TMI Blog2005 (8) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... er, they are all against the order of the Assessing Officer under section 201 treating the assessee to be in default under section 201(1) for its failure to deduct the tax from the payment to Distributor and the interest charged under section 201(1A). The amount of TDS under section 201(1) and interest under section 201(1A) in respective years are as under : Asstt. Year TDS u/s 201(1) Interest u/s 201(1A) Total 2002-03 1,93,160 60,360 2,53,520 2003-04 1,23,100 20,002 1,43,102 2004-05 1,19,254 1,490 1,20,744 3. At the time of hearing before us, the learned counsel for the assessee argued at length. His arguments can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee received the money from hiring of the cinema. In fact the assessee collected the money from exhibition of films and part of which was paid to the Distributor. He, therefore, submitted that the Assessing Officer rightly held that the assessee was liable to deduct the tax at source on the payment to the Distributor. 5. We have carefully considered the arguments of both the sides and perused the material placed before us. Section 194C and Explanation III thereto read us under : "194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broadcasting or telecasting; ( c )carriage of goods and passengers by any mode of transport other than by railways; ( d )catering." 6. From the above, it is clear that section 194C would be applicable if any person is making payment of any sum to any resident for carrying out any work. In the case under consideration before us the assessee is exhibiting the films in the cinema owned by it. The receipt from the exhibition of films is shared between the assessee and the Distributor on the terms agreed between them. Therefore, the question is whether the amount collected by the assessee on exhibition of films and part of which is shared with the Distributor, is covered within the ambit of definition of "contract for carrying out any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed. Main basis for the Assessing Officer for holding that the assessee was liable to deduct at source under section 194C of the Act is the decision of the Hon ble Supreme Court in the case of ACC Ltd. ( supra ) and also Circular No. 681 of CBDT. We found that the Hon ble jurisdictional High Court in the case of All Gujarat Federation of Tax Consultants v. CBDT ( supra ) has considered the decision of the Hon ble Supreme Court in the case of ACC Ltd. ( supra ) as well as Circular No. 681. After considering the decision of the Hon ble Supreme Court Their Lordships have quashed the Circular No. 681 issued by the CBDT. Therefore, the Assessing Officer was wrong in taking cognizance of circular which was purported to be given by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not an activity expressly covered by the Explanation III . Anything which is not expressly covered under the category of work cannot be regarded as "work" by extended meaning of work as described in section 194C of the Act. The following observation of the Hon ble Gujarat High Court from the decision in the case of All Gujarat Federation of Tax Consultants v. CBDT ( supra ) (Page Nos. 292-293) support this view. In our conclusion, we are further strengthened by the fact that the Legislature intended to make a separate provision for bringing the service contract and professional service within the purview of the provision relating to tax deduction at source, by the Finance Bill, 1987 which has been quoted above. Once again the Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k". The exhibition of film in the theatre has not been described in the above Explanation, therefore also, there is no case of the revenue, by which it can be held that the assessee was required to deduct tax at source from the payments made by it to the distributor of films. In view of above discussion on facts and laws, we find no merits in the appeals filed by the department and the same are dismissed." We entirely agree with the above finding of the Tribunal, Ahmedabad Bench "C". No contrary decision is brought to our knowledge. In view of above, we hold that the assessee was not required to deduct TDS on sharing of receipt from the exhibition of films with the Distributor. Accordingly, we quash the orders passed under section 201(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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