DCIT (TDS) Vs Kodak India (P) Ltd. (ITAT Mumbai)
The issue under consideration is whether the services, the modeling, rendered by Ms. Katrina Kaif in this case constitutes professional service and the fee paid to her for modeling with the purpose of marketing of the camera products of the assessee liable for TDS u/s 194J?
Undisputedly, Ms. Katrina Kaif has received the said fee not in connection with production of a cinematographic film and the same received admittedly for modeling. She has not received the sum for acting in a autographic Film. Receipts for all modeling and acting skills of an individual do not attract the said section 194J, unless, they are part of the production of a cinematographic film.
In the original sense of the modeling, the same may be a profession and the receipts earned by such models may be professional receipts. But the fact is that modeling Is not a defined or notified profession either in the Income tax Act, 1961 or in the Notifications, In fact, there are many such unnotified professions and such ones cannot be brought under the provisions of section 194J of the Act.
In the instant, admittedly, the services rendered have nothing to do with the production of a cinematographic film. Further, before parting with the order, it is pertinent to mention that a person can have many skills i.e acting skills in Films, modeling skills for display of merchandise, singing skills etc. and such person can make earning out of such skills. It is not that total earning of that person in lieu of services rendered must attract the provisions of section 194J of the Act. Therefore, the taxable receipts u/s 194J of the Act are services-specific and not person specific. Therefore, the impugned payments made by the assessee to Matrix India on behalf of Ms Katrina Kaif do not attract the provisions of section 194J of the Act. Accordingly, the grounds raised are allowed.
FULL TEXT OF THE ITAT JUDGEMENT
These are cross appeals by the Revenue as well as assessee arising out of learned Commissioner of Income Tax (Appeals) order for Assessment Years 2007-08 and 2008-09 respectively.
2. Since the issues are common and connected and the appeals were heard to that these are being consolidated and disposed of by this common order.
3. One common issue raised in assessee’s appeals relate to the order of the authorities below that the payment made to Matrix India on behalf of Ms. R.K. Kaif required withholding under section 194J.
4. Upon hearing both the counsel and perusing the records, it transpires that this issue stands covered in favour of the assessee by the decision of this Tribunal in assessee’s own case for Assessment Year 2009–10, ITA No. 9080/M/2010 vide order dated 20/2/2013. The Tribunal by an elaborate order has concluded that the TDS officer was incorrect in holding that tax was required to be deducted at 11.33%. The Tribunal concluded that the impugned payments made by the assessee to Matrix India on behalf of Ms. Katarina Kaif do not attract the provisions of section 194J. Accordingly the ground raised was allowed. We may refer to the concluding portion in the said order as under:-
“18. In the light of the above legal scope we need to examine, if the services, the modeling, rendered by Ms. Katrina Kaif in this case constitutes professional service and the fee paid to her for modeling with the purpose of marketing of the camera products of the assessee constitutes FPS, notwithstanding the (act that she is otherwise an actor engaged in the production of a cinematographic film. The answer for this enquiry is found partly from the decision of this Tribunal given in the case of EMS (supra), Undisputedly, Ms. Katrina Kaif has received the said fee not in connection with production of a cinematographic film and the same received admittedly for modeling. She has not received the sum for acting in a autographic Film. Receipts for all modeling and acting skills of an individual do not attract the said section 194-J, unless, they are part of the production of a cinematographic film. It is the case of revenue that modeling is also ‘acting’ and Ms. Katrina Kaif is an actor and therefore covered by the said Rule. But the facts is that all actors are not covered by the said Rule and arose actors who services in production of a cinematographic film along are only covered.
19. In this regard we have examined the meaning of modeling and ft has multiple meaning and one nearer to the one under consideration reads as per www.freedictionarv.com ‘A person employed to display its merchandise, such or cosmetics.’ In this case, Ms Katrina Kaif is employed by the assessee to display its merchandise such as camera. In the original sense of the modeling, the same may be a profession and the receipts earned by such models may be professional receipts. But the fact is that modeling Is not a defined or notified profession either in the Income tax Act, 1961 or in the Notifications, In fact, there are many such unnotified professions and such ones cannot be brought under the provisions of section 194J of the Act. In the instant, admittedly, the services rendered have nothing to do with the production of a cinematographic film. Further, before parting with the order, it is pertinent to mention that a person can have many skills i.e acting skills in Films, modeling skills for display of merchandise, singing skills etc. and such person can make earning out of such skills. It is not that total earning of that person in lieu of services rendered must attract the provisions of section 194J of the Act. The expressions ‘services rendered’ used in the said Explanation assume significance and therefore, the taxable receipts u/s 194J of the Act are services-specific and not person specific. In the instant case, the payments are payable for the ‘services of modeling and it is unconnected with the production of cinematographic film. While ‘modeling’ is aimed at display of merchandise, the ‘acting’ is defined as ‘to act in play or film’ www.freedictionaty.com) i.e. to portray a role authored by a story-writer with different purposes and objects and certainly not to displace the merchandize to boost the sales of a manufacturer or a trader of the product or services. Therefore, the impugned payments made by the assessee to Matrix India on behalf of Ms Katrina Kaif do not attract the provisions of section 194J of the Act. Accordingly, the grounds raised are allowed.”
Respectfully following the aforesaid decision, we decide this issue in favour of the assessee.
5. One common issue raised in Revenue’s appeal is that learned CIT(A) erred in giving relief to the assessee by holding that TDS is not deductible from payments made to custom house agents on account of reimbursement of clearing and forwarding.
6. Brief facts of the case are that during the previous years relevant to assessment years under consideration, the appellant had made payments to Custom House Agents (CHAs). The appellant is making two types of payments to CHAs i.e. i) clearing charges and ii) reimbursement of the expenditure incurred by CHAs on behalf of the appellant on account of Transportation charges. Crane/Forklift hire charges, Stamp Duty/Admin charges. Freight charges and Handling/storage charges. The appellant had deducted tax at source under section 194H of the Act in respect of payments to CHAs towards clearing charges treating the same to be in the nature of commission. However, the appellant did not deduct any tax at source in respect of reimbursement of expenditure incurred by the CHAs on behalf of the appellant. The AO held that the appellant should have deducted tax under section 194C in respect of reimbursement of expenditure as well. Furthermore, in Assessment Year 2008-09, the AO noted that the tax deducted in respect of clearing charges was also short. Therefore, the AO the appellant to be an assessee in default and computed short deduction of tax and interest as under:-
