TMI Blog2015 (2) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act are general in nature and therefore, provisions of section 194C would prevail over section 194J. - Decided against revenue. Deduction of TAS on Event Management Charges - On the payment made to the event manager, the assessee deducted TAS u/s 194C, but according to the AO, the assessee should have deducted TAS u/s 194J - Held that:- Department is heavily relying on the Notification issued by the Board No. 88/2008/F. No. 275/43/2008 dated 21.08.2008, according to which it prescribes that TDS on fee for event management is to be u/s 194J. But this Notification in our opinion shall be prospective and shall not cover the payments made prior to the issue of Notification, as it does not bear any retrospective character. We, therefore, sustain the order of the CIT(A) that the 'event management fees' paid by the appellant to its event managers cannot be held to be in the nature of ….for technical services' in the current year. Since the Appellant has already deducted TDS under section 194C of the Act, the AO is directed not to consider the Appellant to be an assessee in default under Section 201(1) of the Act as there is no short deduction by the Appellant. - Decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) has applied the right law, we are inclined to sustain the order of the CIT(A)held that these directors did not have any employer - employee relationship and nor did they receive any pecuniary benefits. Payment of commission to them, itself, could not be categorised as salary, consequentially reject the ground as raised by the department. - Decided in favour of assessee. - ITA Nos. 3931 to 3935/Mum/2013 - - - Dated:- 20-2-2015 - R. C. Sharma, AM And Vivek Varma, JM,JJ. For the Appellant : Smt Abha Kala Chanda For the Respondent : Shri Vijay Mehta ORDER Per Vivek Varma, JM. The following appeals have been filed by the department: Sr. No Asst. Year ITA No. CIT(A) Date of CIT(A) Order 1 2006-07 3931/Mum/2013 14. Mumbai 26.04.2011 2 2007-08 3932/Mum/2013 14. Mumbai 26.04.2011 3 2008-09 3933/Mum/2013 14. Mumbai 26.04.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prime band and such service are technical service u/s 194J. 3. On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee was in fact author of all the programme purchased by it and was fully in command of making such programme and therefore the payments made by it for production of such programme was in the nature of Technical fee within the meaning of section 194J and therefore erred in deleting the short deduction and interest u/s 201(1A) determined on this account and holding the same within the meaning of provisions of section 194C. 4. On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the facts brought on records by the Assessing officer that the acquisition of programme software involves transfer of rights of that programme to the assessee and such payments made by the assessee are clearly covered under the definition of Royalty within the meaning of royalty in Explanation 2 to clause (vii) to Section 9. 5. On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee did not produce any agreement with event manager to justify that the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee did not produce the evidence of payment of unpaid TDS as per tax audit report before the assessing officer whereas the CIT(A) claimed that the assessee paid the unpaid TDS before the completion of proceedings u/s 201(1)/201(1A). 14. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the demand of ₹ 9,68,90,071/- without properly appreciating the factual legal matrix of the case as clearly brought out by the A.O. in order u/s 201(1) of the IT Act, 1961. 15. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary at the time of the hearing of the case or thereafter. 16. The order of the CIT(A) being erroneous be set aside and the A.O's order be restored . 6. The facts pertaining to these grounds are that the assessee pays carriage fee to cable operator/MSO for putting the channel on a particular frequency. This is done, because in India, broadcasters face bandwidth constraints. By doing this, the broadcaster gets better viewership and revenues. For taking this service from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 2% as per the provisions of section 194C of the Act. 3.13 I do not agree with the stand adopted by the AO in the impugned order that the placement fee should be treated as Fees for technical services for the purpose of TDS under section 194J of the Act. It is a settled position in law that merely because as part of providing any service or facility, if the service provider requires technical equipments that does not mean that any technology or technical service is provided by the service provider. Under the current arrangement, what the cable operator does is to only give preference to a particular channel over the other to place it on a particular band for which they charge a consideration. Merely because as part of providing this privilege/facility, it requires the cable operators to put the channel on a particular band using technical equipments, does not mean that any technology or technical service is provided by the cable operators to the Appellant. Having regard to the decision of Madras High Court in the case of Skycell Communications Ltd and various other judicial precedents relied upon by the Appellant, placement of channels being a standard facility, the considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the Appellant as an assessee in default under Section 201(1) of the Act, as there is no short deduction of tax by the Appellant. The demand of tax of ₹ 81,93,378/- under Section 201(1) and consequential levy of interest at ₹ 48,56,174/- under section 201(1A) is hereby deleted . 