By K. B. Bhujle
Advocate
CIT vs. UTV Entertainment Television
Ltd.; 399 ITR 443 (Bom):
The assessee company carried on the business
of broadcasting of television channels. It paid certain amounts on account of
carriage/placement fees, editing/subtitling expenses and dubbing charges. Tax
at source was deducted by the assessee on these amounts u/s. 194C of the Act,
at the rate of 2%. The relevant period is A. Ys. 2008-09 to 2011-12. The
Assessing Officer was of the view that the amounts were in the nature of fees
payable for technical services and, therefore, tax should have been deducted
u/s. 194J. Accordingly he passed orders u/s. 201(1)/201(1A) and raised demand.
The Commissioner (Appeals) and the Tribunal accepted the assesee’s claim and
held that the tax has been rightly deducted at 2% u/s. 194C of the Act.
Accordingly, they set aside the order of the Assessing Officer.
On appeal by the Revenue, the Bombay High
Court upheld the decision of the Tribunal and held as under:
“i) When
services are rendered as part of the contract accepting placement fees or
carriage fees, they were similar to services rendered against the payment of
standard fees paid for broadcasting of channels of any frequency. The placement
fees were paid under a contract between the assessee and the cable operators or
multi system operators. Considering the nature of transactions, the payments
were not in the nature of commission or royalty.
ii) Commissioner (Appeals) had
found that by agreeing to place the channel on any preferred band, the cable
operator did not render any technical service to the distributor or television
channel. He had rightly found that if the contract was executed for
broadcasting and telecasting the channels of the assessee, the payment was
covered by section 194C as it fell within clause (iv) of the definition of
“work”. Therefore, when placement charges were paid by the assessee to the
cable operators and multi system operators for placing the signals on a
preferred band, it was a part of work of broadcasting and telecasting covered
by sub-clause (b) of clause (iv) of the Explanation to section 194C. It was
found that by an agreement to place the channel on a prime band by accepting
placement fees, the cable operator or multi system operator did not render any
technical services. The Commissioner (Appeals) had recorded detailed findings
on the basis of material on record.
iii) Regarding subtitling
charges also, the finding of fact recorded by the Commissioner (Appeals), which
was confirmed by the Tribunal, was that the work of subtitling was also covered
by the definition of “work” in sub-clause (b) of clause (iv) of the Explanation
to section 194C which covered the work of broadcasting or telecasting including
production of programmes for such broadcasting and telecasting and that the
work of subtitling was part of production programmes.
iv) The findings of fact
recorded by the appellate authorities and the view taken by the Tribunal were
justified. No question of law arose.”
