9911796707
TMI Blog2012 (7) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... he channel companies are not taxable in India and hence tax was not required to be deducted on payment made to channel companies. 3. The appellant prays that the order of the ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored. 4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. Brief facts of the case as culled out from the records are that the assessee 'Star Limited' is a company incorporated in British Virgin Island and having its principal place of business at Hong Kong, is engaged in the business of media/entertainment. The assessee is part of STAR Group of companies and is wholly owned subsidiary of 'News Corporation" having its worldwide operations in the filed of media and entertainment. The news corporation is also having indirect holding in various 'Channel Companies' which are owning and telecasting TV channels in India. The description and details of 'Channel Companies' are as under :- Name of the 'Channel Company' TV Channels shown in India Star Television Entertainment Ltd. STAR PLUS, STAR WORLD Star Asian Movies Ltd. STAR GOLD Star Internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax was required to be deducted at source by the assessee from the credits/payments made to the Channel Companies under section 195 of the Act. Since, the tax was not deducted and paid to the Government, the Assessing Officer disallowed the cost of advertising airtime procured by the assessee from the Channel Companies under the provisions of section 40(a)(i). Against the said order, the assessee preferred an appeal before the CIT(A), who upheld the order of the Assessing Officer. Thereafter in second appeal before the ITAT, though the Tribunal upheld the disallowance, but gave a categorical remark that this case involves complex issue of question of law. Even though the assessment order was passed under Section 143(3) for the assessment year 2000-2001, 2001-2002 & 2002-2003, however, no order was passed under Section 201(1A) for any of the assessment year under consideration, holding the assessee as 'assessee in default' for failure to deduct tax at source. The Assessing Officer after a gap had issued a show cause notice on 9th March, 2006 for imposition of interest under section 201(IA) along with the levy of penalty under section 271C. In response to the said notice, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me barred; and (vi) The appellant has introduced the abstract concept of 'outright sale of advertisement airtime' and has tried to confuse the Revenue department. The intention of the appellant is to make the issue artificially complicated. 3. Before the CIT(A), the assessee had made detail submissions primarily on these grounds that :- (i) penalty proceedings are barred by limitation; (ii) there was bonafide belief for failure to deduct tax at source; and (iii) the issue involved was a debatable issue where different opinion of various Courts have been rendered. 3.1 On the issue of limitation, learned CIT(A) rejected the contention of the assessee quite elaborately after following the decision of the Special Bench in the case of Mahindra & Mahindra, reported in 313 ITR 263 (AT), Mumbai Bench. On the issue of bonafide belief for failure to deduct tax at source, Ld. CIT (A) cancelled the penalty after giving detail reasonings which are from pages 16 to 32 of the appellate order after referring to various judicial decisions. The sum and substance of his findings are as under :- (i) That, the assessee has disclosed all the relevant fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not chargeable to tax in India. In other words, even in respect of income not chargeable to tax, whether permission of Assessing Officer u/s 195(2) of the Act is necessary. (c) Whether the Channel Companies, recipient of payment, have a business connection in India and whether their income is taxable in India." Accordingly, he deleted the penalty on the ground that the assessee had a genuine bonafide belief and had reasonable cause for non-deduction of tax at source. 4. Before us, the learned counsel on behalf of the assessee submitted that the assessee had duly deposited the tax immediately after the passing of the assessment order passed under Section143(3) at the rate of withholding, determined by the Assessing Officer. For the assessment years 2000-2001 & 2001-2002, the entire payment of TDS was deposited in Central Government's account in 2004 and for assessment year 2002-2003 and all the payments were deposited in 2005. By this time, no order under Section 201(1A) was passed by treating the assessee as 'assessee is in default' by the Assessing Officer. Now, the penalty has been levied after expiry of eight years for delayed of payment of tax. 4.1 On the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Eli Lilly and Company Private Limited (supra). 5. Learned Senior DR submitted that, deductor cannot file application under Section 197 and recourse for the assessee was to file application under Section 195(2), which has not been done. The law was always very clear and the assessee has even admitted its default. All the submissions which were raised before the Assessing Officer has been dealt with extensively with detailed reasons in the penalty order to which he referred and relied upon. 6. We have carefully considered the rival submissions, perused the relevant findings given by the CIT(A) as well as the Assessing Officer and also perused the material placed on record. It is an admitted fact that the assessee is a non-resident company having its principal place of business at Honkong and the various Channel Companies are also non-resident companies based in Honkong. Hence, the payment in question is made by a non-resident company to a non-resident company. In the return of income, while computing the taxable income, the assessee has shown his taxable income and also claimed deduction of the cost of advertising airtime procured from the Channel Companies on principal-to-principa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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