8. The CIT(A) therefore, deleted the addition as made by the AO. 9. Against this order on the issue, as decided by the CIT(A), the department is in appeal before the ITAT. 10. Before us, the DR strongly supported the order of the AO, whereas, the AR supported the order of the CIT(A). 11. We have heard the arguments and have pursued the orders of both the revenue authorities and we find that the CIT(A) had correctly applied the provisions of law, i.e. in section 194C, work includes broadcasting and telecasting including production of programmes . We are also helped by the order of the coordinate Bench of ITAT Mumbai in the case ofACIT(TDS) vs UTV Entertainment Television Ltd., ITA No. 2699/Mum/2012, wherein the ITAT held that while making the payment of carriage fee to cable operators, TDS has to be deducted u/s 194C. 12. In such a circumstance, we endorse the finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements is to get the programmes produced by the producers on a commission work basis. The Producer is contracted to organize, plan, shoot and record promos/teaser for the TV programmes and the Appellant has the full creative and technical approval/authority over the programmes, including the outline, script, etc. In such case, I agree with the Appellant that the payment for carrying out the work of producing programmes on behalf of the Appellant is in the nature of 'work' as defined in section 194C of the Act and there can be no question of treating it as fees for technical services' under section 194J of the Act. 4.6 In view of the above, I do not agree with the stand adopted by the AO. He has completely ignored the crux of the transaction. Also, the decision relied upon by the appellant i.e. that of Hon'ble Delhi High Court in case of Prasar Bharti [2006] (158 Taxman 470) is on identical facts i.e., payments for production of TV programmes made on commissioned work basis. The Hon ble Delhi High Court has held as under: We observe that Explanation III, which was introduced Simultaneously with Section 194C, is very specific in its application to not only broad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, before coming to a conclusion, that u/s 194C work includes production of programmes . We find that similar issue was contested before the Hon ble Delhi High Court in the case of CIT vs Prasar Bharti, reported in 292 ITR 580 (Delhi) and followed by ACIT(TDS) vs Sahara One Media Entertainment Ltd. in ITA No. 4548/Mum/2012, wherein it was held that payment to assigned producer for production of programme specifically falls within the ambit of clause (b) to Explanation III to section 194C of the Act, whereas, the provisions of section 194J of the Act are general in nature and therefore, provisions of section 194C would prevail over section 194J. 22. In these circumstances, we sustain the order of the CIT(A) and reject the grounds of appeal raised by the department on the issue. 23. Grounds no. 3 4 are therefore, rejected. 24. Grounds no. 5, 6 and 7 pertain to deduction of TAS on Event Management Charges. 25. The assessee organizes events, for which it appoints event management companies. On the payment made to the event manager, the assessee deducted TAS u/s 194C, but according to the AO, the assessee should have deducted TAS u/s 194J. He, therefore, held the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the AO. 24. Against this order of the CIT(A), the department is in appeal before the ITAT on this issue. 25. The DR vehemently argued the issue on behalf of the AO, whereas, the AR argued the correctness of the order of CIT(A). 26. After hearing both the parties, we find that the department is heavily relying on the Notification issued by the Board No. 88/2008/F. No. 275/43/2008 dated 21.08.2008, according to which it prescribes that TDS on fee for event management is to be u/s 194J. But this Notification in our opinion shall be prospective and shall not cover the payments made prior to the issue of Notification, as it does not bear any retrospective character. 27. We, therefore, sustain the order of the CIT(A) and reject the grounds taken by the department. 28. Grounds no. 5, 6 7 are therefore, rejected. 29. Grounds no. 8 and 9 pertain to TDS on Equipment Hire Charges. 30. The facts are that companies, including the assessee hire equipments, labours and operators for their production units. On these payments, the assessee pays hire charges and deducts TAS under the provisions of section 194C. However, the AO held it to the FTS and therefore the TDS shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 201(1A) is hereby deleted . 