Case Law Details
1. Various expenses incurred by the assessee which were part of post production activities, the assessee deducted tax at source u/s 194C treating them as contractual work whereas the AO was of the opinion that services rendered to the assessee by the payees were professional services, therefore, assessee ought to have deducted tax at source u/s 194J. Ld. CIT(A) confirmed the order of the AO on this issue.
2. We have gone through the orders passed by the lower authorities and also gone through the submissions made by the Ld. Counsel in this regard. The assessee has paid processing charges by Adlabs Films Pvt Ltd amounting to 34,93,624 which included a sum of Rs.23,79,972 towards print and processing charges for which credit was given to the said party. It has been submitted that taking out of the final negative of the films does not involve rendering of any technical or professional services. Therefore, TDS is required to be deducted u/s 194C. In any case, ‘printing and processing of film’ is a part of post production activity. Thus, TDS should be deducted u/s 194C. Similarly, the assessee has paid amount for digital mixing, which is also part of post production activities.
3. Our attention was brought on the decision of Mumbai bench of the Tribunal in the case of DCIT vs Yashraj Films Pvt Ltd 160 ITD 626 (Mum) wherein it was held that taking out a final negative of film does not involve any technical or professional service, therefore, TDS should be deducted u/s 194C. Our attention has also been brought on the following judgments wherein all post production activities have been held covered within the definition of work as provided u/s 194C:-
“ CIT v. Prasar Bharati [2007] 292 ITR 580 (Delhi HC) – The Hon’ble Delhi High Court held that Explanation (iii) to Sec. 194C which was introduced along with Sec. 194J is very specific in its application to not only broadcasting and telecasting but also includes production of programmes for such broadcasting and telecasting. The High Court held that when there are two provisions one general and one specific, the specific one manifests the intention of the legislature and should be followed.
Nitin M Panchamiya v. ACIT [2012] 50 sot 468 (Mumbal) as affirmed by CIT v. Nitin M Panchamiya [2015] 228 Taxman 259 (Bombay HC)(Mag) – The Hon’ble ITAT held that cinematographic films can be covered under the ambit of ‘productions of programs for broadcasting and telecasting’ and that the payment made for production of such films would fall for consideration u/s 194C of the Act (Pg. 20 – Case Law PB 3). The said ground was not appealed by the Revenue before the Hon’ble High Court and hence can be said to have been accepted by the revenue.
ACIT v. Sahara One Media & Entertainment Ltd. [2014] 41 Taxmann.com 488 (Mumbai-Trib) – Dubbing expenses print processing fees are in the nature of a part of production of programmes and are covered u/s 194C
ACIT v. Zee Entertainment Enterprises Ltd. [2014] 51 Taxmann.com 231 (Mumbai – Trib) -Equipment, labour and operators hired for production purposes. CIT(A) also examined the issue of hiring of equipment u/s 1941 of the Act and found in favour of the Assessee. The Hon ‘ble ITAT rendered a considered opinion that there was no error in the CIT(A) order.”
4. We have gone through these judgments and find that case of the assessee is squarely covered in its favour. The impugned expenses incurred by the assessee are in the nature of post production activities. Therefore, the assessee was obliged to deduct TDS u/s 194C only and not u/s 194J. As a result, these grounds are allowed.
