IN THE ITAT HYDERABAD, BENCH 'A'
Assistant Commissioner of Income Tax
Ushodaya Enterprises (P) Ltd.
Recently, couple of issues has been resolved by Income Tax Appellate Tribunal, Hyderabad in the case of Assistant Commissioner of Income Tax vs. Ushodaya Enterprises (P) Ltd.
The assessee is a company carrying out business majorly in the areas of publishing of news, dairy products, electronic media (Television) manufacturing of food items etc.
1) Whether the nature of payments made by the Newspaper company to various news agencies would make the assessee to deduct TDS u/s. 194C or U/s. 194J of the Income Tax Act, 1961?
It was held that, the procurement of news are done by skillful professionals like reporters. Newspaper agencies hires skillful reporters who have professional qualification as well as those who possess mental ability, presence of mind etc in order to collect news. Hence, it would be covered u/s. 194J and not 194C of the said Act.
2) Whether the assessee would be liable to deduct tax u/s. 194C on the software expenses paid by the assessee company to the producers for telecasting their programmes via television?
The assessing officer has held the assessee as defaulter under sec-201(1) read with sec-194C of the Income Tax Act, 1961.
It was submitted by the assessee that the producers did not carry out any work as the main intention was to generate revenue on advertisement slots during programme telecast.
Tribunal observed that in the P & L A/c. the assessee made payments on account of software expenses to ETV Telegu Television and ETV other channel division which was further sub-divided in the form of revenue share under the heads "other programmes" and "Direct purchases". The expenses on account of "revenue share" are on account of production of Televisions soaps/ programmes.
After careful observation of the agreements Tribunal came to a conclusion that the assessee associated with the producers only to get its programmes telecasted on ETV Channel and thereby the assessee gain a source in generating advertisement revenue. Therefore, the assessee made payments to these various agencies on revenue sharing basis earned through advertisements telecasted during TV Serials or programmes. Hence, comes under the purview of Section 194C Explanation III as the nature of payment was that of "contract of work".
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