Court has held that the receipt of telecasting signals from the licensor is essentially under the contract to obtain broadcasting and telecasting facility of TV channels. Therefore, section 194C is attracted to the payments made to the licensor for obtaining TV signals and the assessee was required to deduct tax at source on such payments. He has also relied upon the decision of Hon'ble Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting Corporation of India) (292 ITR 580) and submitted that the Hon'ble High Court has held that Explanation 3 to section 194C is very specific in its application not only to broadcasting and telecasting but also includes 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 (194J) in more general terms, resort must be had to the specific provisions which manifests the intention of the legislature. The learned AR has also relied upon the decision of this Tribunal dated 9-7-2014 in the case of CIT Vs. NGC network in ITA no. 1382/Mum/2014 and in the case of UTV Entertainment Television Ltd. In ITA No.2699, 4202, 4205 and 2700/Mum/2012 order dated 29-10-2014. AYs: 2008-09, 2009-10, 2010-11 and 2011-12
We have considered the rival submissions and relevant material on record. There is no dispute that the payment in question was made by the assessee to the cable operators/ MSOs for placing the TV channels in the prime band in order to enhance the viewership and better advertisement revenue. In the case of Kurukshetra Darpans (P) Ltd. Vs. CIT (supra), the Hon‟ble High Court of Punjab & Haryana while dealing with an identical question has held in Para 13 to 18 as under:-
“13. After hearing learned counsel for the parties, we are of the view that the contentions of the counsel for the appellant are liable to be rejected. Sec. 194C of the Act creates an obligation on a person responsible for paying any sum specified therein to a person for carrying out any work, to deduct the tax at source.' Presently, we are concerned with the „work' as referred to in cl(b) of Expln. III below s. 194C(2)of the Act.
In terms of the said Explanation. it is provided that expression 'work' shall include inter alia broadcasting and telecasting including production of programmes for such broadcasting and telecasting. By way of such Explanation, it is evident that where the payment is for a work involving broadcasting and telecasting, the same shall be subject to deduction of. tax at source in terms of section 194 of the Act, the assessee is a cable network operator through which it provides telecasting of programmes to the ultimate consumers/subscribers. The assessee in turn enters into a contract with the licensor of various TV channels. On the payment so made, s. 194C of the Act" is attracted. This is for the reason that the licensor, is a person who is performing the work which is covered within the meaning of c1. (b) of Expln. III to s. 194C(2) of the Act.
It is also relevant to mention here that in the agreement between the assessee and the licensor, the licensor is referred to as 'company engaged in the business of distribution of satellite based television channel(s) services including the service and has exclusive rights to market and distribute the services in India to various customers and users of the service'. Further, the agreement refers to the assessee subscriber as a party, which is desirous to subscribe for and receive the telecast signals of the service from the company in order to further distribute the same to the customers).
From the recital of the agreement "Itself, it is clear that the service that the assessee subscriber is availing is the receipt of 'telecasting signals' from the licensor or the company. The expression 'service' has also been referred to mean the TV channel which is dealt with by the licensor or the company. Therefore, what the assessee has transacted for with the licensor or company AYs: 2008-09, 2009-10, 2010-11 and 2011-12 certainly includes within its ambit broadcasting and telecasting facility. The essence of the contract is to obtain broadcasting and telecasting of TV channels and thereafter its distribution amongst ultimate customers through the cable network of the assessee.
Another plea of the assessee/subscriber was that the licensor or the person to whom the assessee is making payment by itself does not do the work of broadcasting' and telecasting and is therefore outside the purview of s. 194C of the Act. This argument deserves to be negated at the threshold. As we have pointed out earlier what the assessee subscriber is looking for is to obtain the telecast signals from the licensor, which is enough, to deduce that the impugned contract involves broadcasting and telecasting of TV signals. Moreover, the licensor or the company, as is evident from the specimen agreement on record, in the business of distribution of satellite based TV channels and has exclusive rights to market and distribute said services in India, the service that is referred to in the agreement is the broadcasting and telecasting of TV signals.
For the reasons recorded above, we have no hesitation in concluding that the Tribunal was correct in holding that the assessee was required to deduct tax at source in terms of s. 194C of the Act on payments made to the licensor for obtaining TV signals, Cable TV network owned by the assessee.”
