ITAT Quashes Tax Demand against Zee Channel [Read Order]

In a major relief to the channel Zee, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed the tax demand against the channel for non-deduction of tax on payment towards a foreign company.

The assessee, Zee Entertainment Enterprises Ltd or ZEE, in short, is engaged in the business of broadcasting and distribution of TV channels, production, commissioning, purchase, and export-sale of TV programmes, films, news, distribution of films, and also acts as canvassing agent for space selling on TV Channels. While completing the assessment proceedings, the Assessing Officer noted that the assessee has entered into a lease agreement for the transponder facility offered by M/s Intelsat Corporation, USA to enable transmission of uplinked programs to be seen over the footprint of the satellite (mainly India). He was of the opinion that the assessee was liable to deduct taxes in respect of certain remittances to the company on account of as user charges for the period January to March 2013.

Before the Tribunal, the assessee submitted that as per the decision of Hon’ble Delhi High Court the transponder fee are not taxable in the hands of the recipient Intelsat Corporation, USA, there cannot be any liability on the assessee to deduct tax at source u/s. 195 of the Act. Further, the assessee has submitted that as per the Apex Court ruling in the case of G. E. Technology Centre Pvt. Ltd. vs. CIT, there is no liability to deduct TDS when the income is held to be not chargeable to tax in the hands of the recipient.

The Tribunal relied on the decision of the Tribunal in Viacom 18 Media Pvt. Ltd. vs. Asst. Director of Income-tax (International Taxation) wherein it was held that no liability fastens on the assessee to deduct tax at source on payments made to Intelsat Corporation USA.

Relying on the above decision, the Tribunal held that “Since facts are identical and it is undisputed that the Hon’ble Delhi High Court has held that the payment is not taxable in the hands of the recipient. Respectfully following the precedent of the Hon’ble Apex Court in the case of G. E. Technology Centre Pvt. Ltd. (supra), we are of the considered opinion that when this income is not chargeable to tax in the hands of the recipient, no liability is there on the assessee to deduct tax at source. Accordingly, in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and decide the issue in favor of the assessee.”