Income Tax Appellate Tribunal - Mumbai
Acit 16(1), Mumbai vs Business Broadcast News P.Ltd, Mumbai on 10 April, 2019
आयकर अपीलीय अधिकरण "B " न्यायपीठ मब
ुं ई में ।
IN THE INCOME TAX APPELLATE TRIBUNAL " B" BENCH, MUMBAI
श्री महावीर स हिं , न्याययक दस्य एविं श्री राजेश कुमार लेखा दस्य के मक्ष ।
BEFORE SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM
Aayakr ApIla saM . / ITA No. 542/Mum/2018
(inaQa- a rNa baYa- / Assessment Year 2013-14)
The Asst. commissioner of M/s Business Broadcast
Income Tax, Circle 16(1), News Pvt. Ltd.
Room No. 439, Aayakar Vs. 1076, Parijaat House, Dr. E.
Bhavan, M.K. Marg, Mumbai - Moses Road, W orli Naka,
20 Mumbai-400 018
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. AAACU8997R
अपीलाथी की ओर े / Appellant by : Shri Asghar Zain V.P, DR
प्रत्यथी की ओर े / Respondent by : Shri Deepak Jain, AR
ुनवाई की तारीख / Date of hearing: 10-04-2019
घोषणा की तारीख / Date of pronouncement : 10-04-2019
AadoSa / O R D E R
महावीर स हिं , न्याययक दस्य/
PER MAHAVIR SINGH, JM:
This appeal filed by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-4, Mumbai [in short CIT(A)], Appeal No. CIT(A)-4/IT-12/ACIT 16(1)/2016-17 vide order dated 30.11.2017. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle 16(1), Mumbai (in short 'ACIT/ ITO / AO') for the A.Y. 2 ITA No . 54 2 / Mu m/ 2 01 8 2013-14 vide order dated 07.03.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act').
2. The first issue in this appeal of Revenue is against the order of CIT(A) deleting the disallowance made by AO for non-deduction of TDS under section 40(a)(ia) of the Act. For this Revenue has raised has raised the following two grounds: -
"1. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) r.w.s 194J in respect of 'Carriage fees/Channel Placement Fees' and failing to appreciate that the payments made for use/ right to use of 'process' are 'royalty as per Explanation 6 to section 9(l)(vi) hence such payments covered u/s. 194J of the Income Tax Act, 1961.
2. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) r.w.s 194J of 'Carriage Fees/Channel Placement Fees', whereas the jurisdictional ITAT, Mumbai 'L' Bench, in its order dated 28.03.2014 in the case of ADIT-(IT)-2(2), Mumbai Vs. Viacom 18 Media Pvt. Ltd has confirmed that the payments made for use/ right to use of process' are 'royalty' in terms of Income-tax Act, 1961."3
ITA No . 54 2 / Mu m/ 2 01 8
3. At the outset, the learned Counsel for the assessee stated that this issue is squarely covered in assessee's own case by Tribunal's decision and even CIT(A) has deleted the disallowance by following the Tribunals decision vide Para 6.3 as under: -
"6.3 I have carefully considered the facts of the case, oral contentions and written submission of the assessee, discussion of the AO in the assessment order and material available on record. The said issue is directly covered by the appellant's own case in ITA No. 2697, 2698, 4206 and 4207/Mum/2012, order dated 16.10.2015. The Hon'ble/'Mumbai Tribunal has held that provisions of section 194J of the Act are not applicable on payment of carriage fees to cable operators. Hence, the disallowance carriage/channel placement fees amounting to Rs. 1,12,15,427/- u/s. 40(a)(ia) of the Act is deleted. Accordingly, the Ground Nos. 1 & 3 raised in appeal is allowed."
4. When this fact was pointed out to the learned Sr. Departmental Representative he could not controvert the factual position. We find that this issue is covered by Tribunal's decision in assessee's own case in ITA No 3689 & 3690/Mum/2017 for AY 2011-12 & 2012-13 vide order dated 15.10.2018, wherein following the earlier year order, the Tribunal allowed the claim of assessee vide Para 3 to 5 as under: -
4ITA No . 54 2 / Mu m/ 2 01 8 "3. Briefly stated facts are that during the year under consideration, the assessee paid carriage fee of ₹ 39,61,12,085/- and when the AO perused the details he noticed that the assessee had deducted TDS under section 194C of the Act on payment of such fee at the rate of 2%. But, according to him, it should have deducted tax under section 194J of the Act at the rate of 10% because these payments are in the nature of royalty as per explanation 6 to section 9(1)(vi) of the Act and therefore, covered by section 194J of the Act. Accordingly, the AO disallowed these carriage / channel placement fee by invoking the provisions of section 40(a)(ia) of the Act. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) deleted the disallowance relying on the Tribunal's decision in assessee's own case by observing in para 4.4 as under: -
4.4 I have considered the submissions of the appellant and perused the material available on records. The said issue is directly covered by the appellant's own case in ITA No 2697, 2698, 4206 and 4207/Mum/2012, order dated 16.10.2015.
