TaxTMI 
TaxTMI 
2013 (12) TMI 1117
X X X X Extracts X X X X
X X X X Extracts X X X X
....e place outside India (primarily in Argentina). For the purpose of show the programme outside India the applicant has engaged Endemol Argentina SA (Endemol ARG) for providing line production services in Argentina and for that purpose an agreement in the form of DEAL MEMO for production services agreement was entered into. Endemol ARG is a company incorporated in Argentina and is a tax resident of Argentina. The applicant makes payment to Endemol ARG for the services rendered in Argentina. 3. Based on the facts and circumstances of the case, the applicant seeks ruling from the Authority for Advance Rulings on the following questions:- (1) Whether the payments made by the Applicant towards line production services provided by Endemol ARG in accordance with the agreement entered into with the Applicant is in the nature of Fees for Technical services ('FTS') within the meaning of the term in Explanation 2 to clause (vii) of section 9(1) of the Act? (2) Whether the payments made by the Applicant to Endemol ARG in respect of provision of equipment and services are in the nature of 'Royalty' within the meaning of the term in Expla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tates that when payments are made to advertising agencies for production of programmes which are to be broadcasted / telecasted, the said payments would be subject to withholding tax under section 194C of the Act. It was contended that circular No.394 dated 14th Sept., 1984 of the CBDT provided clarification on the exemption of remuneration received for rendering services in connection with the show of cinematography by foreign film producer in India and as a corollary the services rendered by such non-resident outside India would also be not taxable under the Act. 7. According to the Revenue, however, the line production services provided by Endemol ARG are basically consulting and managerial in nature. There are also technical services which provided special effects, photography, camera operator and sound system. It was stated that Endemol ARG provided several technical personnel such as technical engineer, director, camera operator, technical maintenance chief, technical coordinator, director of photography, sound engineer etc. Thus the services rendered by Endemol ARG are squarely covered under the definition of "Fees of Technical Services" under Explanation 2 of Section 9(1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndertaken by the recipient or consideration which would be the income of the recipient chargeable under the head 'salaries' ". Apart from the Explanation mentioned above there is no other definition of the term 'Fees for Technical Services' in the Act, though various attempts were made at various forums in interpreting the said term. 10. Coming to the argument that the payments clearly fall under the definition of "work" as defined and clarified by CBDT under Explanation 2 to section 194C of the Act, we need to examine whether that definition of "work" under section 194C of the Act can be imported for the purpose of interpreting the term 'Fees for Technical Services' in section 9(1)(vii) of the Act. The issue is effect of the specific definition of 'work' in the Explanation to section 194C in the definition of 'Fees for Technical Services' in Explanation to section 9(1)(vii) of the Act. For the purpose of deduction of "Tax at source" in respect of 'Fees for Technical Services' there is a separate provision of section 194J in the Act. If the payment is held to be 'Fees for Technical Services' under section 9(1)(vii) of the Act, provision of section 197J will automatically appl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gencies shall have to deduct tax at source @ 5% under section 194J of the Act while making payments to artists, actors, models etc. Further, if payments are made for production of programmes for the purpose of broadcasting and telecasting, these payments will be subject to tax deduction @ 2%. Even if the production of such programmes is for the purpose of preparing advertisement materials, not for immediate advertising the payments will be subject to TDS @ 2%. The circular makes clear the distinction between payments to artists, actors, models etc. and payments made for production of programmes for the purpose of broadcasting and telecasting. The payments for artists, actors, models are kept under the provision of section 194J and the payments for production of programmes for the purpose of broadcasting and telecasting are kept under the provision of section 194C. There is no denying of the fact that the payments made by the applicant to Endemol ARG are for production of programmes for the purpose of broadcasting and telecasting. The judgment of the Delhi High Court in the case of Prasar Bharati (supra) and the circular of the CBDT mentioned above are clearly applicable in the pres....