32. The CIT(A), therefore deleted the additional tax liability computed by the AO. 33. Against order of the CIT(A), the department is before the ITAT on the issue of TDS on hire charges of equipment. 34. Before us, the DR argued the case of the AO, while the AR supported the order of the CIT(A). 35. We have heard the arguments and have perused the material on record and also pursued the orders of the revenue authorities. 36. In our opinion the CIT(A) has applied the provisions of the Act and have delved on the same. We also find that the AO termed the payment made for hire charges as FTS, which the CIT(A) has categorically demolished. We find that similar issue was dealt with by the coordinate Bench at Mumbai in the case of ACIT (TDS) vs Sahara One Media Entertainment Ltd., ITA No. 4548-4550/Mum/2012 , wherein it was held that payment made by assessee under a contract, which is a part of production of programme, TDS is required to be deducted u/s 194C. 37. Keeping the relevant provision in mind as well as gainfully following the order of the ITAT in the case of Sahara One Media Entertainment Ltd. (supra), we are of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,87,475/- under Section 201(1) and consequential levy of interest at ₹ 15,02,982/- under section 201(1A) is hereby deleted . 43. The CIT(A), thus deleted the tax charged on the assessee. 44. Against this order of the CIT(A), the department is in appeal before the ITAT. 45. Before us, the DR supported the order of the AO, whereas, the AR supported the order of the CIT(A). 46. After hearing both the parties, we do not find any infirmity in the view taken by the CIT(A). On the facts that payee, M/s Zee Turner Ltd. paid commission to its constituents, they deducted tax where ever applicable. In the instant case, the assessee had only made good the payments made by Zee Turner Ltd., which it had paid on behalf of the assessee. Hence there was no profit element involved in those payments, being reimbursements made by the assessee to Zee Turner Limited. In the proceedings before the revenue authorities, the assessee was able to demonstrate the different characters of payments made by it. The payments, where Zee Turner Limited paid its taxes, the assessee was under no obligation and/or became defaulter u/s 201(1). On the given facts, we find ourselves benefitted by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. In such a circumstances, ground no. 14 become inconsequential, hence it is rejected. 59. Grounds no. 15 16 are general. 60 In the result, the appeal as filed by the department is dismissed. ITA no. 3932/Mum/2013 : Asst. year 2007-08 : 61. The following grounds have been raised by the department: a) On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short deduction u/s 201(1) and interest u/s 201(1A) in respect of carriage fee /placement fee paid by the assessee to various cable operators/MSO/DTH service providers holding the service provided was work within the meaning of section 1940 and not technical service u/s 194J. b) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the cable operators /MSO/DTH service providers had not provided mere standard service of transmitting the signals of assessee's channels but through human intervention and application of mind provided specified technical service of placing assessee's channel on desired prime band and such service are technical service u/s 194J. c) On the facts and circumstance of the case and in law, the CIT(A) fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges without appreciating the facts brought on records by the assessing officer. j) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the commission paid to directors was salary considering day to day involvement of theses directors to carry out the functions of various committee of which they were members and the commission was rightly treated as salary. k) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that relationship between the directors and the assessee was of employer and employee as evident from the nature of work done by these directors as brought out in the order by the Assessing Officer. l) On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short deduction which was determined on the basis of information available in Tax Audit Report especially when the assessee did not submit any evidence of payment of the unpaid TDS as reported in Tax Audit Report. m) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee did not produce the evidence of payment of unpaid TDS as per tax audit report before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector. Since these persons/directors were neither managing director nor whole time director, the provisions of section 194J could not be applied. 68. The DR relied on the order of the AO. 69. We have heard the arguments and have perused the orders of the revenue authorities and are of the view that the AO went on wrong track and did not consider the provisions/expressions used in the relevant section, i.e. 194J. Since the CIT(A) has applied the right law, we are inclined to sustain the order of the CIT(A), consequentially reject the ground as raised by the department. 