The placement fees / carriage fees paid to Cable Operators / MSO / DTH Operators are payments for work contract covered under section 194C and not fees for technical services under section 194J,
SUPREME COURT OF INDIA
Commissioner of Income Tax
v.
Zee Entertainment Enterprises Ltd.
PETITION(S) FOR SPECIAL LEAVE TO APPEAL (C) NO. 22078/2018
JANUARY 6, 2020
Vikramjit Banerjee, ASG, Arijit Prasad, Sr. Adv., Syed Abdul Haseeb, Adv. and Mrs. Anil Katiyar, AOR for the Petitioner. Vivek Sarin, Ms. Anshuma Sharma, Satish C. Kaushik, Ms. Diksha Singh, Advs. and Aakarshan Aditya, AOR for the Respondent.
ORDER
1. Learned counsel for the petitioner, on instructions, issued by the Department of Revenue, Ministry of Finance vide F. No.390/Misc./116/2017-JC dated 22.08.2019, seeks permission to withdraw this Special Leave Petition along with pending applications therein due to low tax effect. Permission granted, subject to just exceptions.
2. The special leave petition and pending applications are dismissed as withdrawn, leaving question of law open.
__________________________________________________________
HIGH COURT OF BOMBAY
Commissioner of Income-tax, TDS-2, Mumbai
v.
Zee Entertainment Enterprises Ltd.
IT APPEAL NOS. 1107, 1117, 1174 OF 2015 & 126 OF 2016
FEBRUARY 28, 2018
ORDER
1. These appeals under Section 260-A of the Income Tax Act, 1961 (the Act) challenge the common order dated 20th February, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order relates to Assessment Years 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11. These four appeals relate to Assessment Years 2007-08, 2008-09, 2009-10 and 2010-11.
2. The Revenue has urged the following substantial questions of law four our consideration :-
| (i) | Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the placement fees / carriage fees paid to Cable Operators / MSO / DTH Operators are payments for work contract covered under section 194C and not fees for technical services under section 194J, without appreciating that the services received by assessee are technical and managerial in nature? | |
| (ii) | Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the payments for programme software purchases, equipment hire charge and other production related expenses excluding dubbing and processing charges made to production houses, are payments for work contract covered u/s 194C and not fees for technical services under section 194J? | |
| (iii) | Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the assessee has correctly deducted tax under section 194C on the payments made to event managers, for events other than sport related activities, as per CBDT’s notification no.188 of 2008 dated 21-08-2008, without appreciating that this notification has merely brought sport related event managers under section 194J whereas the other professional event managers are always covered under section 194J for TDS purpose? | |
| (iv) | Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the purported reimbursement of expenses was not part of the commission paid by the assessee to Zee Turner Ltd. and, therefore, the assessee was not required to deduct TDS as per the provision of section 194H of the I.T. Act without appreciating that the payer cannot distinguish between the types of payment and that assessee is statutorily required to deduct the tax on payments on gross basis? | |
| (v) | Whether in the facts and circumstances of the case and in law, the Tribunal is justified in ignoring that the relationship between the directors and the assessee was that of employer and employee as evident from day to day involvement of these directors to carry out the functions of various committees of which they were members and that the commission paid by the assessee to these directors was rightly treated as salary by the Assessing Officer? | |
| (vi) | Whether in the facts and circumstances of the case and in law, the Tribunal was justified in rejecting the order of the Assessing Officer by holding that the assessee is not in default under section 201(1) in respect of the amount of tax which has not been correctly deducted by it from the payments made under various sections and that the assessee is not liable for levy of interest under section 201(1A)? |
3. Regarding question no.(i) :—
| (a) | Mr. Suresh Kumar, learned Counsel for the appellant – Revenue very fairly states that the impugned order of the Tribunal while dismissing the Revenue’s appeal placed reliance upon the decision of its co-ordinate bench in ACIT v. UTV Entertainment Television Ltd. [IT Appeal No.2699 (Mum.) of 2012, dated 29-10-2014] to hold in favour of the respondent assessee. The Revenue being aggrieved by the order of the Tribunal in UTV Entertainment Television Ltd. (supra) had preferred an appeal to this Court being CIT v. UTV Entertainment Television Ltd. [2017] 399 ITR 443 (Bom.) and by its order the appeal of the Revenue was dismissed. | |
| (b) | In the above view, the question (i) as proposed does not give rise to any substantial question of law. Thus, not entertained. |
4. Regarding question no.(iv) :—
| (a) | We find that both the Commissioner of Income Tax (Appeals) [CIT(A)] and the Tribunal in the impugned order have on examination of the details provided by the respondent assessee found that whether the payee i.e. Zee Turner Ltd. paid commission to its constituents had deducted tax. In the present case, the respondent made payments which were reimbursement by the assessee to Zee Turner Ltd. Thus holding that there was no occasion to deduct tax on the reimbursement of the expenses paid by the respondent assessee to Zee Turner Ltd. | |
| (b) | This concurrent finding of fact by the CIT(A) as well as by the Tribunal has not been shown to be perverse. It is settled position in law that reimbursement of expenses is not taxable as held by this Court in CIT v. Siemens Aktiongesellschaft [2009] 310 ITR 320 and DIT (International Taxation) v. Krupp Udhe Gmbh, [2013] (Mag.)/354 ITR 173. | |
| (c) | In the above view, the question (iv) as proposed does not give rise to any substantial question of law. Thus, not entertained. |
5. Regarding question no.(v) :—
| (a) | This pertains to payment of commission to the non-executive / independent directors of the respondent. The CIT(A) as well as the Tribunal have on examination of the facts come to the conclusion that the commission which was paid to the directors to attend meetings of the board as well as various committees of the company were not payment made to employees of the company as these directors were non-executive / independent directors of the respondent. | |
| (b) | In the aforesaid circumstances, both the authorities held that the payments made to these non-executive / independent directors could not be treated as salary and there would be no occasion to deduct tax. The concurrent finding of fact has not been shown to be perverse by the Revenue in any manner. | |
| (c) | Accordingly, the question (v) as proposed, does not give rise to any substantial question of law. Thus, not entertained. |
6. Regarding question no.(vi) :—
| (a) | The Assessing Officer had held that there was a short deduction of tax at source resulting in the respondent assessee becoming liable under section 201(1) and 201(1A) of the Act. | |
| (b) | However, in appeal, the CIT(A) noted the details as provided by way of challans of payment of tax deduced at source and found that the Assessing Officer had not considered all the details completely. On examination of all the details, the CIT(A) found that there has been no default in deducting tax at source. Thus, no short deduction of tax. This finding of fact by the CIT(A) has been upheld by the impugned order dated 20th February, 2015 of the Tribunal. This finding of fact has not been shown to be perverse in any manner. | |
| (c) | In the above view, question (vi) as proposed, does not give rise to any substantial question of law. Thus, not entertained. |
7. Appeal is admitted on substantial question at (ii) and (iii) above.
8. Registry is directed to communicate a copy of this order to the Tribunal. This would enable the Tribunal to keep the papers and proceedings relating to the present appeals available, to be produced when sought for by the Court.
9. To be heard along with Income Tax Appeal No.1118 of 2015.
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