Bombay High Court
Commissioner Of Income Tax Tds-2 vs Wire And Wireless (India) Ltd on 22 April, 2019
Bench: Akil Kureshi, Sarang V.Kotwal
Priya Soparkar 1 16 itxa 214-17 and 217-17-o
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO.214 OF 2017
WITH
INCOME TAX APPEAL NO.217 OF 2017
Commissioner of Income Tax-TDS-2 ... Appellant
V/s.
Wire & Wireless (India) Ltd ... Respondent
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Mr.Suresh Kumar with Ms.Samiksha Kanani for the Appellant.
Mr.Niraj Sheth with Mr.Jay Bhansali i/by Ms.Snehal Bamne for
the Respondent.
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CORAM : AKIL KURESHI AND
SARANG V.KOTWAL, JJ.
DATE : APRIL 22, 2019.
P.C.:-
1. Appeals are admitted for consideration of following substantial question of law:-
"Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in accepting the assessee's contention that the amount covered by 'Provision for Expenses' were not credited to the account of any of the payee but credited to 'Provision for Expenses' and therefore TDS provisions were not applicable without appreciating the provisions of Explanation
(c) to sub-section (1) of Section 194J and Explanation (iv) to Section 194H ?"::: Uploaded on - 24/04/2019 ::: Downloaded on - 24/04/2019 22:30:43 :::
Priya Soparkar 2 16 itxa 214-17 and 217-17-o
2. To be heard with Income Tax Appeal No.1390 of 2013.
3. We notice that the revenue has suggested two more questions which read as under:-
"a. Whether on the facts and in the circumstances of the case and in law, the ITAT is correct in holding that the pay channel subscription fees paid to cable operators/MSO/DTH Operators are payments for work contract covered u/s 194C and not fees for technical services u/s 194J, without appreciating that the services received by assessee are technical in nature?
b. Whether on the facts and in the circumstances of the case and in law, the ITAT was correct in accepting the claim of the assessee that tax was deductible under section 194C on carriage fees by treating it as contract work by resorting to interpretative reasoning and not under section 194H of the I.T. Act without appreciating that these payments were in the nature of commission for facilitating business to the assessee?
4. The first question relates to the obligation of the assessee to deduct tax at source under the correct provision. The respondent-
assessee is a Multi System Operator. While making payment of subscription fees paid to the channels, the assessee would deduct tax at source under section 194C of the Income Tax Act, 1961. The ::: Uploaded on - 24/04/2019 ::: Downloaded on - 24/04/2019 22:30:43 ::: Priya Soparkar 3 16 itxa 214-17 and 217-17-o revenue contended that such deduction should have been in terms of Section 194J of the Act. Such an issue had been examined by the Division Bench of Punjab and Haryana High Court in case of Kurukshetra Darpans (P) Ltd. Vs. Commissioner of Income Tax1. The Court referred to the Explanation (3) below Section 194C(2) of the Act, explained the term "Work" as to include advertising, broadcasting and telecasting including production of programmes etc. The Court was of the opinion that the deduction made by the payer under section 194C of the Act was correct. The Court held and observed as under :-
13. In terms of the said Explanation, it is provided that expression 'work' shall include, inter alia, broadcasting and telecasting including production of programmes for such broadcasting and telecasting.
By way of such Explanation, it is evident that where the payment 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, Section 194C of the Act is attracted. This is for the reason that the licensor, is a person who is performing the work which is covered within the meaning of Clause (b) of Expln. III to Section 194C(2) of the Act.
1 (2008) (169 taxman 344) ::: Uploaded on - 24/04/2019 ::: Downloaded on - 24/04/2019 22:30:43 ::: Priya Soparkar 4 16 itxa 214-17 and 217-17-o
14. It is also relevant to mention here that in the agreement between the assessee and the licensor, the licensor is referred to as 'company engaged in the business of distribution of satellite based television channel(s) services including the service and has exclusive rights to market and distribute the services in India to various customers and users of the service'. Further, the agreement 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 customer(s).
15. 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 dealt with by the licensor or the company. Therefore, what the assessee has transacted for with the licensor or company certainly includes within its ambit broadcasting and telecasting facility. The essence of the contract is to obtain broadcasting and telecasting of TV channels and thereafter its distribution amongst ultimate customers through the cable network of the assessee.
16. Another plea of the assessee/subscriber was that the licensor or the person to whom the assessee is making payment by itself does not do the work of broadcasting and telecasting and is therefore outside the purview of Section 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 on record, in the business of distribution of satellite based TV channels and has exclusive ::: Uploaded on - 24/04/2019 ::: Downloaded on - 24/04/2019 22:30:43 ::: Priya Soparkar 5 16 itxa 214-17 and 217-17-o rights to market and distribute said services in India, the service that is referred to in the agreement is the broadcasting and telecasting of TV signals.
17. For the reasons recorded above, we have no hesitation in concluding that the Tribunal was correct in holding that the assessee was required to deduct tax at source in terms of Section 194C of the Act on payments made to the licensor for obtaining TV signals, cable TV network owned by the assessee."
5. We are in respectful agreement with the view of the High Court of Punjab and Haryana. This question is therefore not considered. Question No.b is covered by Judgment of this Court in case of Commissioner of Income Tax Vs. UTV Entertainment Television Limited and ors.1, which has been followed consistently thereafter. This question is therefore, also not considered.
6. Learned counsel for the respondent waived notice. She said that assessee waived notice for admission.
7. Registry is directed to communicate a copy of this order to the Tribunal. This would enable the Tribunal to keep the papers 1 ITA No.2697/Mu/2012 dated 16.10.15 ::: Uploaded on - 24/04/2019 ::: Downloaded on - 24/04/2019 22:30:43 ::: Priya Soparkar 6 16 itxa 214-17 and 217-17-o and proceedings relating to both the appeals available, to be produced when sought for by the Court.
(SARANG V.KOTWAL,J.) (AKIL KURESHI,J.) ....
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