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2016 (1) TMI 213 - ITAT MUMBAI

2016 (1) TMI 213 - ITAT MUMBAI - TMI - TDS u/s 194C or u/s 194J - payment in question was made by the assessee to the cable operators/ MSOs for placing the TV channels in the prime band in order to enhance the viewership and better advertisement revenue - Held that:- When two provisions are simultaneously introduced in the Act, one is specific and another is more general in terms then the resort must be to the specific provision. Therefore, when the work of broadcasting and telecasting of the pr .....

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H, JUDICIAL MEMBER For The Appellant : Mohammad Rizwan For The Respondent ; Shri R. Murlidhar ORDER PER AMARJIT SINGH, JM: All these four appeals filed by the Revenue are directed against different orders dated 31-01-2012 and 30-03-2012 passed under Section 201/201(A) of the Income Tax Act, 1961 [hereinafter referred to as the Act ] by the learned Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as the CIT(A)] relating to the aforementioned assessment years. The facts being .....

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ppeal for assessment year 2008-09:- 1. (i) The Ld. CIT(A) has erred on facts in law and not correctly appreciating the nature of the services rendered by the cable operators/ MSOs for which placement charges are paid and holding that such charges come within the purview of section 194C whereas such placement charges are in nature of technical fee within the meaning of section 194J of the Income-tax Act, 1961. (ii) The Ld. CIT(A) has erred on facts and in law in not appreciating that for placing .....

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ounds of appeals as above, since providing the services of preferred channel placement on account of which placement charges are paid requires use of industrial, commercial or scientific equipment within the meaning of sub clause (iv a) to Explanation to sub clause (vi) of section 9(1) of the Income-tax Act, 1961, the said payment is payment on account of royalty and therefore, section 194J is clearly applicable. Accordingly, CIT(A) has erred in law and on facts in not appreciating this factual .....

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red in law and on facts in holding that section 194C applies to the payment of placement charges without appreciating the correct nature of these charges, as is clearly brought out in the statement of fact annexed to the ground of appeal and the order u/s. 201(1) of the Income-tax 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 hearing of the case or thereafter. 3. The order of the CIT(A) being erroneous be set aside .....

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p; loss account on which appropriate TDS compliance is made under the provisions of the Act. On appraisal of the profit & loss account of the assessee company, it was found by the Assessing Officer [hereinafter referred to as the AO ] that the assessee company has debited an amount of ₹ 1,49,69,250/- during the financial year 2007-08 on account of carriage fees. The assessee was asked to give the details of the payments made against carriage fees and the services rendered to them along .....

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cal Service for which TDS is required to be deducted under the provisions of Section 194J, instead of that the assessee has deducted the TDS as per the provisions of Section 194C @1% or 2% on the payments made to the concern contractors as mentioned therein; whereas in view of the provisions contained in Section 194J of the Act, TDS was required to be deducted @10% on the payments made. The AO issued show-cause notices to the assessee for the financial year 2007-08, 2008-09, 2009-10 and 2010-11 .....

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appeal before the learned CIT(A) and the learned CIT(A) arrived at the conclusion that the case of the assessee falls within the purview of Section 194C of the Act instead of Section 194J. Hence, he set aside the order of the AO in this regard. Being aggrieved, the Revenue is in appeal before the Tribunal. 4. The learned Departmental Representative [hereinafter referred to as the DR ] has argued that the assessee made payment in lieu of technical services provided to it by the MSO/Cable Operato .....

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the case of the assessee falls within the ambit of the provisions of Section 194C of the Act. Hence, the order of the learned CIT(A) dated 31-12-2012 is not liable to be sustainable in the eyes of law and submitted that the order of the AO may be restored by setting the order in question. 5. On the other hand, the learned Representative of the assessee [hereinafter referred to the AR ] argued that the assessee company is engaged in the business of broadcasting business news through TV Channels .....

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J cannot be applied. He has further referred to the CBDT Circular No. 720 dated 30.08.1995, wherein it was clarified that each section under chapter XVII, deals with a particular kind of payment to the exclusion of all other sections in this chapter. The payment of any sum shall be liable for tax deduction only under one section. In support of his contention he has relied upon the decision of Hon‟ble Punjab & Haryana High Court in the case of Kurukshetra Darpans (P) Ltd. Vs. CIT (supra .....

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ting Corporation of India) (292 ITR 580) and submitted that the Hon'ble High Court has held that Explanation 3 to section 194C is very specific in its application not only to broadcasting and telecasting but also includes production of programmes for such broadcasting and telecasting. If on the same date two provisions are introduced in the Act, one specific to the activity sought to be taxed and the other (194J) in more general terms, resort must be had to the specific provisions which mani .....

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V channels in the prime band in order to enhance the viewership and better advertisement revenue. In the case of Kurukshetra Darpans (P) Ltd. Vs. CIT (supra), the Hon‟ble High Court of Punjab & Haryana while dealing with an identical question has held in Para 13 to 18 as under:- 13. After hearing learned counsel for the parties, we are of the view that the contentions of the counsel for the appellant are liable to be rejected. Sec. 194C of the Act creates an obligation on a person resp .....

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nt is for a work involving broadcasting and telecasting, the same shall be subject to deduction of. tax at source in terms of section 194 of the Act, the assessee is a cable network operator through which it provides telecasting of programmes to the ultimate consumers/subscribers. The assessee in turn enters into a contract with the licensor of various TV channels. On the payment so made, s. 194C of the Act" is attracted. This is for the reason that the licensor, is a person who is performi .....

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nt refers to the assessee subscriber as a party, which is desirous to subscribe for and receive the telecast signals of the service from the company in order to further distribute the same to the customers). 16. From the recital of the agreement "Itself, it is clear that the service that the assessee subscriber is availing is the receipt of 'telecasting signals' from the licensor or the company. The expression 'service' has also been referred to mean the TV channel which is .....

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by itself does not do the work of broadcasting' and telecasting and is therefore outside the purview of s. 194C of the Act. This argument deserves to be negated at the threshold. As we have pointed out earlier what the assessee subscriber is looking for is to obtain the telecast signals from the licensor, which is enough, to deduce that the impugned contract involves broadcasting and telecasting of TV signals. Moreover, the licensor or the company, as is evident from the specimen agreement .....

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nals, Cable TV network owned by the assessee. 7. Thus after examination of the Explanation III to the then section 194C, the Hon'ble High Court held that the payment for obtaining the telecast licenses from the licensor falls under the provisions of section 194C. We find that the work of broadcasting/telecasting including production of programme or such broadcasting or telecasting falls under the definition of work as provided under clause (iv) of the Explanation to section 194C which reads .....

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d from such customer, But does not include manufacturing or supplying a product according to the requirement of specification of a customer by using material purchased from a person, other than such customer.] 8. The Hon‟ble Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting Corporation of India) (supra), has observed in Para 11 as under:- We are unable to agree with this submission. We observe that Explanation III, which was introduced simultaneously with section 194J, i .....

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produced for television, including "commissioned programmes", will fall outside the realm of section 194C, Explanation III of the Act. We find no infirmity in the view taken by the Income-tax Appellate Tribunal which we hereby affirm. 9. The Hon‟ble Delhi High Court has made it clear that when two provisions are simultaneously introduced in the Act, one is specific and another is more general in terms then the resort must be to the specific provision. Therefore, when the work of .....

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