2017 (8) TMI 1057 - AT - Income Tax

ITAT rules telecasting fees under section 194C, not 194J, in Mumbai tax case.

DCIT TDS 1 (1), Mumbai Versus Balaji Telefilms Ltd.

The ITAT Mumbai upheld the decision of the Ld. CIT(A) in a tax deduction dispute, ruling that the telecasting fees paid by the assessee to TV channels ... TDS u/s 194C OR u/s. 194J - payments to various T.V channels for broadcasting its serials during fixed time slots - tds liability on telecasting fees paid - Held that:- Impugned payments in the instant case, are nothing but the telecasting fees paid by the appellant company in pursuance of the Agreements and hence the same fall within the ambit of the provisions of Section 194C of the Act and Accordingly, the relevant grounds of appeal stand allowed in favour of assessee. Issues:1. Dispute over tax deduction at source for telecasting fees paid to TV channels.Analysis:The appeals filed by the revenue challenged the orders of the Ld. CIT(A) related to the assessment years 2010-11 and 2011-12 concerning the deduction of tax at source. The revenue contended that the telecasting fees paid by the assessee to TV channels should have been subject to a higher TDS rate under section 194J of the Income Tax Act, rather than the 2% rate applied by the assessee under section 194C. The Assessing Officer treated the assessee as an assessee in default and raised demands under sections 201(1) and 201(1A) of the Act for both years.Before the Ld. CIT(A), the assessee relied on Circular No. 775 dated 08.08.1995 issued by the CBDT and the agreement with the TV channels. The assessee argued that the telecasting fees should be considered under section 194C, not section 194J, citing the definition of 'work' in the Act and a decision of the Delhi High Court. The Ld. CIT(A) agreed with the assessee's contentions and allowed the appeals, prompting the revenue to appeal to the ITAT Mumbai.The ITAT Mumbai considered the arguments presented by both parties and reviewed the record. It noted the specific provisions of the Act and the Delhi High Court decision, emphasizing that the telecasting fees paid by the assessee fell within the scope of section 194C. The ITAT upheld the order of the Ld. CIT(A) as reasoned and well-founded, dismissing the appeals of the revenue.In conclusion, the ITAT Mumbai upheld the decision of the Ld. CIT(A) regarding the tax deduction at source issue, emphasizing the applicability of section 194C to the telecasting fees paid by the assessee to TV channels. The judgment highlighted the importance of specific provisions in the Act and legal precedents in determining the correct TDS treatment for such payments.