2005 (11) TMI 366 - AT - Income Tax

Tribunal Confirms No Tax Deduction at Source Required for Stunt Artists; Assessee Not a Defaulter Under Income Tax Act.

The Tribunal upheld the CIT(A)'s decision, concluding that the assessee is not a defaulter under sections 201(1) and 201(1A) of the Income Tax Act, as it ... Deduction of tax at source - Assessee in default - Payments made to the stunt artists - 'professional services' Or Not - non-profit making Welfare organisation/association - Stunt Artist is an actor? - whether the assessee as the name itself indicates a voluntary organization formed to protect the interest of its members - HELD THAT:- First of all, section 194J is applicable to any person, but other than an individual or to a HUF. Secondly, such person should be responsible for making the payments to a recipient by way of fees either for professional services or for technical services. The services rendered by stunt artist is undoubtedly a professional service. There is no agreement between the artists and the assessee. The agreement if any is between the producer/film makers and the services by the artists are rendered to them directly but the payment is made through the assessee to safeguard the interest of the recipient i.e., its members/stunt artists. Written submission of the assessee which is reproduced vide page 2 of the para 5 of the order of CIT(A) mentions that the association had been in existence since 1959 and it was formed primarily because of producers/film makers never used to make full payments to the stunt artists or never used to make the payments in-time. With the formation of the association, not only the payments made on time and the rate at which the payment is fixed by the association (in consultation with the producers guild). Hence, only the payment to the stunt artist is routed through the association. These facts have not been denied either. Therefore, the first criteria that the assessee should be a person responsible to make the payment is not satisfied. As rightly contended by the Counsel for the assessee, the omission to include the ‘stunt artist’ anywhere in the Rules referred in para 4 cannot be treated as accidental or immaterial. The case of the revenue is that stunt actor is also an actor, because he is also acting. Stunt Artist is not included in the notification made for the purpose of section 44AA/this section 194J. Nothing prevented the competent authority, while enumerating the persons engaged in the production of cinematograph film to include a stunt artist as well in this category, this is all the more so. It does not say an actor includes a stunt artist/dupe. Therefore, the contention that stunt artist is an actor within the meaning of the rules is far fetched and cannot be accepted. Particularly, considering the fact that while enumerating a director, a music director, art director, dance director and their assistants as well included. Had the Legislature any inclination to include ‘Stunt Artist’ it would have been specifically mentioned the same. Thus, we are of the view that there is no reason to disturb the order of the first appellate authority. Hence, the appeal by the revenue fails and dismissed. In the result, the appeal of the revenue is dismissed. Issues Involved:1. Whether the assessee is a defaulter under sections 201(1) and 201(1A) of the Income Tax Act.2. Whether the assessee is liable to deduct tax under section 194J for payments made to stunt artists.Detailed Analysis:1. Whether the assessee is a defaulter under sections 201(1) and 201(1A) of the Income Tax Act:Facts and Contentions:- The assessee, an association of stunt artists, provides services to film producers, raising bills and receiving payments on behalf of the artists.- The Assessing Officer (AO) held that the assessee failed to deduct tax at source as required under section 194J, resulting in a liability to pay interest under section 201(1A) and initiation of penalty proceedings under section 221.- During a survey under section 133A, it was noted that no tax was deducted on payments to artists, which the AO classified as 'professional services' under section 194J.Arguments by Assessee:- The assessee argued it is a non-profit welfare organization acting merely as an agent between artists and producers, with no contractual relationship with the artists.- It contended that the services rendered by artists are directly to producers, not the association, and hence section 194J does not apply.- The assessee also argued that stunt artists are not explicitly mentioned in Rule 6F of the I.T. Rules, which lists professions for section 44AA, and thus should not be considered under section 194J.Tribunal's Findings:- The Tribunal observed that section 194J applies to any person other than an individual or HUF responsible for paying fees for professional or technical services.- It noted that the association is a voluntary organization formed to protect the interests of its members, with no direct agreement with the artists.- The Tribunal found that the payments were routed through the association to safeguard the interests of the artists, not as a direct payment for services rendered to the association.- It concluded that the association is not responsible for making payments in the context of section 194J, as the agreement is between producers and artists.Conclusion:- The Tribunal upheld the CIT(A)'s decision, finding that the assessee is not a defaulter under sections 201(1) and 201(1A) as it is not responsible for making payments directly to the artists.2. Whether the assessee is liable to deduct tax under section 194J for payments made to stunt artists:Facts and Contentions:- The AO classified the services rendered by stunt artists as 'professional services' under section 194J, requiring tax deduction at source.- The total payment made by the assessee to artists exceeded Rs. 20,000, triggering the provisions of section 194J.Arguments by Assessee:- The assessee argued that the definition of 'professional services' under section 194J and Rule 6F does not explicitly include stunt artists.- It contended that the omission of stunt artists in the rule is intentional and significant, as other specific roles in film production are listed.Tribunal's Findings:- The Tribunal examined the definition of 'professional services' and noted that the rule explicitly lists various professions in film production but does not include stunt artists.- It found that the legislative intent did not include stunt artists within the scope of section 194J, as evidenced by the detailed enumeration of other roles.- The Tribunal rejected the revenue's argument that a stunt artist falls under the general category of an actor, emphasizing the specific exclusions in the rule.Conclusion:- The Tribunal ruled that stunt artists are not covered under section 194J, and therefore, the assessee is not liable to deduct tax at source for payments made to them.Final Judgment:- The appeal by the revenue is dismissed, and the order of the first appellate authority (CIT(A)) is upheld.Result:- The revenue's appeal is dismissed.