ACIT (TDS)-3(1), MUMBAI vs. VIACOM 18 MEDIA P. LTD, MUMBAI

The facts in brief are that the assessee is a company incorporated in India and is primarily engaged in broadcasting and telecasting of television serials /films/other programs from India viz. Colors, MTV, Nick and VH1. It is also engaged in marketing of advertising airtime on these channels, distribution of the channels, marketing and distribution of films through its film division and production of program content/television software. For such broadcasting and telecasting of programs , the assessee needed to place its programmes on the bandwidth or frequency so that these could reach the end viewers . The cable operator/D.T.H. are the last in the rung of broadcasting and telecasting and thus are in a inherent position to decide that which programme is to be placed or released at what frequency or bandwidth. The placement charges were paid by the assessee to cable operators for placing a particular channel on a preferred bandwidth in order to telecast programmes during peak hours so that it attracted the viewership and also fetched better revenue for the TV Channels. The assessee deducted tax at source at the rate of 2% u/s 194C from such payments.

The CIT(A) by disagreeing with the view taken by the AO decided the issue of deduction of tax at source on placement charges in favour of the asssessee by following the Judgment of Honourable Delhi High Court in the case of Prasar Bharati (Broadcasting Corporation of India) [2006] 158 taxmann 470 by holding that the placement charges/ carriage fees is covered under the definition of work contract u/s 194C.

The Ld. DR relied on the order of AO and submitted that the services provided by the cable operators are highly technical, involves technical equipment for transmitting the channel network to end user and, therefore, the payment is in the nature of fees for technical services and thus attracted deduction of tax at source u/s 194J.

On the other hand, the Ld. AR relying upon the following decisions submitted that the issue of TDS on placement charges was squarely covered in its favour by the following decisions of Tribunals and High Courts :-

He further relied and referred to circular no. 720 dated 30th August, 1995 and prayed for dismissal of appeal of Revenue on this ground.

We have considered the rival submissions, decisions referred to above and carefully perused the materials on record . We find that the issue regarding deduction of tax at source for the payment made to cable operators as placement charges is fully covered in favour of the assessee by the various decisions and also by the Circular no. 720 of 30.08.1995. The Hon’ ble Delhi 7 | P a g e

In view of the facts and circumstances of the case and the Judgment of Hon’ble Delhi High Court in the case of CIT Vs. Prasar Bharati (supra), we do not find any reason to interfere with the order of CIT(A) qua this issue and the same is hereby affirmed. Accordingly, the grounds no. 1 to 5 are dismissed.

Ground no. 6 relates to the issue whether the uplinking charges were liable for deduction of tax at source u/s 194C or 194J.

The facts of the case are that the assessee is in the business of telecasting/broadcasting TV channels and for which the signals/channels need to be uplinked from the earth station to the satellite. The assessee

The AO held that the uplinking involved operation of complex equipments at the uplink centre and further that the assessee was paying uplinking charges not for broadcasting but towards royalty and thus provisions of section 194J were attracted and not 194C.

The CIT(A) rejected the action of the AO by observing that uplinking was an integral part of broadcasting/telecasting and is covered under the Explanation to section 194C of the Income Tax Act by following the Judgement of Honourable Delhi High Court in the case of Prasar Bharati (Broadcasting Corporation of India) (Supra) and CBDT circular no 720 dated 30.08.1995 (supra) by observing as under:-

The Ld. DR heavily relied on the order passed by the AO as well as the decision of Mumbai Bench of Tribunal in the case of Asst. CIT Vs. Sanskar Info. T.V.P. Ltd [2008] 24 SOT 87 (Mum.)

On the other hand, the Ld. AR, in support of his claim , relied upon the following decisions as well as Circular No. 720 dated 30.08.1995.

We have considered the rival submissions and also perused the relevant material on record. The decision of Mumbai Bench in the case Asst. CIT Vs. Sanskar Info. T.V.P. Ltd (supra), relied upon by the Ld. DR are not applicable in the facts and circumstances of the present case as the payment made in that case was made to a non-resident whereas in the present case the payment has been made to Indian resident. In the light of the proposition laid down by the Hon’ble Delhi High Court in the case of CIT Vs. Prasar Bharati (supra), the specific provisions of section 194J are applicable in case of uplinking fees

Ground No. 7 relates to whether the payment for production of programmes for bradcasting and telecasting was liable to tax u/s 194C or 194J.

The brief facts of the case are that the assessee used to get his programmes such as TV serials, films and other programmes produced from outside producers/studios for which it used to make payments. The similar production was also undertaken by the assessee in-house. The assessee deducted TDS u/s 194C from the payments made to such producers of programmes.

The AO rejected the contention of assessee that section 194C was applicable to such payments and opined that such payment are in the nature of royalty and technical fee and, therefore, the provisions of section 194J were applicable.

The CIT(A) decided the issue in favour of the assessee by following the decision in the case of Prasar Bharati (Broadcasting Corporation of India) (Supra) and CBDT circular dated 30.08.1995 (supra) By holding that the AO was not justified in treating the payments for programmes production as royalty. In any case as also held in the aforesaid judgment provisions of section 194C are more specific as compared to those of section 194J( Since provision of 194C deals with very payment in question- production of programmes and not with general category of payment like fee for technical services or royalty as in section 194J and hence section 194J cannot apply to the payment for production of programmes. Section 194C clearly states that payment for production of programmes constitutes payment for work u/s 194C. Accordingly, applying the said Judgment of the Hoourable Delhi High Court and also relying on CBDT circular, he held that provisions of section 194C would prevail over section 194J of the Act in this case.

The Ld. DR relied upon the order of AO.

The Ld. AR argued that payment for production of programme for broadcasting/telecasting is covered by a series of Judgments.

We have considered the rival submissions and also perused the relevant material on record. We find that this issue regarding payment for production of programmes for broadcasting and telecasting has been considered and decided by the Honourable Delhi High Court in the case of CIT Vs. Prasar Bharati (supra) as discussed above. Respectfully following the same, this issue is accordingly decided in favour of the assessee.

In view of the above finding, we find that there is no merit in the appeal of the Revenue and the same is hereby dismissed.

Since the issues raised in all the appeals of Revenue are common, our decision in the appeal for assessment year 2009-10

Since we have dismissed the appeal of Revenue, the Cross Objections filed by the assessee have become infructuous and the same are hereby dismissed.

In the result appeals of the Revenue as well Cross Objections by the assessee are dismissed.