Income Tax Appellate Tribunal - Mumbai
B4U Television Network India Ltd, ... vs Assessee on 30 December, 2015
आयकर अपील
य अ धकरण, मब
ुं ई यायपीठ 'बी' मब
ुं ई
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI
ी आर. सी. शमा , लेखा सद य, एवं ी अमरजीत #संह, या%यक सद य, के सम&
BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM
आयकर अपील सं/ I.T.A. No.3594/M/14
(%नधा रण वष / Assessment Year: 2010-11)
M/s. B4U Television बनाम/ Dy. Commissioner of
Network India Ltd. Income Tax (TDS) - 1(1)
Vs.
45-Marol co-op. Industrial Mumbai
Estate Ltd., Andheri Kurla
Road, Andheri (East)
Mumbai - 400059
आयकर अपील सं/ I.T.A. No. ITA 3595/M/14
(%नधा रण वष / Assessment Year: 2011-12)
M/s. B4U Television बनाम/ Dy. Commissioner of
Network India Ltd. Income Tax (TDS) - 1(1)
Vs.
45-Marol co-op. Industrial Mumbai
Estate Ltd., Andheri Kurla
Road, Andheri (East)
Mumbai - 400059
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AABCB1717B
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Assessee by: Shri Sunil Nahta
Department by: Shri Sumit Kumar
सन
ु वाई क तार ख / Date of Hearing: 17.11.2015
घोषणा क तार ख /Date of Pronouncement: 30.11.2015
आदे श / O R D E R
PER AMARJIT SINGH, JM:
ITA No. 3594/M/14 & 3595/M/14
A.Y. 2010-11 & 2011-12 This order shall disposed of both the appeals bearing ITA No. 3594/M/14 for A.Y. 2010-11 and ITA 3595/M/14 for A.Y. 2011-12 as the matter of controversy involves similar in nature and can safely be adjudicated by this single order.
2. The assessee company is mainly engaged in the activity of rendering and supplying content for television channels and also in the business of purchase and sale of film and music software.
3. We have heard the arguments advanced by the learned representative of the parties and gone through the record. The matter of controversy between the parties is that whether the remuneration paid to the director Mr. K. S. Kalyansundaram is liable to be taxed in view of provision contended u/s. 192(1) of the Income Tax Act, 1961( in short "the Act") or is liable to be taxed in view of the provision contended in section 194J of the Act. Learned representative of the assessee has argued that Mr. K. S. Kalyansundaram is not the permanent/regular employee of the company, however, his professional services was taken on contract, therefore, the assessee company has rightly deducted tax at source @ 10% u/s. 194J of the Act and the tax is not liable to be deducted and payable u/s. 192(1) of the Act because Mr. K. S. Kalyansundaram was not permanent/regular employee of the company and was not on the pay roll. The representative of the assessee brought to the attention of the Tribunal towards agreement between the company and Mr. K. S. Kalyansundaram wherein Mr. K. S. Kalyansundaram has not been shown as the permanent /regular employee of the company.
4. While, on the other hand the learned departmental representative refated the said contentions and argued that the learned CIT(A) has rightly adjudicated the matter of controversy by holding that Mr. K. S. Kalyansundaram was a regular employee and accordingly, the income was assessed in view of the 2 ITA No. 3594/M/14 & 3595/M/14 A.Y. 2010-11 & 2011-12 201(1)/201(1A), hence, the appeal of the assessee is liable to be dismissed. Before deciding the matter of controversy it is necessary to advert the terms & conditions of the contract on record:
a) Working period of the professional was fixed and in addition to such fixed period, the professional was also required to attend the company's work as and when required by the company
b) The consolidated remuneration fixed annually was paid per month and such payment was referred to as 'remuneration' in the appointment contract.
c) The professional was to abide by the code of conduct for the staff of the company and such other norms as laid down by the board of the company from time to time.
d) The professional was appointed initially for a contract period of one year which was further expendable at the option of the assessee company
e) The Professional was liable to be transferred from the post engaged in any other post in any other department of the company or its subsidiary/associate companies anywhere in India or abroad
f) The Professional is required to devote full time and energy in the best interest of the company and shall not, while in service of company, undertake or concern itself directly or indirectly with any other employment or activity,
g) All work developed during the employment of professional shall be the exclusive property of the company and the professional shall have no right of ownership, copyright etc. 4.1 The restrictive covenant coupled with the control, supervision and final say over the acceptance or rejection of output being exercised by the assessee company clearly shows that the relationship between these professional and the company is in the nature of employee-employer. As regards the treatment given by the company or professional to the remuneration paid in their books of accounts, the same is not conclusive to decide the nature of the said remuneration which has to be ascertained on the basis of relationship between the assessee and the professional. It is thus established that the relationship between the assessee company and the professional was purely that of employer and employee and the remuneration paid to the professional in terms of the said relationship is salary liable to be subjected to TDS uls 192 of the Act. whereas the company has deducted tax uls 194J treating the payments as professional fees. The assessee 3 ITA No. 3594/M/14 & 3595/M/14 A.Y. 2010-11 & 2011-12 company has therefore deducted tax at source from the payment of Rs.26,00,000/-
made to the Professional short by an amount equal to the difference of rates u/s 192 & u/s 194 J i.e. 26.50% .
5. No doubt, in view of the terms and conditions of the contract of Mr. K. S. Kalyansundaram, it is apparent that he is not regular employee of the company. There is nothing on record to which it can be assumed that Mr. K. S. Kalyansundaram can be considered as permanent/regular employee of the company. No P.P.F/C.P.F. has been deducted. There is no regular increase of salary. There is no other benefits on record which was being paid to him as regular employee. No doubt, in the said circumstance when Mr. K. S. Kalyansundaram has been professionally being paid for his technical services therefore, provisions u/s. 194J would be quite applicable to his case, whereas the provision u/s 192(1) along with interest u/s. 201(1)/201(1A) are not applicable in the case of the assessee. Therefore, ground no. 1 has been decided against the Revenue. Consequently, second ground also awarded in favour of assessee and against the Revenue.
8. We are of the view that order in question is in view of the said findings not liable to be sustainable in the eyes of law therefore, the same is hereby ordered to be set aside and appeals of the assessee are accepted. The file is hereby ordered to be restored with Assessing Officer to decide the matter afresh in new of the observations made above.
Order pronounced in the open court on 30th November, 2015.
Sd/- Sd/-
(R.C.SHARMA) (AMARJIT SINGH)
लेखा सद
य / ACCOUNTANT MEMBER %या&यक सद
य/JUDICIAL MEMBER
मंब
ु ई Mumbai; )दनांक Dated : 30th November, 2015
MP
4
ITA No. 3594/M/14 & 3595/M/14
A.Y. 2010-11 & 2011-12
आदे श क* +%त#ल,प अ-े,षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु*त(अपील) / The CIT(A)-
4. आयकर आय* ु त / CIT
5. -वभागीय &त&न0ध, आयकर अपील य अ0धकरण, मुंबई / DR, ITAT, Mumbai
6. गाड4 फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, स या-पत &त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मंब ु ई / ITAT, Mumbai 5