Thereon U/S 194C Instead Of Sec. 194J Of The I.t. Act? v. Pvsmemorial Hospital Ltd. (2015) 60 Taxmann.com 69 (Kerala)Has Held That Whenever Tax Was Deductible Under Section 194Jbut Was Deducted Under Section 194C, Such

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 950 OF 2017 Pr. Commissioner of Income Tax-16 .. Appellant v/s. M/s. Star Entertainment Media Pvt. Ltd. .. Respondent Mr. Suresh Kumar for the appellant Mr. P.F. Kaka, Senior Counsel a/w Mr. Divesh Chawla i/b Mr. Atul Jasanifor the respondent CORAM : M.S. SANKLECHA & NITIN JAMDAR, J.J. DATED : 14[th] OCTOBER, 2019 P.C. 1.This appeal under Section 260A of the Income Tax Act, 1961(Act) challenge the order dated 29[th] April, 2016 passed by theIncome Tax Appellate Tribunal (Tribunal). This appeal relates toAssessment Year 2010-11. 2.The Revenue has urged the following re-framed questions oflaw for our consideration :- (a)Whether on the facts and in the circumstances of thecase and in law, the Tribunal is justified in holding that thedisallowance of Channel Placement Fee cannot be made underSection 40(a)(ia) of the I.T. Act when the tax was deducted thereon u/s 194C instead of Sec. 194J of the I.T. Act? (b)Whether on the facts and in the circumstances of thecase and in law, the Tribunal has erred in upholding the orderof DRP to delete the disallowance on account of advertising,marketing and publicity expenses incurred by the assessee forpromotion of its channels without denying the fact that theforeign sister concern of the assessee is benefited by theseexpenses? (c)Whether on the facts and in the circumstances of thecase and in law, the Tribunal has erred in holding thatdeduction of tax at a lesser rate would not lead to applicationsof provision of section 40(a)(ia) of the Act withoutappreciating that the Hon’ble Kerala High Court in itsjudgment dated 20.07.2015 in the case of CIT-1, Kochi Vs. PVSMemorial Hospital Ltd. (2015) 60 taxmann.com 69 (Kerala)has held that whenever tax was deductible under Section 194Jbut was deducted under section 194C, such a deduction doesnot satisfy requirement of Section 40(a)(ia) of the I.T. Act,1961? 3.Regarding question no.(a) :- (a)The impugned order of the Tribunal dismissed theRevenue’s appeal by holding that the amounts paid to cableoperators for channel placement fee was subject to taxdeduction at source under Section 194C of the Act and notunder Section 194J of the Act as contended by the Revenue.This by following the decision of its co-ordinate benches in the case of Star Den Media Services Pvt. Ltd. (ITA No.1418/M/2014) rendered on 5[th] August, 2015 and in the case ofNCG Networks (ITA No. 1525/M/2015) rendered on 12[th] July,2016. (b)Mr. Suresh Kumar, learned Counsel appearing for theRevenue very fairly states that issue arising in this case iscovered by the decisions of this Court in CIT Vs. M/s. Star DenMedia Services Pvt. Ltd. (Income Tax Appeal No.1237 of 2016)decided on 4[th] January, 2019 and CIT Vs. M/s. NCG NetworksIndia Pvt. Ltd. (Income Tax Appeal No.397 of 2015). In boththe orders, this Court held that payments made for channelplacement fee are subject to tax deduction at source underSection 194C of the Act. No distinguishing feature in this caseis shown, which would warrant different view. (c)Therefore, for the reasons indicated in the above twoorders dated 29[th] January, 2018 and 4[th] January, 2019 passedby this Court, this question no.(a) does not give rise to anysubstantial question of law. Thus, not entertained. 4.Regarding question no.(b) :- (c)Therefore, for the reasons indicated in the above twoorders dated 29[th] January, 2018 and 4[th] January, 2019 passedby this Court, this question no.(a) does not give rise to anysubstantial question of law. Thus, not entertained. 4.Regarding question no.(b) :- (a)The respondent had incurred expenditure of Rs.9.75crores by way of marketing and publicity expenses forpromoting its regional channels ‘Star Pravaha’ and ‘Star Maza’.The respondent claimed the above marketing and publicityexpenses as deduction under Section 37(1) of the Act. TheAssessing Officer held that the promotion expenses incurrednot only benefited the respondent but also resulted in benefitto M/s. Star Ltd. who owned the ‘Star’ brand. In the abovecontext, the Assessing Officer allowed only 75% of Rs.9.75crores incurred by way of marketing and publicity expensesunder Section 37(1) of the Act. Thus, disallowed Rs.2.44crores being the balance 25% of the marketing and publicityexpenses incurred by the respondent. (b)The Dispute Resolution Panel (DRP) on an application ofthe petitioner, deleted the disallowance. (c)On appeal by the Revenue, the Tribunal held that once itis not disputed that the expenses were primarily incurred forthe purpose of business, incidental benefit to some other partyfrom such expenses, would not reduce the allowability of such expenditure as a deduction. This more particularly when thesame has been incurred in the course of and for the purpose ofbusiness. The impugned order of the Tribunal held that the100% expenditure of Rs. 9.75 crores by way of marketing andpublicity expenses are allowable as expenses deductible underSection 37(1) of the Act. This by following the decision of thisCourt in CIT Vs. NCG Networks India (Income Tax AppealNo.538 of 2012) decided on 13[th] October, 2014 and thedecision of this Court in CIT Vs. Star India Pvt. Ltd. (IncomeTax Appeal No. 165 of 2019) decided on 24[th] March, 2009. (c)The Revenue has not able to show any distinguishingfeatures in the present facts which would make the decisions ofthis Court in NCG Networks India Ltd. (supra) and Star IndiaPvt. Ltd. (supra) inapplicable to the present facts.(d)In view of the fact that this issue is concluded by thedecisions of this Court in favour of the respondent, thequestion as proposed does not give rise to any substantialquestion of law. Thus, not entertained. 5.Regarding question no.(c) :- (a)In view of our answer to question (a) above, this question hasbecome academic. (b)In view of the fact that this question has become academic, thesame is not being entertained. 6.In view of the above, the appeal is dismissed. (NITIN JAMDAR, J.) (M.S. SANKLECHA, J.)