The Hon'ble Mumbai Tribunal has held that provisions of section 194J of the Act are not applied on payment of carriage fees to 5 ITA No . 54 2 / Mu m/ 2 01 8 cable operations hence, the disallowance carriage/ channel placement fees amounting to ₹ 39,61,12,085/- under section 40(a)(ia) of the Act is deleted."
4. The learned Counsel for the assessee stated that the Tribunal in assessee's own case in ITA No. 2697,2698,4206 & 4207/Mum/2012 vide order dated 16.10.2015 for AY 2008-09 to 2011-12 has deleted the addition vide Para 3 to 10 as under: -
3. Subsequently, the assessee came in 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 Operators; hence the case of the assessee comes within the ambit of "fees" for technical services which comes within the ambit of the provisions contained in Section 194J of the Act and accordingly, TDS was required to be deducted, but the assessee deducted TDS as per the provisions of Section 6 ITA No . 54 2 / Mu m/ 2 01 8 194C of the Act wrongly, therefore, the order of the AO passed u/s 201/201(A) of the Act dated 18-03-2011 is quite legal and in accordance with law. But, the learned CIT(A) has wrongly arrived at his conclusion that 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 and submitted that the payment is covered specifically under the provisions of section 194C. He has referred to the Explanation to section 194C and submitted that as per clause (iv) of the Explanation, "the work" shall include inter alia Broadcasting and Telecasting including production of programme for such Broadcasting and Telecasting. Therefore, he has submitted that when the payment is in relation to broadcasting work which is specifically provided u/s 194C, then the general provisions u/s 194J cannot be applied. He has further referred to the CBDT Circular No. 720 dated 7 ITA No . 54 2 / Mu m/ 2 01 8 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) and submitted that the Hon'ble High Court has held that the receipt of telecasting signals from the licensor is essentially under the contract to obtain broadcasting and telecasting facility of TV channels. Therefore, section 194C is attracted to the payments made to the licensor for obtaining TV signals and the assessee was required to deduct tax at source on such payments. He has also relied upon the decision of Hon'ble Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting 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 8 ITA No . 54 2 / Mu m/ 2 01 8 which manifests the intention of the legislature. The learned AR has also relied upon the decision of this Tribunal dated 9-7-2014 in the case of CIT Vs. NGC network in ITA no. 1382/Mum/2014 and in the case of UTV Entertainment Television Ltd. In ITA No.2699, 4202, 4205 and 2700/Mum/2012 order dated 29-10-2014.
6. We have considered the rival submissions and relevant material on record. There is no dispute that the 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. 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 responsible for paying any sum specified therein to a person for carrying out any work, to deduct the tax at source.' Presently, we are concerned with the „work' as referred to in cl(b) of Expln. III below s. 194C(2)of the Act.9
ITA No . 54 2 / Mu m/ 2 01 8
14. 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, s. 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 c1. (b) of Expln. III to s. 194C(2) of the Act.
15. 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 10 ITA No . 54 2 / Mu m/ 2 01 8 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 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 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.
17. Another plea of the assessee/subscriber was that the licensor or the person to whom the assessee is making payment by itself 11 ITA No . 54 2 / Mu m/ 2 01 8 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 on record, in the business of distribution of satellite based TV channels and has exclusive 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.
18. 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 s. 194C of the Act on payments made to the licensor for obtaining TV signals, Cable TV network owned by the assessee.
7. Thus after examination of the Explanation III to the then section 194C, the Hon'ble High 12 ITA No . 54 2 / Mu m/ 2 01 8 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 as under:-"
Explanation - For the purpose of this section - ********************************* ********************************* (iv) "work" shall include- (a) Advertising; (b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting (c) Carriage of goods or passengers by any mode of transport other than by railways; (d) Catering;
(e) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased 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 13 ITA No . 54 2 / Mu m/ 2 01 8 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, is very specific in its application to not only broadcasting and telecasting but also include "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 in more general terms, resort must be had to the specific provision which manifests the intention of the Legislature. It is not, therefore, possible to accept the contention of the Revenue that programmes 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 broadcasting and telecasting of the programmes specifically falls under the ambit 14 ITA No . 54 2 / Mu m/ 2 01 8 of provisions of section 194C, then in view of the decision of Hon‟ble Delhi High Court (supra), the provisions of section 194J cannot be applied on such payments. The CBDT Circular No. 720 dated 30.08.1995, also supports this view as it was clarified in the said circular as under:-
1261. Payment of any sum shall be liable for deduction of tax only under one section.
It has been brought to the notice of the Board that in some cases persons responsible for deducting tax at source are deducting such tax by applying more than one provision for the same payment. In particular, it has been pointed out that the sums paid for carrying out work of advertising are being subjected to deduction of tax at source under section 194C as payment for work contract as also under section 1941 as payments of fees for professional services.
2. It is hereby clarified that each section, regarding TDS under Chapter XVII, deals with a particular kind of payment to the exclusion of all other sections is this Chapter. Thus, payment of any sum shall be liable for deduction of tax only under one section.
Therefore, a payment is liable for tax deduction only under one section.