70. Grounds no. 1(j) and (k) are therefore, rejected. 71. As a result, the appeal, as filed by the department is rejected. ITA no. 3933/Mum/2013 : Asst. year 2008-09 : 72. The following grounds have been raised by the department: a) On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short deduction u/s 201(1) and interest u/s 201(1A) in respect of carriage fee /placement fee paid by the assessee to various cable operators/MSO/DTH service providers holding the service provided was work within the meaning of section 1940 and not technical service u/s 194J. b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices u/s 194J. h) On the facts and circumstance of the case and in law, the CIT(A) erred by holding the equipment hire charges u/s. 194C and failed to appreciate that the evidences available on records clearly show that the equipment hire charges were paid for services which were technical service within the meaning of section 194J. i) On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short deduction and interest u/s 201(1A) in respect of equipment hire charges without appreciating the facts brought on records by the assessing officer. j) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the commission paid to directors was salary considering day to day involvement of theses directors to carry out the functions of various committee of which they were members and the commission was rightly treated as salary. k) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that relationship between the directors and the assessee was of employer and employee as evident from the nature of work done by these directors as brought out in the order by the Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on desired prime band and such service are technical service u/s 194J. c) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee was in fact author of all the programme purchased by it and was fully in command of making such programme and therefore the payments made by it for production of such programme was in the nature of Technical fee within the meaning of section 194J and therefore erred in deleting the short deduction and interest u/s 201(1A) determined on this account and holding the same within the meaning of provisions of section 194C. d) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the facts brought on records by the Assessing officer that the acquisition of programme software involves transfer of rights of that programme to the assessee and such payments made by the assessee are clearly covered under the definition of Royalty within the meaning of royalty in Explanation 2 to clause (vii) to Section 9. e) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee did not produce any agreement with event manager to justify tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 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 the A.O's order be restored . 77. We find that grounds 1(a) to (e) are similar and identical to grounds no. 1 to 12 in ITA No. 3931/Mum/2013, wherein we have rejected the grounds. Since the grounds as raised by the department are similar in nature and issue, we reject the grounds in this appeal as well. 78. Grounds no. 1(a) to 1(e) are, therefore, rejected. 79. We, therefore, reject the grounds as raised by the department. 80. In the result, the appeal as filed by the department is dismissed. ITA no. 3935/Mum/2013 : Asst. year 2010-11 : 81. The following grounds have been raised by the department: a) On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short deduction u/s 201(1) and interest u/s 201(1A) in respect of carriage fee /placement fee paid by the assessee to various cable operators/MSO/DTH service providers holding the service provided was work within the meaning of section 1940 and not technical service u/s 194J. b) On the facts and circumstance of the case and in law, the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the nature of work done by these directors as brought out in the order by the Assessing Officer. i) On the facts and circumstance of the case and in law, the CIT(A) erred in deleting the short deduction which was determined on the basis of information available in Tax Audit Report especially when the assessee did not submit any evidence of payment of the unpaid TDS as reported in Tax Audit Report. j) On the facts and circumstance of the case and in law, the CIT(A) failed to appreciate that the assessee did not produce the evidence of payment of unpaid TDS as per tax audit report before the assessing officer whereas the CIT(A) claimed that the assessee paid the unpaid TDS before the completion of proceedings u/s. 201(1)/201(1A). k) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the demand of ₹ 25,20,73,318/- without properly appreciating the factual legal matrix of the case as clearly brought out by the A.O. in order u/s. 201(1) of the IT. Act, 1961. 2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary at the time of the hearing of the case or thereafter. 3. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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