Thus after examination of the Explanation III to the then section 194C, the Hon'ble High Court held that the payment for obtaining the telecast licenses from the licensor falls under the provisions of section 194C. We find that the work of broadcasting/telecasting including production of programme or such broadcasting or telecasting falls under the definition of “work” as provided under clause (iv) of the Explanation to section 194C which reads as under:-
“Explanation - For the purpose of this section - ********************************* ********************************* (iv) “work” shall include- (a) Advertising; (b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting (c) Carriage of goods or passengers by any mode of transport other than by railways; (d) Catering; AYs: 2008-09, 2009-10, 2010-11 and 2011-12 (e) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, But does not include manufacturing or supplying a product according to the requirement of specification of a customer by using material purchased from a person, other than such customer.]”
The Hon‟ble Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting Corporation of India) (supra), has observed in Para 11 as under:- “We are unable to agree with this submission. 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.
The Hon‟ble Delhi High Court has made it clear that when two provisions are simultaneously introduced in the Act, one is specific and another is more general in terms then the resort must be to the specific provision. Therefore, when the work of broadcasting and telecasting of the programmes specifically falls under the ambit of provisions of section 194C, then in view of the decision of Hon‟ble Delhi High Court (supra), the provisions of section 194J cannot be applied on such payments. The CBDT Circular No. 720 dated 30.08.1995, also supports this view as it was clarified in the said circular as under:-
“1261. Payment of any sum shall be liable for deduction of tax only under one section. It has been brought to the notice of the Board that in some cases persons responsible for deducting tax at source are deducting such tax by applying more than one provision for the same payment. In particular, it has been AYs: 2008-09, 2009-10, 2010-11 and 2011-12 pointed out that the sums paid for carrying out work of advertising are being subjected to deduction of tax at source under section 194C as payment for work contract as also under section 1941 as payments of fees for professional services.
It is hereby clarified that each section, regarding TDS under Chapter XVII, deals with a particular kind of payment to the exclusion of all other sections is this Chapter. Thus, payment of any sum shall be liable for deduction of tax only under one section. Therefore, a payment is liable for tax deduction only under one section.”
In view of the above discussion as well as the decisions of Hon‟ble Punjab & Haryana High Court, Hon‟ble Delhi High Court and the decisions of the Co-ordinate Benches of the Tribunal deciding the issue in controversy i.e. order dated 09-07-2014 in the case of CIT Vs. NGC Network in ITA No.1382/Mum/2014 and in the case of UTV Entertainment Television Ltd. in ITA No.2699, 4202, 4205 and 2700/Mum/2012 order dated 29-10-2014, we do not find any error or illegality in the impugned order of CIT(A) qua this issue. Furthermore, no contrary decision on the issue has been referred to or produced before us by the learned DR. Therefore, following the decisions of the Hon‟ble Punjab & Haryana High Court, Hon‟ble Delhi High Court and the decisions of the Co-ordinate Benches of the Tribunal, we do not find any reason to interference in the order of the learned CIT(A). Accordingly, we uphold the action of the learned CIT(A) and dismiss all the appeals preferred by the Revenue.
In the result, all the appeals of the Revenue are dismissed. Order pronounced in the open court on 16th October, 2015. S d (B. R. BASKARAN) (AMARJIT SINGH) रेखा सदस्म / ACCOUNTANT MEMBER न्मायमक सदस्म/JUDICIAL MEMBER भुंफई Mumbai; ददनांक Dated : 16th October, 2015 व.यन.स./ LK Deka, Sr. PS AYs: 2008-09, 2009-10, 2010-11 and 2011-12
आदेश की प्रनिलऱपि अग्रेपषि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. 2. प्रत्मथी / The Respondent. आमकय आमुक्त(अऩीर) / The CIT(A)- 3. आमकय आमुक्त / CIT 4. ववबागीम प्रयतयनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai 5. गार्ड पाईर / Guard file. 6. आदेशधिुसधर/ BY ORDER, सत्मावऩत प्रयत //// उि/सहधयक िंजीकधर (Dy./Asstt.