The assessee in the present case is a Company, which is engaged in the business of Media Broadcasting. A survey under section 133A of the Act was carried out in its business premises on 20.06.2011. As found during the course of survey, the assessee- company while making the payment towards channel carriage fees, up- linking charges and Bandwidth charges to the various parties had deducted tax at source at 2% as per the provisions of section 194C. According to the Assessing Officer, the said payments made by the assessee were covered by section 194J and the assessee, therefore, was required to deduct tax at source at 10% instead of 2%. He, therefore, issued a notice under section 201(1) of the Act requiring the assessee to show- cause as to why it should not be treated as an assessee in default for short deduction of tax from the payments made on account of channel carriage fees, up- linking charges and Bandwidth charges. In reply, it was submitted on behalf of the assessee that the payment of channel carriage fees, up-linking charges and Bandwidth charges were not in the nature of payment for any technical services and the same being in the nature of contractual payment, tax at source was deductible at 2% as per the provisions of section 194C. Reliance in support of this contention was placed by the assessee on the decision of the Honorable Delhi High Court in the case of CIT- Vs.- Estel Communications Pvt. Limited reported in 318 ITR 185. The Assessing Officer, however, found the said case law relied upon by the assessee to be distinguishable on facts. According to him, the provisions of section 194C were general in nature, while the provisions of section 194J being special covering specific situation, the assessee was required to deduct tax at source at 10% instead of 2%. He, therefore, treated the assessee as in default in respect of short deduction of tax under section 201(1) of the Act and also charged interest under section 201(1A) of the Act. Accordingly, total demand of Rs.1,68,08,795/- was raised by the Assessing Officer against the assessee vide an order dated 22.03.2013 passed under section 201(1)/201(1A) of the Act.
Held by ITAT
Assessee produced various types of programmes/ serials and news and these were telecasted/ broadcasted through Multi System Operators for which payments were made to them under the head ‘carriage charges’. The assessee has duly deducted and paid tax under section 194C of the Act. We agree with the Id CIT (Appeals) that no technical services were involved in payment of carriage charges made by the assessee for broadcasting of the programmes produced by the assessee. The assessee produced various types of programmes/ serials and news and these were telecasted/ broadcasted through Multi System Operators. Payments in this regard were made as carriage charges for which payment of tax was deductible under section 194C of the Income Tax Act. As per definition of technical services given in Explanation to Section 9 of the Act, the deductee should have rendered managerial, technical or consultancy services. In this case, we find that there is no such finding of the Assessing Officer. The deductee has only telecasted the programmes produced by the assessee. In this case law referred to by the ld. CIT'(Appeals) decision in the case of DCIT- Vs- NNM Securities Limited, ITAT held that if the assessee is using any facility of anyone the same is not technical services. Honorable Punjab & Haryana High Court in the case of Karukshetra Darpan (P) Ltd -vs- CIT [217 CTR 326J has held that telecasting on the programme was covered under section 194C of the Act .