Prasar Bharti defaulted to deduct the tax at source: Supreme Court

Prasar Bharti introduced an problem of taxation in advance of the Apex Courtroom in advance of the Bench comprising of Hon’ble Mr. Justice R.K. Agrawal, Hon’ble Mr. Justice Abhay Manohar Sapre by way of Specific Depart Petition. Prasar Bharti was represented by Mr. Rajeeev Sharma and counsel for Commissioner of Cash flow Tax, Thiruvananthapuram was Mr. Rupesh Kumar.

Prasar Bharti Doordarshan Kendra has its Regional Branch at Trivandrum. The Prasar Bharti’s channel, Doordarshan, in the study course of their company, regularly telecasted ads of numerous consumer corporations. Prasar Bharti entered in agreement with advertising organizations in which these organizations had to make an software to Prasar Bharti to get the accredited standing for their Agency so as to enable them to do company with the Prasar Bharti of telecasting the ads of numerous consumer solutions manufactured by numerous corporations on the Prasar Bharti’s Doordarshan Television set Channel. It also supplied that the appellant would spend 15% by way of commission to the Agency. The agreement also supplied the way, manner and the time in which the payment was to be built by the Agency to the appellant. The failure to make the payment was to consequence in shedding the accredited standing by the Agency. The Agency was to give minimum once-a-year company of Rs.6 Lakhs to the appellant in a fiscal calendar year failing which their accredited standing was liable to be withdrawn. The Agency was to furnish a financial institution assure for a sum of Rs.3 Lakhs.

Prasar Bharti was an assessee below Cash flow Tax Act, 1963 in the assessment calendar year 2002-2003 and 2003-2004, Prasar Bharti paid out a sum of Rs.2,56,75,165/- and Rs.2,29,65,922/- to numerous accredited Companies, with whom they had entered into the aforementioned agreement as commission for telecasting the ads provided by these Companies relating to solutions manufactured by numerous consumer corporations.

The problem which arose in advance of Evaluating Officer (AO) that whether or not Segment 194H of the Cash flow Tax Act was relevant to the payments built by Prasar Bharti, if so, whether or not the Prasar Bharti deducted “tax at source” as supplied below Segment 194H of the Act from the volume paid out by the Prasar Bharti to the Companies. Evaluating Officer was of that Segment 194H was relevant and thus channel unsuccessful to deduct the tax at source thus attracting the provisions of Segment 201(1) of the Act through the Assessment decades 2002-2003 and 2003-2004.

Aggrieved with the order of Evaluating Officer, Prasar Bharti appealed to the Commissioner of Cash flow Tax (Appeals)-II (CIT Appeals), Thiruvanathapuram. The attractiveness was dismissed. The make any difference went to the Tribunal which established apart the orders handed by AO and CIT (Appeals).

The attractiveness was built by Revenue (Cash flow Tax Office) to Large Courtroom of Kerala at Earnakulam below Segment 260-A of the Cash flow Tax Act. The Large Courtroom restored the order of CIT (Appeals) and AO, as Prasar Bharti dedicated default of non-compliance of Segment 194H resulting in attracting the provisions of Segment 201 of the Act.

The counsel for Prasar Bharti submitted that the accredited organizations were not operating as agent of the appellant and nor the appellant was having to pay them any volume by way of commission. He pointed out that the Companies, in phrases of the agreement, purchased the air time from Prasar Bharti. It was, for that reason, his submission that these kinds of transaction simply cannot be regarded as being among the principal and agent and nor the payment can be regarded as owning been built by way of commission so as to catch the attention of the rigor of Segment 194H and Segment 201 of the Act.

The counsel for Prasar Bharti relied on the circumstance of Jagran Prakashan Ltd vs. Deputy Commissioner of Cash flow Tax(TDS), (2012)345 ITR 288 in guidance of his submission. The Apex court docket did not take the precedent cited as the info of the precedent cited did not match with the current occasion.

In reply, learned counsel for the respondent supported the impugned judgment and contended that the order handed by the AO, CIT (Appeals) and the impugned judgment deserve to be upheld as all the a few orders are dependent on appropriate reasoning calling no interference.

Having read the learned counsel for the parties and on perusal of the file of the circumstance, we find no benefit in these appeals. Therefore, Prasar Bharti unsuccessful to comply with the provisions of Segment 194H of the Act.