In ITO v. Media Worldwide Pvt Ltd, the division bench of the Income Tax Appellate Tribunal (ITAT) Kolkata held that payments on account of channel carriage fees, up-linking charges, and Bandwidth charges are not in the nature of payment towards Technical Fees under section 194J, but the same are contractual in nature, for which 2% of TDS is applicable under section 194C of the Income Tax Act.
Assessee, a Media Broadcasting Company, made a payment towards channel carriage fees, uplinking charges and Bandwidth charges to the various parties had deducted tax at source at 2% as per the provisions of section 194C of the Income Tax Act. Assessing Officer found that the above payments are covered by section 194J and therefore, assessee ought to have deducted 10% tax on such amount.
In the appeal, the assessee contended that the payment of channel carriage fees, uplinking charges and Bandwidth charges were not in the nature of payment for any technical services and the same being in the nature of contractual payment, tax at source was deductible at 2% as per the provisions of section 194C.
After considering the arguments from both sides, the bench found that a similar issue was concluded in favor of the assessee by the Tribunal for an earlier assessment year by holding that assessee had rightly deducted 2% of tax on the said payments.
Read the full text of the order below.
