TaxTMI 
TaxTMI 
2014 (4) TMI 113
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....h the producer (in respect of production charges), which evidences the fact that the agreement is in the nature of Royalty agreement which attracts the provisions of section 194J of the Income Tax Act, 1961 for deduction of TDS. ii) The ld. CIT(A) has erred in law as well as on the facts of the case by holding that the dubbing expenses/print processing fees as contract, this work involves technical expertise which can only be executed by competent persons in the respective field thus dubbing expenses/pring processing fees attracts the provisions of section 194J of the Income Tax Act, 1961 for deduction of TDS. iii) The ld. CIT(A) has erred in law as well as on the facts of the case by relying on the decision of ACIT Vs. Manish Dutt (2011) 12 Taxmann. Com 50 without appreciating that in the said decision, the payments made by the assessee was for use of rented premises which falls within the purview of section 194 J of the Income Tax Act, 1961. The ld. CIT(A) failed to distinguish the instant case with the case of ACIT Vs. Manish Dutt (supra) which only attracted the provision of section 194 j and not ot....
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....edia and Entertainment Ltd (referred as 'the producer') and Ananda Film and Tele-communications Pvt. Ltd. (referred as assigned producer),wherein, it has been mentioned that the 'assigned producer' hereby expressly represents and warrants to the 'producer' that it owns the exclusive, un-encumbered, unrestricted and effective rights of copyright in perpetuity of the said programme and all its elements like concept/theme, creative, format process flow and management, script screenplay with dialogues literary content, characters, visuals, audio, songs and musical works and performances etc, and has obtained the required lawfully authority from PPL/IPRS/TPPL/ respective producers or right holders, if required to use the material owned by others as part of the said programme( subject to, however, the approval of the producer) and absolutely grant it to the 'producer' and that neither prior to signing the agreement, it has granted, transferred and/or assigned the said rights of the said programme or parts thereof to any other person, party, company or organization whatsoever, nor would grant, transfer, assign, use and exploit the same in any way ever except this first and conclusive assi....
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....the tax deduction at source was required to be made @2% under section 194C of the Act and section 194J of the Act was not applicable. He therefore accepted the contention of the assessee that tax was deductable @2% under section 194 C of the act and not @ 10% under section194 J of the act. 7. Before us, the submission of the ld. AR has been that in fact the assessee being the producer had been the sole owner of the programme. There was no question of purchase of copyright etc. from the assigned producer as such rights vested in the producer i.e. assessee from the inception or starting of the production of the programme. He has further explained the sequence of events of production as under: - Assigned Producer approaches the assessee with the concept/theme for production of the serial; - The assessee agrees to become main producer of the serial made according to the agreed concept/theme; - Assigned Producer would produce the serial in accordance to the concept/theme of the serial for the assessee; - Assigned Producer is responsible for day-to-day production of the serial; - The assessee would oversee....
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....rants to 'The PRODUCER': a) That it is producing and/or proposes to produce 'the said PROGRAMME' solely for "The PRODUCER' strictly in accordance with the concept/theme, creatives, format, process flow and management, synopsis, screenplay-script with dialogues, story, legendary material, cast, crew, treatment, songs, shooting-schedule in the given medium, delivery dates and production-values etc., as duly approved by 'The PRODUCER'. Any alteration in the approved details, therefore, has to be with prior written consent of 'The PRODUCER' only. b) That it owns the exclusive, unencumbered, unrestricted and effective rights of copyright in perpetuity of 'the said PROGRAMME' and all its elements like concept/theme, creatives, format, process flow and management, script-screenplay with dialogues, literary content, characters, visuals, audio, songs and musical works and performance etc. and has obtained the required lawful authority, from PPL/ IPRS/TPPL/ prespective Producers or Right Holders, if required, to use the material owned by others, as part of 'the said PROGRAMME' (Subject to however, the approval of 'The PRODUCER') and absolutely grant it to 'The....
