TaxTMI 
TaxTMI 
2016 (7) TMI 694
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....onal technical knowhow and thus erred in not confirming the order passed under section 201(1)/201(1a) of the Act in respect of short deduction of tax at lower rate under section 194C instead of section 194J of the Act. 2. During hearing the learned D.R., Shri Rajesh Ojha advanced arguments which are identical to the ground raised. On the other hand, Shri Vishal Shah, learned counsel for the assessee, defended the conclusion arrived at in the impugned order. 3. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee is engaged in the business of film production/ distribution. A survey action under section 133A was carried out on 28.02.2006, at the premises of the assessee to ascertain whether the assessee is complying with the provisions of Chapter XVII-B of the Act. The stand of the Assessing Officer is that the assessee did not deduct tax as per the provisions of section 194J of the Act with respect to payments made to M/s. Adlab Ltd. which had made copies of films/prints of the films produced by the assessee. The learned Assessing Officer issued show cause notice under section 201(1)/201(1a) of the Act.....
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....- (i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or (ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice. (4) No individual or Hindu undivided family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family. (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed thirty thousand rupees : Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds [one lakh] rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section. (6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor....
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....sub-contract; (iv) "work" shall include- (a) advertising; (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) carriage of goods or passengers by any mode of transport other than by railways; (d) catering; (e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer." Section 194J of the Act reads as under: - "194J. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services, or (ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or (c) royalty, or (d) any sum referred to in clause (va) of sec....
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....r technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (ba) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; (c) where any sum referred to in sub-section (1) is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly." If the aforesaid provisions of the Act are analysed with facts of the present appeals the whole case of the Revenue is that for obtaining copies of the film prints, the TDS in respect of payments made by the assessee to M/s. Adlabs should have been as per the provisions of section 194J of the Act. There is no dispute to the fact that the TDS was deducted by the assessee on the negative processing charges as the processing involves specific task of editing which enhances the quality of film. The assessee had been consistently deducting TDS on payments for taking prints of negative and earlier the claime....
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....he assessment under section 143(3), the learned Assessing Officer while dealing with identical issue for Assessment year 2007-08 himself mentions that TDS needs to be deducted under section 194C. Identical view was taken by the learned CIT(A) for Assessment year 2007-08 and the addition made by the Assessing Officer under section 40(a)(ia) was deleted saying that TDS has been deducted at appropriate rate. The certificate issued under section 197 by the Department to Adlabs itself mentions that TDS has to be deducted under section 194C and the annexures also mentions the name of the present assessee. Thus we find no force in the conclusion of the Assessing Officer. 4.2 So far as the allegation of the Assessing Officer that all work is done when processing of negative is done. It is noted that the initial master piece wherein shoots take place, is sent to the approval of the sensor Board and this masterpiece was got done/processes from Kodak Ltd. on which TDS was deducted @10%. Whereas the q question before us is positive print processing charge which is a copying work so does not require the skill which is required for the master print. The Assessing Officer has not brought on re....