TaxTMI 
TaxTMI 
2014 (12) TMI 716
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....of section 194J of the Income-tax Act, 1961. (ii) The Ld. CIT(A) has erred on facts and in law in not appreciating that for placing the channel of broadcaster in prime band, for which placement charges are paid, application of human mind by a technical person is essential and the same cannot be done merely by mechanical means. Therefore, the payment on account of placement charges is in nature of technical fee within the meaning of section 194J and section 194C has no application to the facts of the case. Accordingly CIT(A) has erred in law and on facts in holding to the contrary. (iii) Without prejudice to the first two grounds of appeals as above, since providing the services of preferred channel placement on account of which placement charges are paid requires use of industrial, commercial or scientific equipment within the meaning of sub clause (iva) to Explanation to sub clause (vi) of section 9(1) of the Income-tax Act, 1961, the said payment is payment on account of royalty and therefore, section 194J is clearly applicable. Accordingly, CIT(A) has erred in law and on facts in not appreciating this factual and legal position and in giving relief to the assessee. (iv) CIT(A....
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.... 3. The assessee challenged the action of Assessing Officer before CIT(A). The CIT(A) has held that the placement fee paid by the assessee is only for giving preference to a particular channel over the other to place on a particular band which does not mean any technology or technical services as provided by the cable operators to the assessee. Relying upon the decision of Hon'ble Madras High Court in the case of Skycell Communication Ltd., (119 Taxman 496) as well as the decision of Punjab & Haryana High Court in the case of Kurukshetra Darpans (P) Ltd. Vs. CIT (169 Taxman 344), the CIT(A)A held that the placement fee paid by the assessee to the cable operators should be subjected to TDS as per provisions of section 194C of the Act. 4. Before us, the Ld. DR has heavily relied upon the orders of Assessing Officer and submitted that the services provided by the cable operators/MSOs are highly technical services involving technical equipments in transmitting the channel network to the end user and, therefore, the payment is in the nature of fee for technical services, which attracts the TDS to be deducted u/s 194J. 5. On the other hand, the Ld. Authorized Representative of the....
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....Os for placing the TV channels in the prime band in order to enhance the viewership and better advertisement revenue. In the case of Kurukshetra Darpans (P) Ltd. Vs. CIT (supra), the Hon'ble High Court of Punjab & Haryana while dealing with an identical question has held in para 13 to 18 as under:- "13. After hearing learned counsel for the parties, we are of the view that the contentions of the counsel for the appellant are liable to be rejected. Sec. 194C of the Act creates an obligation on a person responsible for paying any sum specifled therein to a person for carrying out any work, to deduct the tax at source.' Presently, we are concerned with the work' as referred to in cl(b) of Expln. III below s.194C(2)of the Act. 14. In terms of the said Explanation. it is provided that expression 'work' shall include inter alia broadcasting and telecasting including production of programmes for such broadcasting and telecasting. By way of such Explanation, it is evident that where the payment is for a work involving broadcasting and telecasting. the same shall be subject to deduction of. tax at source in tems of section 194 of the Act. the assessee is a cable networ....
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....lusive rights to market and distribute said services in India, the service that is referred to in theagreement is the broadcasting and telecasling of TV signals. 18. For the reasons recorded above. we have no hesitation in concluding that the Tribunal was correct in holding that the assessee was required to deduct tax at source in terms of s. 194C of the Act on payments made to the licensor for obtaining TV signals. cable TV network owned by the assessee." 7. Thus after examination of the Explanation III to the then section 194C, the Hon'ble High Court held that the payment for obtaining the telecast licenses from the licensor falls under the provisions of section 194C. We find that the work of broadcasting/telecasting including production of programme or such broadcasting or telecasting falls under the definition of "work" as provided under clause (iv) of the Explanation to section 194C which reads as under:- "Explanation - For the purpose of this section - ********************************* ********************************* (iv) "work" shall include- (a) Advertising; (b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting....
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.... out that the sums paid for carrying out work of advertising are being subjected to deduction of tax at source under section 194C as payment for work contract as also under section 1941 as payments of fees for professional services. 2. It is hereby clarified that each section, regarding TDS under Chapter XVII, deals with a particular kind of payment to the exclusion of all other sections is this Chapter. Thus, payment of any sum shall be liable for deduction of tax only under one section. Therefore, a payment is liable for tax deduction only under one section. 10. In view of the above discussion as well as the decisions of Hon'ble Punjab & Haryana High Court and Hon'ble Delhi High Court, we do not find any error or illegality in the impugned order of CIT(A) qua this issue. 11. Ground No. 2 is regarding the payment for subtitling and editing charges, treated by the Assessing Officer as fee for technical service and thereby applied provisions of section 194J. 12. We have heard the Ld. DR as well as Ld. Authorized Representative and considered the relevant material on record. The CIT(A) while deciding this issue has relied upon the decision of this Tribunal in the case of ....
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....een that Assessing Officer had only asked Appellant to explain the payment but had not specified any evidence to be furnished. The submissions made during the appeal indicate that the studio was hired for utilizing the dubbing facilities which included service through the studio staff. Condition of section 194C(7) Explanation (iv) are met also. As such the payment made was coverable under section 194C under which tax was deduced. On facts, therefore, the disallowance made under section 40(a)(ia) is deleted." 11. Aggrieved by the order of the CIT(A) the revenue has raised ground No.2 before the Tribunal. 12. We have heard the rival submissions. As can be seen from the order of the CIT(A), the assessee had utilized the services of dubbing studio Ninety Degrees by using their equipments as well as the artists who were working for Studio Ninety Degrees. The assessee had thus carried out the work of dubbing by engaging services and the same was of the nature of getting work done through a subcontractor. The findings of the CIT(A) in this regard are not in challenge before us. In such circumstances we are of the view that the provisions of section 194C were applicable and the assessee ....