TMI Blog2014 (4) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... auses of the agreement. - agreement in question was an agreement to produce the programme by the assigned producer i.e., contractor on behalf of the producer i.e., assessee. Clause (b) to Explanation III to section 194C specifically covers activity of production of programmes whereas provisions of section 194J are general in nature - Provisions of section 194C would prevail over section 194J of Act - Section 194C clearly states that payment for production of programmes constitutes payments for 'work’ under section 194C - Assessee rightly deducted TDS u/s 194C at rate of 2% on payments made to contractor - CIT(A) has rightly observed that production of programmes is nothing but combination of processes right from planning - He rightly held that dubbing charges and processing fees being a part of production of television serials and programmes, are squarely covered under ambit of specific provisions of section 194C of Act and liable to TDS at rate of 2%. - General provisions of section 194J are not attracted in this case - Findings of ld. CIT (A) upheld - Decided against Revenue. - ITA Nos.4548,4549&4550/Mum/12 - - - Dated:- 23-10-2013 - P M Jagtap And Sanjay Garg, JJ. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground or add a new ground which may be necessary at the time of the hearing of the case or thereafter. 3. The order of the CIT(A) being erroneous be set aside and ld. A.O. s order be restored." 3. The assessee is a limited company and is inter-alia engaged in the business of production of cinematographic motion pictures and small screen programmes through assigned producers. A survey operation u/s 133A was carried out in the case of the assessee and it was found that the assessee had debited "production expenses" and "dubbing expenses/print processing fees" on which the tax was deducted under section 194C of the Act. The AO was of the view that the "dubbing expenses/print processing fees" and "production expenses" were in the nature of 'fees for technical services and 'royalty respectively, and hence the tax should have been deducted under section 194J of the Act @10%,instead of @2% deducted by the assessee under section 194C, with respect to the payments made during the year. After considering the reply of the assessee in this regard, he computed short deduction of tax under section 201(1) and raised demand of Rs.4,74,34,481/-.However, the ld. CIT(A) On appeal by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e film who was fully in command of making the film. Therefore, the specific clause regarding the transfer of right was inserted in the agreement. 6. In appeal, The ld. CIT(A), however, observed that it was evident from the sample Agreement that the assessee used to hire the producers (who first approach the assessee) for producing TV programmes for it, on a commissioned work basis and pay consideration to such assigned producer for producing the programmes. He further observed that under the provisions of section 194C of the Act, it has been provided that expression 'work shall include, inter alia, broadcasting and telecasting including production of programmes for such broadcasting and telecasting. Therefore, where the payment was made for production of TV programmes, it was covered by provisions of section 194C. He further observed that the principal purpose of entering into the Agreements was to get the programmes produced through the assigned producers on a commissioned work basis. The assessee was the exclusive owner of the programmes to be produced by the producer. He therefore held that the payment for carrying out the work of producing programmes on behalf of assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition of royalty and tax was liable to be deducted u/s 194J of the act. He has relied upon the A.O. 10. We have considered the submissions of the ld. Representatives of the parties and have also gone through the record. First of all we have to see the intention of the parties to the contract as to whether the contract was for production of programme or for the sale or transfer of copy rights etc. of the programme produced by the so called assigned producer. Clauses of an agreement cannot be read into isolation but the true intention behind the contract can be gathered by reading all the clauses together in harmony with each other and also taking into consideration the inter se relation between those clauses. A view cannot be formed about the nature object of a contract by reading a clause of it in isolation and in ignorance of the other relevant clauses therein. 