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TMI Blog2013 (12) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... h Gupta, Sachin Shah, Aditya Modani and Ms. Priyanka Minawala. For the Respondent : R.S. Rawal and Rajkumar. RULING The applicant M/s Endemol India Private Limited (EIPL) is a resident company incorporated under the Companies Act, 1956. It is engaged in the business of providing and distributing television programmes. It mainly produces reality shows and has also ventured lately into soap operas. The company started its operation in 2006 with the non-fiction format show Bigg Boss (Big Brother) and has also other reality shows in India such as Fear Factor - Khatron Ke Khiladi etc. 2. During the financial year 2010-11 the applicant had produced the reality show 'Wipe Out' ('the show') which was aired by Viacom 18 Media Private Limited on Imagine TV. As per the format of the show the shooting was to take place outside India (primarily in Argentina). For the purpose of show the programme outside India the applicant has engaged Endemol Argentina SA (Endemol ARG) for providing line production services in Argentina and for that purpose an agreement in the form of DEAL MEMO for production services agreement was entered into. Endemol ARG is a company incorporated in Argentina a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olve any professional and technical input/ex-party function provided to the applicant. Endemol ARG did not perform any function on behalf of the applicant and therefore the payment for the services is not covered under FTS definition in the Act. In its submission the applicant relies on the decision of the ITAT Mumbai in the case of Yashraj Films Private Limited (ITA No.4856 of 2008). 6. It was also submitted that the payments would be covered by the provisions of Section 194C of the Act (i.e. Contractual work) as the term 'work' inter alia includes broadcasting and telecasting including production of programs for such broadcasting or telecasting. Attention was invited to CBDT's circular No.715 dated 8th August, 1995 which states that when payments are made to advertising agencies for production of programmes which are to be broadcasted / telecasted, the said payments would be subject to withholding tax under section 194C of the Act. It was contended that circular No.394 dated 14th Sept., 1984 of the CBDT provided clarification on the exemption of remuneration received for rendering services in connection with the show of cinematography by foreign film producer in India and as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement of the applicant with Endemol ARG, it is found that the main provision of the services are technical crew, production crew and technical equipments. It appears that other services are ancillary necessary for the technical/production crew and the technical equipments only. 9. Explanation 2 to Section 9(1)(vii) of the Income-tax Act reads as under: "For the purposes of this clause 'fees for technical services' means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the services undertaken by other personnel but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be the income of the recipient chargeable under the head 'salaries' ". Apart from the Explanation mentioned above there is no other definition of the term 'Fees for Technical Services' in the Act, though various attempts were made at various forums in interpreting the said term. 10. Coming to the argument that the payments clearly fall under the definition of "work" as defined and clarified by CBDT under Explanation 2 to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng including production of programmes for such broadcasting or telecasting. In the case decision cited above, the Delhi High Court held that Broadcasting and Telecasting including production of programmes for such broadcasting and telecasting do not fall under the provision of section 194J as they are specifically covered by definition of work in section 194C of the Act. In the Circular issued by the CBDT No.715 dated 8th August, 1995 cited by (supra), it is clarified that tax deduction for advertising services (which includes charges of art work and other related job as well payments made to media) will have to be made under section 194C of the Act @ 1%. The advertising agencies shall have to deduct tax at source @ 5% under section 194J of the Act while making payments to artists, actors, models etc. Further, if payments are made for production of programmes for the purpose of broadcasting and telecasting, these payments will be subject to tax deduction @ 2%. Even if the production of such programmes is for the purpose of preparing advertisement materials, not for immediate advertising the payments will be subject to TDS @ 2%. The circular makes clear the distinction between p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statute expresses also a particular expression incompatible with the general intention the particular intention is to be considered in the nature of an exception. Again if the services are characterized as 'contact work' under section 194C of the Act, then the income received should be necessarily treated as business income. The non-resident company does not have PE in India. The services are rendered and utilized outside India and the payments for the services rendered is also received outside India. There is no business connection in India. In such circumstances the income of the non-resident company is not taxable in India. 12. The questions raised by the applicant are answered as follows: (1) The payments made by the applicant towards line production services provided by Endemol ARG in accordance with the agreement entered into by the applicant with Endemol ARG is not 'fees for technical services' as the services falls under 'work contract' as defined in Explanation to Section 194C of the IT Act. (2) The question is not dealt with because of our answer to question No.1 (3) The payments made by the applicant to Endemol ARG for availing the line produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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