Bombay High Court
Commissioner Of India Tax-Tds-2 Mumbai vs Star India Pvt. Ltd on 11 January, 2019
Author: M.S. Sanklecha
Bench: Akil Kureshi, M.S. Sanklecha
Uday S. Jagtap 1420-16-ITXA-4-C=.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 1420 OF 2016
WITH
INCOME TAX APPEAL NO. 1422 OF 2016
Commissioner of Income Tax-TDS-2
Mumbai .. Appellant
v/s.
Star India Pvt. Ltd. .. Respondent
Mr. Suresh Kumar for the appellant Mr. Porus Kaka, Senior Counsel a/w Mr. Divesh Chawla, Mr. Atul Jasani for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. DATED : 11 th JANUARY, 2019 P.C.
1. The Revenue has filed both the appeals against the common judgment of the Income Tax Appellate Tribunal, raising similar question of law for our consideration, which is as under :-
(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal is correct in holding that the placement fees / carriage fees paid to cable operators / MSO/DTH Operators are payments for work contract covered u/s 194C and not fees for technical service u/s 194J, without appreciating that the services received by assessee are technical in nature?
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2. The brief controversy between the appellant Revenue and the respondent assessee is with respect to the correct provision under which the payments made by the assessee for the purpose of channel placement should be made. The Revenue held that the deduction of tax at source should have been done in terms of Section 194J of the Act, whereas the assessee contended that the deduction was correctly made in terms of Section 194C of the Act.
3. Upon perusal of the impugned order of the Tribunal, we notice that Tribunal while dismissing the Revenue's appeal and confirming the view of the CIT(A), has placed reliance on the decision of the Tribunal in the case of UTV Entertainment Television. We notice that such decision of the Tribunal was carried in appeal by the Department in Income Tax Appeal No.525 of 2015 and connected appeals. These appeals were dismissed by an order dated 10/11 th October, 2017. The Court in the said judgment has made following observations :-
"14. The Commissioner (Appeals) has given a finding of fact on the perusal of sample copies of the agreements. The agreements are entered into with the respondent by the cable operators for placement of channels on agreed frequencies on which the respondent wishes to place a particular channel. The placement fee is the consideration for providing choice of the desired 2 of 4 ::: Uploaded on - 15/01/2019 ::: Downloaded on - 16/01/2019 03:49:26 ::: Uday S. Jagtap 1420-16-ITXA-4-C=.doc placement of the channels. That is how, channel placement charges are paid to the cable operators under the agreement. Under the agreement, the cable operators agree for placing a particular channel on agreed frequency band. As stated earlier, the respondent has deducted tax at the rate of 2% at source by invoking Section 194C of the Income Tax Act while making payment towards placement fees to the cable operators/ MSOs. If Section 194J is to be applied, the deduction would be of 10%. The Commissioner (Appeals) has also gone through the method followed by the cable operators/ MSOs. The Commissioner (Appeals) has also gone into the submission of the Revenue that, in fact, Section 194J would apply. In substance, the argument is that placement charges are basically for rendering technical service. The Commissioner (Appeals) has recorded a finding of fact on the basis of material on record that the placement charges are consideration for placing the channels on agreed frequency bands. It was found that, as a matter of fact, by agreeing to place the channel on any preferred band, the cable operator does not render any technical service to the distributor/ TV channel. Reference is made to the standard fee paid for basic broadcasting of a channel at any frequency. The Commissioner (Appeals) has considered clause (iv) of the explanation to Section 194C which incorporates inclusive definition of "work". Clause (iv) includes broadcasting and telecasting including production of programmes for such broadcasting and telecasting. The Commissioner (Appeals) rightly found that if the contract is executed for broadcasting and telecasting the channels of the respondent, the same would be covered by Section 194C as it falls in clause (iv) of the definition of "work". Therefore, when placement charges are paid by the respondent to the cable operators/ MSOs for placing the signals on a preferred band, it is a part of work of broadcasting and telecasting covered by sub-clause (b) of clause
(iv) of the explanation to Section 194C. As a matter of fact, it was found by the Commissioner (Appeals) that whether the payment is towards a standard fee or placement fee, the activities involved on the part of the cable operators/ MSOs are the same.
When placement fee is received, a channel is placed on a particular prime band. It was found that by an agreement to place the channel on a prime band by accepting placement fee, the cable operator/ MSO does not render any technical service. As far as Appellate Tribunal is concerned, again the definition of 3 of 4 ::: Uploaded on - 15/01/2019 ::: Downloaded on - 16/01/2019 03:49:26 ::: Uday S. Jagtap 1420-16-ITXA-4-C=.doc work in clause (iv) of the explanation to Section 194C was looked into. We must note here that a grievance was made by the learned counsel appearing for the appellant that there are no detailed findings recorded by the Appellate Tribunal. However, the Commissioner (Appeals) has recorded detailed findings on the basis of material on record and by referring to the findings, the Appellate Tribunal has expressed general agreement with the findings recorded by the first Appellate Authority. While affirming the judgment of the first Appellate Authority, it is open for the Appellate Tribunal to express such general agreement."
4. In view of this position, we do not find any question has arisen for our consideration. Accordingly, both the Income Tax Appeals are dismissed.
(M.S. SANKLECHA, J.) (AKIL KURESHI, J.)
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