TaxTMI 
TaxTMI 
2020 (12) TMI 770
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....cts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) rws 194J of 'Carriage Fees/ Channel Placement fees', whereas the jurisdictional ITAT, Mumbai 'L' Bench, in its order dated 28.03.2014 in the case of ADIT-(IT)-2(2), Mumbai Vs Viacom 18 Media Pvt.Ltd has confirmed that the payments made for use/ right to use of 'process' are 'royalty' in terms of the Income-tax Act, 1961 3. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) rws 194J in respect of 'editing expenses' and failing to appreciate that the film editor has been notified under the category of professionals as per Section 44AA of the Act vide Notification dated 12.1.1977. As such, the payment made to them has to be characterized as fees for professional services and hence such payments are covered u/s. 194J of the Income-tax Act, 1961. 4. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) pl....
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....d supports the order of the Ld.CIT(A). 6. We have heard the rival submissions, perused the orders of the authorities below. The Assessing Officer while completing the assessment disallowed 'Carriage Fees/Channel Placement fees' paid by the assessee for not deducting TDS u/s. 194J and invoking provisions of section u/s.40(a)(ia) of the Act by treating such 'Carriage Fees/Channel Placement fees' as royalty as process/royalty as per Explanation 6 to section 9(1)(vi) of the I.T. Act. Ld.CIT(A) following the order of the Tribunal deleted the disallowance observing as under: - "4.1. In appeal, it is contended by the Appellant that the Ld. Assessing Officer has wrongly made disallowance of expenditure without appreciating the fact that such expenditure is not a Royalty. Such Carriage Fees is charged by the Broadcaster to carry the channel. Placing of a channel on a particular presumption or carrying a channel is integral part of transmission and broadcasting process, hence, it again presumed to be 'Royalty' in nature. Further, it is submitted that this issue has been decided by the Hon'ble ITAT in the Appellant's own case vide ITA No.2699, 4204,....
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....o market and distribute the services in India to various customers and users of the service'. Further, the agreement refers to the assessee subscriber as a party, which is desirous to subscribe for and receive the telecast signals of the service from the company in order to further distribute the same to the customers). 16. From the recital of the agreement "Itself, it is clear that the service that the assessee subscriber is availing is the receipt of 'telecasting signals' from the licensor or the company. The expression 'service' has also been referred to mean the TV channel which is dealt with by the licensor or the company. Therefore, what the assessee has transacted for with the licensor or company certainly includes within its ambit broadcasting and telecasting facility. The essence of the contract is to obtain broadcasting and telecasting of TV channels and thereafter its distribution amongst ultimate customers through the cable network of the assessee. 17. Another plea of the assessee/subscriber was that the licensor or the person to whom the assessee is making payment by itself does not do the work of broadcasting' and telecasting ....
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....a 11 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 infirmity in the view taken by the Income-tax Appellate Tribunal which we hereby affirm. 9. The Hon'ble Delhi High Court has made it clear that when two provisions are simultaneously introduced in the Act., one is specific and another is more general in terms then the resort must be to the specific provision. Therefore, when the work of broadcasting and telecasting of the programmes specifica....
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....nue on this issue are dismissed. 8. Ground No. 3 of grounds of appeal is relating to deleting the disallowance made u/s. 40(a)(ia) of the Act in respect of editing expenses. The Assessing Officer while completing the assessment noticed that assessee has debited Rs..8,20,650/- under the head editing expenses on which TDS was deducted @2% u/s. 194C of the Act. However, the Assessing Officer was of the view that assessee should have deducted TDS @10% as applicable for professional fees u/s. 194J and not as contract u/s. 194C. Therefore, since the assessee has deducted TDS @2% u/s. 194C instead u/s. 194J @10%, the amount debited by the assessee towards editing charges was disallowed u/s. 40(a)(ia) of the Act. 9. On appeal Ld.CIT(A) following the decision of the Hon'ble Calcutta High Court in the case of S.K. Tekriwal and the decision of the Coordinate Bench in the case of Chandanbhoy & Jassobhoy [49 SOT 448 (Mum. Trib.) deleted the disallowance u/s. 40(a)(ia) of the Act, as it was held that no disallowance can be made u/s. 40(a)(ia) of the Act in respect of short deduction and provisions of section 40(a)(ia) of the Act applies only for non-deduction of TDS. 10. Ld. DR vehe....
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....sessee the Assessing Officer disallowed channel placement fees of Rs..10,20,88,270/- and Rs..8,40,82,020/- for the A.Ys. 2013-14 & 2014-15 respectively u/s. 40(a)(ia) of the Act treating these payments as Royalty. 3 On appeal the Ld.CIT(A) following the decision of the Mumbai Bench in the case of DCT v. Cox & Kings (I) Ltd & Anr [160 DTR 201] and Dish TV Indai Ltd v. ACIT [159 DTR 257] deleted the disallowance made u/s.40(a)(ia) of the Act. In these decisions the Coordinate Bench held that when there is a short deduction of TDS there cannot be any disallowance u/s.40(a)(ia) of the Act. 4. Ld. DR strongly supported the orders of the Assessing Officer and the Ld. Counsel for the assessee placed reliance on the decisions of the Tribunal particularly in the case of ACIT v. Hindustan Thompson Associated Pvt. Ltd., in ITA.No. 6729/Mum/2014 dated 13.07.2016 and ACIT v. M/s. UBJ Brodcasting Pvt. Ltd., in ITA.No. 1205/Mum/2018 dated 19.03.2019. 5. We have heard the rival submissions and perused the orders of the authorities below and the case laws relied on. On a perusal of the decisions of the Coordinate Bench, we find that the identical issue has been decided by....
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....avour of the assessee, he cannot ignore that decision and take a contrary view, because that would equally prejudice the assessee." Considering the above, we are taking the view which is in favour of the assessee. We are following the judgment of Samir Tekriwal (supra)of the Hon'ble Kolkata High Court as well as the orders of the Mumbai Tribunal delivered by it for the earlier years. Effective ground of appeal is decide against the AO." Respectfully following the said order, we uphold the order of the Ld. CIT(A) on this issue and dismiss the Revenue's appeal." 6. Similarly, in the case of ACIT v. M/s. UBJ Brodcasting Pvt. Ltd., (supra) the Coordinate Bench held as under: - "5. We have carefully considered the submissions and material on record including the decisions cited before us. The undisputed position that emerges is that the assessee has suffered impugned disallowance u/s 40(a)(ia) for want of deduction of tax at source at higher rate i.e. 10%. It is undisputed fact that the assessee has deducted tax @2% and the additions have been made for short-deduction of tax as per Section 40(a)(ia). We find that the facts of the present case are squa....
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....sult appeals of the revenue are dismissed." 9. Undoubtedly in the appeals before us the Assessing Officer made disallowance on the ground that assessee made short deduction of TDS. Therefore, this decision squarely applicable to the facts of the case. Respectfully following the said decision, we delete the disallowance made u/s. 40(a)(ia) of the Act." 13. The ratio of the above decision applies squarely to the facts of the case. Since in the case on hand also there is short deduction of TDS as the assessee had deducted TDS @2% as against 10%, it is a case of short deduction of TDS and not non-deduction of TDS. In the circumstances no disallowance is attracted u/s. 40(a)(ia) of the Act. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the revenue on this issue. 14. Coming to last ground i.e. Ground No. 5 of grounds of appeal which relates to deletion of disallowance made towards commission expenses, we observed that Assessing Officer while completing the assessment noticed that assessee has paid commission of Rs..13,93,805/- and claimed as deduction. However, commission paid by the assessee was disallowed by the Assessing Officer stating th....