×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
06-06-2019, UTV Entertainment Television, Section 9(1)(vi), Tribunal Mumbai
This appeal, filed by revenue, being ITA No. 5958/Mum/2017, is directed against appellate order dated 16.06.2017, passed by learned Commissioner of Income Tax (Appeals)-4, Mumbai (hereinafter called “the CIT(A)”), for assessment year 2012-13, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 15.03.2016 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) r.w.s. 144C(3) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2012-13.
2. The grounds of appeal raised by Revenue in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
1. "Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) rws 194J in respect of 'Carriage fees/Channel Placement fees' and failing to appreciate that the payments made for use/right to use of 'process' are 'royalty' as per Explanation 6 to section 9(1)(vi) hence such payments are covered u/s. 194J of the Income Tax Act, 1961".
2. "Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) rws 194J in respect of 'Carriage fees/Channel Placement fees', whereas the jurisdictional ITAT, Mumbai ‗L‘ Bench, in its order dated 28.03.2014 in the case of ADIT-(IT)-2(2), Mumbai Vs Viacom 18 Media Pvt. Ltd. has confirmed that the payments made for use/right to use of 'process' are 'royalty‘ in terms of the Income Tax Act, 1961".
3. "Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in directing to delete the disallowance u/s. 40(a)(ia) without appreciating that the Hon'ble Kerala High Court in its judgment dated 20.07.2015 in the case of CIT-1, Kochi Vs PVS Memorial Hospital Ltd.  60 taxmann.com 69 (Kerala) has clearly laid down that the disallowance u/s. 40(a)(ia) would be made even in the cases of short deduction of tax".
4. "The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer restored".
5. "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary."
3. The brief facts of the case are that the assessee is engaged in the business of advertisement and subscription. The assessee owns and operate four channels namely UTV Movies, UTV World Movies, UTV Stars and UTV Action Telugu. The assessee has paid channel placement/carriage fees of Rs. 88,08,20,017/- during the previous year relevant to impugned assessment year , on which the assessee has deducted income-tax at source u/s. 194C of the Act on such payment at the rate of 2% , while the AO was of the view that the income-tax ought to have been deducted at source @ 10% under the provisions of Section 194J of the 1961 Act. The assessee was asked by the AO to explain reasons for short deduction of income-tax at source @2% by invoking provisions of Section 194C instead of deducting income-tax at source @10% u/s 194J of the 1961 Act.
3.2 The assessee submitted that the assessee did deducted income-tax at source @2% u/s 194C of the 1961 Act on payments made towards Channel Placement/Carriage Fees. It was submitted that Section 40(a)(ia) of the 1961 Act can be invoked for making disallowance of expenses only when there is no deduction of income-tax at source. It was claimed that in case there is a shortfall in deduction of incometax at source, Section 40(a)(ia) of the 1961 Act has no applicability. The assessee also submitted before the AO that placing of channel on particular band which is otherwise also distributed through the network is not a right transferred , information imparted , allowed use of patent , invention , model , design , trademark etc. . It was submitted that the assessee did not receive any information, technical knowledge , experience or skill . It was also submitted by assessee before the AO that the assessee had also not granted right to use anyright, information or intellectual property or any equipment. The assessee claimed before the AO that the payment of carriage fees does not comes within definition of royalty and hence Section 194J of the 1961 Act has no applicability. The assessee relied upon decision of ITAT, Mumbai in assessee‟s own case for AY 2008-09, 2009-10 and 2010-11 , wherein the Mumbai tribunal had held in favour of the assessee that the deduction of income-tax at source was rightly made by assessee @ 2% u/s 194C of the 1961 Act.
3.3. The AO observed that Revenue has filed an appeal with Hon‟ble Bombay High Court against decision of Mumbai-tribunal holding in favour of the assessee on this issue as the decision of Mumbaitribunal was not accepted by Revenue. The AO rejected the contentions of the assessee and held that provisions of Section 194J of the 1961 Act are applicable and the assessee ought to have deducted income-tax at source @10% u/s 194J of the 1961 Act instead of deducting income-tax at source @2% u/s 194C of the 1961 Act , wherein the AO made additions to the tune of Rs. 88,08,20,017/- under provisions of Section 40(a)(ia) of the 1961 Act on the ground that the assessee has infringed provisions of Section 194J read with Section 40(a)(ia) of the 1961 Act on payments made towards Channel Placement/Carriage Fees, vide assessment order dated 15.03.2016 passed by the AO u/s 143(3) read with Section 144C(3) of the 1961 Act, by holding as under:
―8.4 Revenue is under appeal on issue. The undersigned has considered the above submissions carefully, but the contention of the assessee cannot be accepted for following reason:
8.4.1. Channel Placement Fee: Channel Placement/ Carriage Fees are the charges paid by the broadcasters to the MSO for placing their channel on a particular frequency/bandwidth. These charges are paid to put the channel in prime band so that viewership as well as quality of channel can be increased. The carriage fee is a fee charged by broadcaster to carry the channel. As the channel capacity of MSO/LSO is limited whereas the channels are more, channels pay the charge to carry the signals
8.4.2. Placing the particulars channel on a particular frequency or carrying a channel is ―INTEGRAL‖ part of Transmission or Broadcasting PROCEES. The Pictorial representation of the ―PROCESS‖ involved is depicted below‖