ACIT-(TDS)-2(2), Mumbai v. M/s. Allied Media Network Pvt Ltd
[Citation -2016-LL-0923-102]

Citation 2016-LL-0923-102
Appellant Name ACIT-(TDS)-2(2), Mumbai
Respondent Name M/s. Allied Media Network Pvt Ltd.
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 23/09/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags composite contract
Bot Summary: In this appeal, Revenue raised the following grounds which read as under:- On the facts and in the circumstances of the case and in law, the Ld CIT failed to appreciate that the services provided by Search Light Movies is far beyond the mere supply of labour and the very nature of services rendered suggest that they are technical, as envisaged in the Explanation 2 to section 9(1)(vii) of the Act and ought to be subjected to TDS u/s 194J of the Act. On the facts and in the circumstances of the case and in law, the Ld CIT has erred in deleting the interest u/s 201(1A) of the Act, 1961 as interest deletion is consequential to the quantum deletion for which further appeal has been recommended vide ground no.1. These 2 payments attract provisions of section 194J and not 194C of the Act as applied by the assessee. Briefly stated relevant facts include that the assessee was surveyed by the TDS team u/s 133A of the Act. Assessee affected the TDS on the said payment as per the provisions of section 194C of the Act whereas the Assessing Officer is of the opinion that the provisions of section 194J of the Act are applicable. Further, an amount of Rs. 8,59,450/- was also raised on the assessee u/s 201(1A) of the Act. Considering the above, we are of the considered opinion that the view taken by the CIT regarding the splitting of the composite contract for the purpose of 3 invoking the TDS provisions of the Act is fair and reasonable and it does not call for any interference.


IN INCOME TAX APPELLATE TRIBUNAL BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. No.3017/M/2014 (Assessment Year: 2010-2011) ACIT (TDS)-2(2), M/s. Allied Media Network th R.No. 703, 7 Floor, Smt. K.G. Pvt Ltd., Vs. Mittal Ayurvedic Hospital Bldg, P2, 2 nd Floor, Percept Charni Road, Mumbai -400002. House, 22 Raghuvanshi Estates, 11/12 Senapati Bapat Marg, Lower Parel, Mumbai 400 013. PAN : AADCP9975H (Appellant) .. (Respondent) Appellant by : Shri A. Ramachandran Respondent by : Shri Pankaj Jain, DR Date of Hearing : 29.08.2016 Date of Pronouncement : 23 .09.2016 ORDER PER D. KARUNAKARA RAO, AM: This appeal filed by Revenue on 1.5.2014 is against order of CIT (A)-14, Mumbai dated 19.2.2014 for assessment year 2010-2011. In this appeal, Revenue raised following grounds which read as under:- (i) On facts and in circumstances of case and in law, Ld CIT (A) failed to appreciate that services provided by Search Light Movies is far beyond mere supply of labour and very nature of services rendered suggest that they are technical, as envisaged in Explanation 2 to section 9(1)(vii) of Act and ought to be subjected to TDS u/s 194J of Act. (ii) On facts and in circumstances of case and in law, Ld CIT (A) has erred in deleting interest u/s 201(1A) of Act, 1961 as interest deletion is consequential to quantum deletion for which further appeal has been recommended vide ground no.1. 2. In this appeal, Revenue is aggrieved with order of CIT (A) to extent that payments made to Search Light Movies constitutes technical services within meaning of Explanation 2 to section 9(1)(vii) of Act. Therefore, these 2 payments attract provisions of section 194J and not 194C of Act as applied by assessee. 3. Briefly stated relevant facts include that assessee was surveyed by TDS team u/s 133A of Act. During survey action, it is noticed that assessee pre-paid sum of Rs. 2,55,88,000/- to Search Light Movies. These payments are in nature of Media Plan Presentation cum Coordination for BSNL client 3 years . Assessee affected TDS on said payment as per provisions of section 194C of Act whereas Assessing Officer is of opinion that provisions of section 194J of Act are applicable. Accordingly, he invoked provisions of section 201(1) of Act for default and levied sum of Rs. 23,87,360/-. Further, amount of Rs. 8,59,450/- was also raised on assessee u/s 201(1A) of Act. Matter travelled to first appellate authority. 4. During proceedings before first appellate authority, assessee raised argument that said amount is aimed at various services from Search Light Movies and amount paid as per various clauses of composite contract. After considering submission of assessee, as per contents of para 3.3.1, CIT (A) granted relief and demand raised by AO was deleted. In said para, CIT (A) mentioned that AO cannot split composite contract and applied TDS provisions. For this proposition, CIT (A) relied on Special Bench decision of Tribunal in case of Motrola Inc. Vs. DCIT (95 ITD 269) (Del.) (SB). CIT (A) accepted assessee s argument that contract is indivisible. 5. On other hand, Ld DR for Revenue relied on order of AO. 6. On hearing both parties and on perusing said order of CIT (A), we find, para 3.3.1 of CIT (A) s order is relevant in this regard and same is extracted for sake completeness of this order. 3.3.1. From preamble it is evident that vendor ie M/s. Search Light & Movies have to work under direction of appellant. On perusal of terms of contract produced in appellant s submission, it is seen that it is composite contract ie they will provide labour, liaison with BSNL and execute plan as per their guidelines. issue that arises here is that whether one composite agreement can be split into components for TDS purpose. 7. Considering above, we are of considered opinion that view taken by CIT (A) regarding splitting of composite contract for purpose of 3 invoking TDS provisions of Act is fair and reasonable and it does not call for any interference. Accordingly, grounds raised by Revenue are dismissed. 8. In result, appeal of Revenue is dismissed. Order pronounced in open court on 23rd September, 2016. Sd/- Sd/- (SAKTIJIT DEY) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; 23.09.2016 . OKK Sr. PS Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 4. CIT 5. ,DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, (Dy./Asstt. Registrar) , ITAT, Mumbai ACIT-(TDS)-2(2), Mumbai v. M/s. Allied Media Network Pvt Ltd
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