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TMI Blog2012 (7) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that the assessee defaulted in deducting tax at source from various payments made by it. The AO called for information and after considering the same and also the clarifications and explanations furnished by the assessee, the Assessing Officer held that the assessee is a defaulter in respect of deduction of tax at source from various categories of payments. 3. Discount on advertisements: The Assessing Officer stated that advertising agents collect money from clients who want to place their advertisements in the various media published/run by it and pass on the money to the assessee after deducting the discount/commission at 15%. The AO proposed to treat the assessee as defaulter u/s 201. The Assessing Officer held that assessee is in default and raised demand u/s 201(1)(and 201(1A). 4. In appeal the CIT (A) held that the assessee cannot be held as an assessee in default after discussing various cases cited and relied on by the assessee. 5. On further appeal before us, it was submitted by the learned counsel that the impugned amounts are nothing but discounts and are recognised as such by the entire trade. It was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The next issue in the Departmental appeals is Payment of data circuit rentals: The Assessing Officer noticed that in the publication division and ETV other channels division, the assessee made payments towards use of data circuit lines to BSNL and that the assessee has not made TDS on these payments. 11. The CIT(A) took note of the fact that data circuit lines were taken on lease by the assessee from BSNL for transmitting data/news in its office from various places where the reporters or contributors collect news from various events across the country. He also took into account the contention of the assessee that the data circuit lines are akin to telephone lines and hence the provision of section 194J are not attracted since BSNL is only providing only the line and not any professional or technical services to the assessee. After examining the invoices issued by BSNL towards rent for channel and rent for local lead at the end "A" refers to location of the assessee at Eenadu complex, Somajiguda, Hyderabad and end 'B' refers to assessee's location at various places in and out of AP. He opined that payments for obtaining connectivity, which is what the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer held that payments made to various companies towards bandwidth charges are liable for TDS u/s 194J. He brushed aside the assessee's plea that the payments were made for providing facilities and not any services. In appeal, the CIT(A) accepted the contention of the assessee and held that the payments are in the nature of rent paid for space allotted in the transponder and the same will not come under the purview of section 194J. The CIT(A) followed the decision of the Hon'ble Madras High Court in the case of Skycell Communications Ltd. Vs. DCIT 251 ITR 53 MAD. The CIT(A) also relied on the decision of the Bangalore Bench of the Tribunal in the case of Software Technology Parks of India Vs. ITO 3 SOT Bang. The CIT(A) held that section 194J will not be applicable to the impugned payments. 16. Aggrieved, the department is in appeal before us. 17. The learned counsel for the assessee Shri Shiva Kumar relied on the decision of the Tribunal Mumbai Bench in the case of Pacific Internet (India) P Ltd. Vs. ITO 318 ITR (AT) 0197 Mum wherein it has been held that payment made for using bandwidth and network operation are not technical services and tax needed not be deducted from su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dismiss the revenue appeal on this ground. 23. The next ground is Payment of Data Circuit Rental Charges: The payments relate to Data Circuit Rentals charges. In the assessment order, the AO has observed that the assessee has made payments to BSNL towards use of data circuit lines on which tax was not deducted at source. The AO (TDS) referred to the assessment order dated 26.12.2007 passed u/s 143(3) by the jurisdictional AO wherein it was held that the payments are towards contractual obligation and are liable to TDS. Apparently no explanation was offered by the assessee either during the assessment or during the TDS proceedings. The AO therefore held the payments to be of the fees for technical services and held that the assessee to be an assessee in default for non deduction of tax at source u/s 194J of the IT Act. 24. In the statement of fact the assessee submitted that it has taken Data Circuit line on lease from BSNL for transmitting data/news in its office from various places where the reporters or contributors collect news from various events across the country. These data circuit lines are akin to telephone lines and hence the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee and reliance by the assessee on decision of the Tribunal in the case of DCIT Vs. Pan Amsat International Systems Inc. 103 TTJ 861 Delhi. The AO held that the assessee was liable to make deduction of tax at source u/s 194J on the transponder rent and raised demand accordingly. 30. On appeal, the CIT(A) analysed the nature of facility that the assessee has obtained by making the impugned payment. By following the Hon'ble Madras High Court decision in the case of Skycell Communications Ltd. Vs. DCIT 251 ITR 53 MAD the CIT(A) deleted the demand raised by the Assessing Officer. The CIT(A) also relied on the decision of the Tribunal Madras Bench in the case of Raj Television Network in ITA No.1827/MDS/98 holding that payment of transponder charges is not fee for technical services. 31. Aggrieved, the revenue is in appeal before us. 32. We heard both the parties and perused the materials available on record. We find that in the case of ISRO satellite centre in 175 Taxman 97 AAR, the assessee was to make payment for taking on lease Space Segment Capacity consisting of L-1 and L-5 transponder Centered on an Inmarsat 4th Generation Satellite whose capacity is utilised throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical services. The CIT(A) erred in holding that the professional qualifications and skills required to be possessed by news reporters result in professional services by the news service agencies. The CIT(A) ought to have appreciated that professional service is to be understood as the application of personal skill by persons who is trained/qualified and the word professional service attaches to services rendered by individuals. The news service agencies may be utilising professional services but in the hands of the assessee the data is raw data which has to undergo processes for being converted into news or features fit for publication/presentation. The work carried out by news service agencies in getting the news gathered and transmitted to the assessee is not a technical service in the sense that any process/skill is made available to the assessee. The CIT(A) ought to have deleted the demand raised by the Assessing Officer who applied provisions of section 194J. 38. Aggrieved, the assessee is in appeal before us. 39. The learned DR relied on the order of the AO & CIT(A). 40. We heard both the parties and perused the materials available on record. We are unable to apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the revenue paid to M/s Usha Kiron Television, M/s Usha Kiron Movies and other parties out of advertisement revenue from the time slots in telecasting the programmes is not towards cost of programmes, serials etc. In this connection, the assessee further submitted that it had credited the gross revenue generated during said programmes and debited the amount paid to the said parties to P&L account under the head 'cost of TV programmes" for accounting purposes. In fact it would have been enough if the assessee had credited its shares of revenue to its profit and loss account instead of passing entries as stated above. 42. In the above circumstances, the assessee submitted that the provisions of section 194C are not attracted to the transaction between the assessee and M/s Usha Kiron Television, M/s Usha Kiron Movies and others for the reason that these parties did not carry out any work for the assessee within the meaning of section 194C of the Act. 43. However, the Assessing Officer invoked section 194C and raised demand in respect of the amounts paid over on sharing basis. He also levied interest u/s 201(1A). 44. In appeal, the CIT(A) noticed that in respect of outright purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one/agreed to be done by the payee. The assessee reiterated its reliance on the decisions in the cases of ACIT Vs. NIIT 112 TTJ 800 DEL and HFCL Infotel Limited Vs. ITO 99 TTJ 440 CHD. 48. We heard both the parties and perused the materials available on record. From the Profit and Loss account it was seen that in the ETV Telugu Division and ETV Other Channel Division, the assessee has made payments towards software expenses. These payments are further subdivided into 'revenue share'. 'Other programmes' and 'Direct purchases'. Expenses towards revenue shares are towards the agreed cost for production of TV serials/programmes. From the agreements with other parties, it can be concluded that the assessee is associating itself with the producers for getting the programmes telecasted on ETV channel and thereby the assessee gets a source for generating advertisement revenue. Hence the assessee is making payments to various agencies on revenue sharing basis from the income generated through advertisements by way of telecasting the serials or programmes produced by the agencies. The mode of payment is nothing but a payment for contract of work and is squarely covered by explanation III to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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