Kurukshetra Darpans (P) Ltd. vs Commissioner Of Income Tax on 3 March, 2008
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 specifled 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. 14. In terms of the said
Explanation. it is provided that expression 'work' shall include inter alia
broadcasting and telecasting including production of programmers 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 programmers 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 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). 7 ITA 669 & 670/M/12 & CO 16&17/M/13 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
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ITA No. 5664/M/2012
A.Y.2010-11
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 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 companyv, 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 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 8 ITA 669 &
670/M/12 & CO 16&17/M/13 (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.