Shanti Prime Publication Pvt. Ltd.
Sec. 194C of Income Tax Act, 1961— TDS — Payment made by assessee was neither in the nature of contractual payment nor rental payment and for the payments were made to the film distributor towards it’s share for screening the film, the TDS provisions are not covered.
Facts: AO found that the assessee has made the payment of Rs. 26,79,887/- under the head ‘Distributor Hire Charges” and was under the impression that that the said payment was in the nature of contractual obligation, therefore viewed that the assessee is liable for deduction of tax at source u/s 194C and since the assessee has failed to deduct the tax at source, the AO held that the expenditure is not allowable as provided u/s 40(a)(ia). Assessee filed appeal before CIT(A) and CIT(A) confirmed the addition made by the AO. Against the order .CIT(A) the assessee is in appeal Tribunal.
Held, that assessee is exhibiting the films and making payments to the distributor. Assessee relied on Circular No.681 dated 08.03.1994 and Circular No.736 dated 13.06.1996 to support that the payment was neither in the nature of contractual payment nor rental payment and for the payments were made to the film distributor towards it’s share for screening the film, therefore submitted that the TDS provisions are not covered. In the instant case, the payment was made by the theatre owner who is exhibiting the films, therefore, it cannot be held as rental payment. In the case of rent, the assessee ought to have received the payment, but in the instant case, the assessee is making the payment to film distributor. Similarly, the assessee is screening the films being the theatre owner, it cannot be held that the same is contract payment. Therefore, we are of the view that the AO has not made out the case of either contractual payment or rental payment for holding that it attracts the TDS. Department also did not make out a case of assessee in default for non deduction of tax at source u/s 201(1). Hence, the order of CIT(A) is unsustainable and accordingly, we set aside the order of CIT(A) and delete the addition made by the AO – SRI PARAMESWARI PROJECTS P. LTD. Vs. ITO [2020] 79 ITR (TRIB) 529 (ITAT-VISAKHAPATNAM)