11. We have gone through the various clauses of the sample agreement placed in file before us and a harmonious reading of the whole agreement reveals that the said agreement is essentially an agreement to produce teleserials and not for transfer of copy rights etc. of a already produced programme of another pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'the said PROGRAMME for the consultations and advice, as may be considered necessary by 'The PRODUCER from time to time. ' The PRODUCER also reserves the right to effectively advise, be it creative, commercial and otherwise, to 'The ASSIGNED PRODUCER in writing on all pre-production main-production and post-production matters of 'the said PROGRAMME and constituents therein, in the course of this Agreement and the same shall be binding on 'The ASSIGNED PRODUCER for required modifications, incorporations, insertions and compliances whatsoever. However, 'The ASSIGNED PRODUCER shall alone be responsible for any consequences arriving out of any omission and /or commission with regard to the making of 'the said PROGRAMME and/or its exploitations by 'The PRODUCER and/or its Assignees." . "n) That 'The PRODUCER shall be entitled to market, sell, telecast, assign and exploit 'the said PROGRAMME and parts thereof globally in any way by any means in whichever way, to be decided exclusively by 'The PRODUCER being the ABSOLUTE OWNER and PERPETUAL COPYRIGHT HOLDER of the 'the said PROGRAMME in which 'The ASSIGNED PRODUCER shall have no right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case may be." . "IV.b) The above stated GROSS CONSIDERATION per episode includes any and all costs, investments and expenses, in the complete conduct of process flow and management, production, delivery of the excellent quality finished (broadcastable) 'said PROGRAMME and assignment of perpetual and universal copyrights thereof, including relating to the following- (i) Recce, (ii) Pre-production(story, script-screenplay with dialogues, creatives, format, process flow, participants, relates, including sets and properties etc.) (iii) Main-production (including raw-stock, studios, properties, costumes, song-dance recordings-picturizations, equipment and locations), (iv) Post-production(including graphical and special effects and presentations), (v) All statutory and otherwise obligations and expenses, costs, levies, insurance premia and taxes etc. (vi) Authority to use the film songs/other clippings in 'the said PROGAMME whether directly or indirectly related to the appearing Guest, if any, to be obtained by PPL/IPRS/TPPL/respective Right Holders, as the case may be, (vii) Remunerations and expenses of overall cast and crew such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id programme in which the assigned producer shall have no rights/interests and/or claims whatsoever. As per clause (o) any suggestions and/or value additions advised by the producer in the programme shall have to be incorporated by the assigned producer and he shall, in no event, deviate from the approved format, process flow and management and script-screenplay etc. of the programme. Further as per clause (r), 'the producer shall be entitled to examine, verify and audit the project specific books and accounts as well as the production progress of the assigned producer for the said programme from time to time and the assigned producer shall not in any way restrain/prohibit 'the producer the producer from questioning/disputing the accuracy of any transaction, payment and action/inaction for the project at a later date. The gross consideration clause clearly reveals that the 'consideration payable by the producer to the assigned producer is relating to different constituents of the 'to be produced programme as mentioned under clause IV(b), but does not include any separate consideration for transfer or assignment of copyrights etc. of the programme. The clause II(b) relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) any sum referred to in clause (va) of section 28, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein: .." 14. perusal of the above extract of the provisions of section 194C, reveals that clause (b) to Explanation III to section 194C specifically covers the activity of production of programmes, hence, the payment made to the contractor i.e. Assigned Producer for production of programme specifically falls within the ambit of clause(b) to Explanation III to section 194C, whereas the provisions of section 194J are general in nature. It is settled law that when an activity or transaction is covered by the specific provisions of the act, then resort must be have to that specific provision and not to the general provisions especially when general provisions are contrary, departing from, giving a different intention, interpretation or meaning in any manner as compared to the said specific provisions. It is thus clear that the provisions of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this expenditure was liable for TDS u/s 194J. The ld. CIT(A) however observed that the dubbing and processing of films are processes in the production activity undertaken by the assessee. The service of dubbingthus was in the nature of 'work and would fall under section 194C of the Act. He further observed that the service rendered in regard to payment of Print Processing Fees was also in the nature of 'work and would fall under section 194C of the Act in view of similar processes involved. He therefore deleted the demand of tax of Rs.27,09,159/- under section 201(1) made by the AO under this head. 18. Before us the ld. AR has submitted that both dubbing and processing are part of production activity of the film/serial undertaken by the assessee. The dubbing is nothing but an ancillary activity to the production of serial/films. It is done to make sure that the serial communicates with the targeted audience and to make it ready for telecast. He has further submitted that Print Processing fees is paid for processing of raw films and making extra copies of the same. At the time of shooting of the serial/film, the serial is shot using raw images/films. Such raw films are not in ed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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