PCIT Vs Media Worldwide Ltd. (Bombay High Court)
In , the Bombay High Court dismissed the Revenue’s appeal filed under Section 260A of the Income-tax Act, 1961 against an order of the Income Tax Appellate Tribunal for Assessment Year 2012-13. The dispute concerned disallowance under Section 40(a)(ia) relating to channel placement fees, uplinking charges, and bandwidth charges claimed by the assessee, which was engaged in the business of telecasting programmes.
The Assessing Officer had held that although the assessee deducted tax at source at 2% under Section 194C, the payments were actually in the nature of royalty for use of a “process” under Explanation 6 to Section 9(1)(vi), and therefore tax should have been deducted under Section 194J at 10%. On this basis, the Revenue disallowed expenditure of Rs. 15.90 crore under Section 40(a)(ia).
The Commissioner of Income Tax (Appeals) deleted the disallowance, holding that the case involved only short deduction of tax and not non-deduction of tax. The Tribunal upheld this finding while following orders passed in the assessee’s own earlier cases.
Before the High Court, the Revenue argued that deduction under the wrong TDS provision should be treated as failure to deduct tax properly, relying on the Kerala High Court judgment in PVS Memorial Hospital Ltd. The assessee, however, relied on several High Court decisions including S.K. Tekriwal, Future First Info Services, Kishore Rao & Others (HUF), Samsung Heavy Industries Company Ltd., Morgan Stanley India Capital Pvt. Ltd., and JDS Apparels (P.) Ltd.
