Case Law Details
During the course of assessment proceedings, it was noted by the assessing officer that assessee company had made payments of Rs. 2.26 crores during the year under consideration to Radio Jockeys (RJs) and deducted TDS on this payment @ 10 per cent under section 194J considering its as payment of professional/ consultancy charges. The assessing officer examined the terms of the agreement made with RJs and inferred that there was an employer-employee relation between the assessee and RJ, therefore payments of RJ should have been subjected to deduction of TDS under section 192 by treating is as salary and not under section 194J by treating is as professional/ consultancy charges. Accordingly, he issued show-cause notice to the assessee. The assessee submitted detailed reply analyzing various clauses of the agreement in detail to argue that contents of the agreement with the RJ clearly suggest that these are exclusive professional contract. It was also submitted that RJs have raised invoices on the assessee company for the service rendered by them.
But, assessing officer was not convinced with the argument of the assessee, and after analyzing agreement with RJs, it was held by the assessing officer that TDS should have been deducted by treating the impugned payment as salary under section 192.
It is noted by us at the very outset that it has been pointed out by the assessee that the impugned payments have been shown as part of professional income by the RJs in their respective returns and have been accepted as such by their respective assessing officers. Nothing has been brought on record by the assessing officer or by the learned Departmental Representative before us to contradict this aspect to show whether in any case the said income has been treated as income under the head of salaries. It is also not the case of the assessing officer that ultimately any RJs is left to be assessed by the Department or if any one of them avoided making payment of tax. The case of the assessee, which remains undisputed, is that all the RJs were duly assessed to tax and they have paid taxes and filed their returns as per law. Under these circumstances, it was not justified on the part of the assessing officer to magnify this issue and change the relationship of the assessee and RJs from professional consultant to employee by any inappropriate reading of terms of the agreement. Further, it is noted by us that learned Commissioner (Appeals) has rightly pointed out RJs were not entitled for the various benefits which assessee company’s employees were entitled e.g. provident fund, gratuity, retirement benefits etc. The agreements with them were for a specific period and assessee company was not bound to renew the same. It has also been noted by us that RJs were free to take assignments from any company (except with any other radio broadcasting company). They were not bound to act solely as RJs. Such kind of permissions cannot be given to employee. It is also worth noting that with effect from 1-7-2012, the RJs were liable to pay service-tax on the value of service rendered by them. The assessee supported this fact with the help of sample copies of invoices showing that service- tax was charged by the RJs. Thus, different treatment cannot be given under the income-tax law and service-tax law to decide the nature of the payments.
Further, on examination of various clauses of the agreement, it is noted that neither it is mentioned anywhere that RJ would be employee of the assessee, nor it can be concluded on the basis of holistic reading of the entire agreement that there was any employer-employee relationship between assessee and RJs.
Lastly, it is noted by us that the assessee has made payment by treating it as payment for professional services. Under these circumstances, the assessee was obliged to deduct the TDS under section 194J only.
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