Indian Kanoon - Search engine for Indian Law

11. Now we turn to examining the attractability or otherwise of the provisions of section 194J, which requires deduction of tax at source from 'fees for professional or technical services.' Sub-section (1) of section 194J provides that : `Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of-- (a) fees for professional services, or (b) fees for technical services or .... (c) royalty, or... shall, ...... deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein'. The term 'royalty' as used in clause (c) of section 194J(1) has been defined in the Explanation to: 'have the same meaning as in Explanation 2 to clause (vi) of sub- section (1) of section 9.'. When we consider Explanation 2 to ITA Nos.5310 & 6066/Del/2013 section 9(1)(vi), we get the meaning of 'royalty', whose relevant part is as under:-

14. Now, we will espouse the case law relied by the ld. AR to canvass the view that deduction of tax at source was required u/s 194C. First is the judgment of the Hon'ble jurisdictional High Court in CIT vs. Prasar Bharati (Broadcasting) Corporation of India (2007) 292 ITR 580 (Del). The assessee in that case made certain payments to outside producers for programs under 'commissioned category' for which the assessee deducted tax at source u/s 194C by treating them as ITA Nos.5310 & 6066/Del/2013 contract payments. The Revenue took a stand that the television programs producers should be treated as professionals/technical persons and the payment made to them should be subjected to TDS u/s 194J. An order was passed u/s 201(1)/(1A) of the Act holding the assessee in default for short deduction. When the matter went before the Hon'ble High Court, their Lordships observed that Explanation III which was introduced simultaneous with section 194J is very specific in its application to not only broadcasting and telecasting, but also includes 'production of programs for such broadcasting and telecasting'. That is how, the case was held to be falling u/s 194C of the Act. When we peruse the nature of payment made in the case of Prasar Bharati (Broadcasting) Corporation of India (supra), it comes up that the same was made to outside producers for making programs on behalf of Prasar Bharati. Since payment for making programs is directly covered under Explanation (iv)(b) being 'production of programs for such broadcasting or telecasting', there remains ITA Nos.5310 & 6066/Del/2013 absolutely no doubt that payments to producers for making programs falls within the ambit of section 194C of the Act. We find that the facts of this case are nowhere close to those under consideration. Instantly, we are examining the applicability of TDS provisions on payments made by the assessee to the TV channels for use of their programs in connection with television, which is directly covered under Explanation 2(v) of section 9(1)(vi) and not for `producing any programs'. As such, the decision in Prasar Bharti (Broadcasting) Corporation of India (supra), does not support the case of the assessee.

ITA Nos.5310 & 6066/Del/2013 The assessee deducted tax at source u/s 194C. The Revenue made out a case that the provisions of section 194J were attracted. When the matter came up before the Tribunal, it was held that section 194J was not attracted. Again, we find that this judgment to be of no consequence because of distinction in its factual backdrop. The dispute in that case was only about deduction of tax at source on `Channel placement charges' which is not the case before us. We, therefore, find this case also of no assistance to the assessee.

17. The ld. AR then pressed into service the `Principle of consistency' by arguing that the assessee made similar payments in past also to the TV Channels after deduction of tax at source u/s 194C, which view has not been disturbed by the Revenue. It was, ergo, argued that the same view should be followed for this instant year as well. This was vehemently opposed by the ld. DR. On a specific query, it was admitted by the ld. AR that in none of the earlier years, the TDS returns ITA Nos.5310 & 6066/Del/2013 were taken up for verification and as such, the issue as to the attractability of section 194C or section 194J of the Act was never examined. In view of the fact that this issue has never been examined in the past in assessee's case, such a non- decision cannot have a precedent value. The ld. AR admitted in all fairness that the Revenue has taken similar stand in the succeeding years by holding the magnetizing of the provisions of section 194J to the similar payments, for which the matter is sub judice. Be that as it may, the rule of res judicata is not applicable in fiscal statutes like income-tax. The contention of the ld. AR about the applicability of the `rule of consistency', in our considered opinion cannot be allowed to dethrone the rule of `no estoppel against the statute'. After making an elaborate analysis, we have hereinabove held that section 194J is attracted to the facts of the instant case. Merely because in earlier years this issue was not examined and the assessee's contention got accepted without verification, cannot give license to it claim in the later years ITA Nos.5310 & 6066/Del/2013 that the correctly applicable section be put under carpet. Since the statute requires such an amount to be considered u/s 194J, we cannot permit a wrong provision of section 194C to be applied in the garb of consistency. This contention is therefore, jettisoned.