15ITA No . 54 2 / Mu m/ 2 01 8
10. In view of the above discussion as well as the decisions of Hon‟ble Punjab & Haryana High Court, Hon‟ble Delhi High Court and the decisions of the Co-ordinate Benches of the Tribunal deciding the issue in controversy i.e. order dated 09-07-2014 in the case of CIT Vs. NGC Network in ITA No.1382/Mum/2014 and in the case of UTV Entertainment Television Ltd. in ITA No.2699, 4202, 4205 and 2700/Mum/2012 order dated 29-10-2014, we do not find any error or illegality in the impugned order of CIT(A) qua this issue. Furthermore, no contrary decision on the issue has been referred to or produced before us by the learned DR. Therefore, following the decisions of the Hon‟ble Punjab & Haryana High Court, Hon‟ble Delhi High Court and the decisions of the Co-ordinate Benches of the Tribunal, we do not find any reason to interference in the order of the learned CIT(A). Accordingly, we uphold the action of the learned CIT(A) and dismiss all the appeals preferred by the Revenue"
5. As the facts are exactly identical in both the years and nature of payment is same and the facts in AY 2012-13 in ITA No. 3690/Mum/2017 are also exactly identical, respectfully following the Tribunal's decision in assessee's own case and taking a consistent 16 ITA No . 54 2 / Mu m/ 2 01 8 view, we confirm the order of CIT(A) deleting the disallowance."
5. As the facts are identical and assessee has deducted TDS under section 194C of the Act on such payments at the rate of 2%, the issue is squarely covered. We find no infirmity in the order of CIT(A) and hence, we affirm the order of CIT(A) deleting the disallowance.
6. The next issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by the AO on account of discrepancy in reconciliation of the receipts as per AIR information vis-à-vis, the receipt shown in the profit and loss account. For this Revenue has raised the following ground No. 3 and 4 as under: -
"3. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in deleting the addition in respect of the discrepancy in reconciliation of the receipts as per AIR information vis-ã-vis that shown in P&L Account merely relying on the assessee's submission made during the appellate proceedings and without affording any opportunity to the Assessing Officer to counter the same.
4. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in deleting the addition in respect of the discrepancy in reconciliation of the receipts as per AIR information vis-à-vis that shown in P&L Account without appreciating that 17 ITA No . 54 2 / Mu m/ 2 01 8 once an addition has been made by the Assessing Officer on account of assessee's to produce the necessary details, the Assessing Officer should get an opportunity to at least verify the claim of the assessee made during the appellate state."
7. We have heard rival contentions and gone through the facts and circumstances of the case. We find that the facts of the case and material available on record that the AO has noted the following details in his order at para 5.1, where the assessee has received income from the following parties but has not offered to tax:-
Sr. Name of the parties Income as per AIR No.
1. 1. National Commodity & Derivatives 280900 Exchange Ltd.
2. 2 National Commodity & Derivatives 280900 Exchange Ltd.
3. 3 End to End marketing Solutions P. Ltd. 337080 4. 4 M/s Go Airline India Ltd. 341
5. 5 M/s Go Airline India Ltd. 750000
6. Total 16,49,221 The assessee has contended that these are duplicate entries recorded in AIR statement. Further, in respect of the third entry it has been contended that in the AIR statement it has been shown twice and in respect of last two entries the assessee contends that it has not entered into any transaction with this party. The AO has simply made addition based on the observation that the assessee has not taken initiative to reconcile the difference. The learned Counsel for the assessee stated that there are duplicate entries and when they further deny to have entered into any transaction with one party, it was incumbent upon the AO to enquire it further from the said parties. However, AO has not taken 18 ITA No . 54 2 / Mu m/ 2 01 8 any such step. In the case where the assessee states that there are duplicate entries in the AIR, there cannot be any addition made by the AO without-requisite verification. Further if the assessee denies to have entered into the very transaction reflected in the AIR information, it would become imperative to further go into such information and verify it from the parties concerned. The learned Counsel for the assessee relied on various case laws decisions, where it is held that AO cannot make addition merely based on the AIR information. Accordingly, we find that there is no infirmity in the order of CIT(A) and the addition made by the AO is not sustainable and therefore deleted.
7. In the result, the appeal of Revenue is dismissed.
Order pronounced in the open court on 10-04-2019.
Sd/- Sd/-
(राजेश कुमार / RAJESH KUMAR) (महावीर स ह
िं /MAHAVIR SINGH)
(लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER)
मुिंबई, ददनािंक/ Mumbai, Dated: 10-04-2019 सदीप सरकार, व.निजी सधिव / Sudip Sarkar, Sr.PS 19 ITA No . 54 2 / Mu m/ 2 01 8 आदे श की प्रनिललपप अग्रेपिि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. आयकर आयुक्त(अपील) / The CIT(A)
4. आयकर आयुक्त / CIT
5. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण, मुिंबई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
आदे शािसार/ BY ORDER, त्यावपत प्रयत //True Copy// उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीलीय अधिकरण, मुिंबई / ITAT, Mumbai