TaxTMI 
TaxTMI 
2005 (8) TMI 583
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....ever, they are all against the order of the Assessing Officer under section 201 treating the assessee to be in default under section 201(1) for its failure to deduct the tax from the payment to Distributor and the interest charged under section 201(1A). The amount of TDS under section 201(1) and interest under section 201(1A) in respective years are as under :- Asstt. Year TDS u/s 201(1) Interest u/s 201(1A) Total 2002-03 1,93,160 60,360 2,53,520 2003-04 1,23,100 20,002 1,43,102 2004-05 1,19,254 1,490 1,20,744 3. At the time of hearing before us, the learned counsel for the assessee argued at length. His arguments can be summarized as under :- (i)That the assessee has given on hire the cinema on weekly basis to the Distrib....
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....part of which was paid to the Distributor. He, therefore, submitted that the Assessing Officer rightly held that the assessee was liable to deduct the tax at source on the payment to the Distributor. 5. We have carefully considered the arguments of both the sides and perused the material placed before us. Section 194C and Explanation III thereto read us under :- "194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and- (a )the Central Government or any State Government; or (b)any local authority; or (c )any corporation established by ....
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....194C would be applicable if any person is making payment of any sum to any resident for carrying out any work. In the case under consideration before us the assessee is exhibiting the films in the cinema owned by it. The receipt from the exhibition of films is shared between the assessee and the Distributor on the terms agreed between them. Therefore, the question is whether the amount collected by the assessee on exhibition of films and part of which is shared with the Distributor, is covered within the ambit of definition of "contract for carrying out any work". In our opinion, there is no work carried out by the Distributor. The Distributor is getting his share because he has acquired rights of the distribution of the films in particular....
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....Ltd. (supra) and also Circular No. 681 of CBDT. We found that the Hon'ble jurisdictional High Court in the case of All Gujarat Federation of Tax Consultants v. CBDT (supra ) has considered the decision of the Hon'ble Supreme Court in the case of ACC Ltd. ( supra) as well as Circular No. 681. After considering the decision of the Hon'ble Supreme Court Their Lordships have quashed the Circular No. 681 issued by the CBDT. Therefore, the Assessing Officer was wrong in taking cognizance of circular which was purported to be given by the CBDT in accordance with the decision of Hon'ble Supreme Court in the case of AAC Ltd. The ratio of the decision of the Hon'ble jurisdictional High Court in the case of All Gujarat Federation of Tax Consultants v.....
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....of the Hon'ble Gujarat High Court from the decision in the case of All Gujarat Federation of Tax Consultants v. CBDT (supra) (Page Nos. 292-293) support this view. 'In our conclusion, we are further strengthened by the fact that the Legislature intended to make a separate provision for bringing the service contract and professional service within the purview of the provision relating to tax deduction at source, by the Finance Bill, 1987 which has been quoted above. Once again the Finance Bill, 1995, a similar insertion has been proposed. Had the service rendered by the professionals like, Advocates, chartered accountants, engineers, physicians, architects etc. already been within the scope and ambit of section 194C, the Legislature would n....