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....porated by 'The ASSIGNED PRODUCER'. 'The ASSIGNED PRODUCER' shall, in no event, deviate from the approved format, process flow and management and script-screenplay with dialogues and other constituents of 'the said PROGRAMME' and if it is noticed by 'The PRODUCER' in its reasonable opinion as a deviation, compromise and/or any poor adverse impression of the treatment, content and quality etc., 'The ASSIGNED PRODUCER' shall be asked to immediately address the concern and if required to re-shoot 'the said PROGRAMME' either in totality or the affected part alone, as the case may be , at 'The ASSIGNED PRODUCER's cost alone and in the event of its failure to promptly do son or willful avoidance/inability thereof, 'The PRODUCER' shall be entitled to proportionately forfeit the concerned prospective payments and if already paid, to claim forthwith refund and claim for damages from 'The ASSIGNED PRODUCER' for any loss/damages/inconvenience whatsoever." ............ ............... ......... .......... "r) That 'The PRODUCER' shall be entitled to examine, verify and audit the project specific books and accounts as well as the production progress of 'The ASSIG....
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.... (viii) Per episode, all rushes on Digi-Bata, Audio Tracks/Spools of Music and Songs, 02(two) Digi-Beta Broadcastable Masters with mixed sound in Hindi language, 01(one) Digi- Beta unmixed Master and 02(two) VHS and/or VCD/DVD of each episode, with one TCR, 03(three) still Negative Rolls (per episode) with positive (5"X 7") (of desired number) copies of each snap, as desired by 'The PRODUCER; a 10(ten) minutes showreel, log sheets and all the production properties etc., which are procured out of the Gross Consideration (All to be delivered to 'The PRODUCER' being the property of 'The PRODUCER'), (ix) Making the cast and crew available for the desired promo-publicity of 'the said PROGRAMME' and also the making of 'the said PROGRAMME' and its telecast, as desired by 'The PRODUCER' for necessary promotions of 'the said PROGRAMME', (x) Costs regarding the Show Packaging, including remunerations of professionals hired for the same(It is expressly mutually agreed that 'The PRODUCER' shall deduct a sum of Rs.4,00,000/-(Rupees Four Lacs) only, per 52 (Fifty two) episodes or as may be mutually agreed, for creating the desired packaging of 'the s....
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....article cannot be interpreted in a manner to give a different meaning to the agreement in question The assignment or vesting of copy rights etc. in the programme are incidental to the main object of the agreement or transactions in question. When a contactor produces a programme on behalf of other, it is obvious that all the rights including copy rights etc. will vest in the producer and the assigned producer/contractor will not be left with any control or right over the programme and such rights of the producer have been recognized with the said assignment clause, which is incidental to the main object of the contract. The observation of the AO that assigned producer has an absolute contract over the rights of the programme is falsified from the perusal of the different clauses of the agreement. In view of our above discussion of the matter, it is held that the agreement in question was an agreement to produce the programme by the assigned producer i.e., contractor on behalf of the producer i.e., assessee. 13. Now coming to the legal aspect of the case, The relevant extract of the operative provisions of section 194C and Explanation III is reproduced below: "194....
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....tion 194C clearly states that payment for production of programmes constitutes payments for 'work' under section 194C, hence, the assessee rightly deducted TDS u/s 194C at the rate of 2% on payments made to the contractor (Assigned Producer). When faced with somewhat similar issue, the Hon'ble Delhi High Court in the case of 'CIT vs. Prasar Bharti Broadcasting Corpn. Of India' (supra) has observed as under: "... We are unable to agree with this submission. We observe that Explanation III, which was introduced simultaneously with section 194J, is very specific in its application to not only broadcasting and telecasting but also include 'production of programmes for such broadcasting and telecasting. If on the same date, two provisions are introduced in the Act, one specific to the activity sought to be taxed and the other in more general terms, resort must be had to the specific provision which manifests the intention of the Legislature. It is not, therefore, possible to accept the contention of the Revenue that programmes produced for television, including 'commissioned programmes; will fall outside the realm of section 194C Explanation III of the Act. We find no in....
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....red to be telecast in digital formats. Conversion of such raw films is necessary to make the film editable and suitable for telecast. Accordingly, processing fees are paid wholly and solely for the purpose of making the film ready for editing and ready for other processes of production. Thus, it is a part of production process of a serial. On the other hand the ld. DR has relied upon the AO. 19. A perusal of the section 194C reveals that the activities under this section include broadcasting and telecasting including production of programmes for such broadcasting or telecasting. Hence all the activities from the production of the programme up to its telecast are included under this section. The ld. CIT(A) has rightly observed that production of programmes is nothing but combination of processes right from planning Schedule to post production processes enabling the serial to be ready for telecast. He rightly held that the dubbing charges and processing fees being a part of production of television serials and programmes, are squarely covered under the ambit of specific provisions of section 194C of the Act and liable to TDS at the rate of 2%. The general provisions of section 194....