K.P.T. Thangal, Vice President
1. This appeal by the revenue is for the assessment year 2000-01.
2. The only effective ground of objection urged by the revenue is directed against the order of CIT(A) in holding that assessee is not a defaulter within the meaning of section 201(1) and 201(1A) of the I.T. Act and assessee is not liable to deduct tax as per the provisions of section 194J.
3. The brief facts of the case are as under :
The assessee is an association of Stunt Artists and provide the services of such artists to the producers of the films. For the services rendered, i.e., for making the artists available as dupes to the producers of the films, the bills are raised by the association. Thereafter, the producers make the payment to the association and association in turn pays the same to the artists. The Assessing Officer held that tax has not deducted at the time of making the payment in accordance with section 194J. As the tax was not deducted assessee is liable to pay interest at the rate of 18 per cent per annum on the amount of such tax from the date on which tax deducted on the date of the order. Since the assessee has not submitted the dates of the payments, the period of default was calculated, by considering that the payment have been made throughout the financial year, the period of default took as commenced from the middle of the financial year, i.e., 1-10-1999. The default period was taken as 16 months and the interest under section 201(1A) was calculated at Rs. 2,07,967 and the penalty proceedings under section 221 were also initiated separately.
4. There was a survey action under section 133A at the premises of the association on 15-11-2000. During this survey action, it was noticed that tax has not been deducted out of the payments made to the artists, as required under section 194J; he held that the services rendered by the artists are covered by the definition of "professional services" as given in Explanation to section 194J. While holding so, he further held that for the purpose of section 44AA/this section the notified profession includes that of film artists as provided in rule 6F of the I.T. Rules, 1962. As per Rule, he held, the film artist means any person engaged in his professional capacity in the production of a cinematograph film whether produced by him or by any other person as—
"(i )an actor;
(ii)a cameraman;
(iii)a director, including an assistant director;
(iv)a music director, including an assistant music director;
(v)an art director; including an assistant art director;
(vi)a dance director, including an assistant dance director;
(vii)an editor;
(viii)a singer;
(ix)a lyricist;
(x )a story writer;
(xi)a screenplay writer;
(xii)a dialogue writer and
(xiii)a dress designer."
He held that the services rendered by the stunt artists are covered under professional services and therefore while making the payment association should have deducted tax at source. He held that the association is a person as defined under section 2(31) and it is not an individual or Hindu undivided family.
5. The total payment made by the assessee to the members/artists for the year under consideration come to Rs. 1,57,55,147 and the payments exceeded to Rs. 20,000. The assessee was asked to explain with reference to section 194J. A show-cause notice was again issued on 14-2-2001, which reads as under :
"A survey under section 133A was conducted at your premises, and during the course of which it was found that, you are receiving payments from various films and TV serials and in turn you are making payments to person.
It is seen that you have made payments to various persons, amounting to Rs. 1,57,55,147 for which details were filed by you before DCIT Cir. 1(6), Mumbai. Please state whether, you have deducted the tax while making the payments, as required by section 194J of the Income-tax Act. If no tax is deducted, please state as to why not the association be treated as an assessee in default, in respect of the tax not deducted of Rs. 8,66,533 and the interest under section 201(1A), calculated at the rate of 18 per cent on the tax for the period of default and penalty under section 221 of the Income-tax Act be also not levied. In this regard, also submit the dates of payment to these persons so that the interest be calculated correctly.
Please also submit the details of all the payment made to various persons during financial year 1999-2000, wherein the total payment credit exceed Rs. 20,000 to a particular person, so that necessary action for not deducting the taxes as required by section 194J.
Please also state whether, the producers, other than individual HUF while making payment to the association are deducting tax, if yes, please submit the name and address of such producers. If, the association is getting payments without deduction of tax, then the names and address of such producers be submitted, for the period 1-4-2000 to till date.
Please submit the copy of latest return of income filed, along with profit and loss account and balance sheet.
Attention is also drawn to letter dated 16-1-2001 issued by this office for which, a reply is still awaited. The reply to this letter should reach this office on or before 19-2-2001, otherwise necessary action as per the provisions of Income-tax Act, 1961 will be taken".
6. There was no response. The Assessing Officer held assessee has no explanation to offer. He held that assessee has failed to comply with section 194J and therefore it was held that assessee is in default. Further, he held that in respect of taxes as per section 201(1) of the Income-tax Act, should have been deducted at Rs. 8,66,533, calculated at the rate of 5.5 per cent on the entire amount paid. Aggrieved by the above order, the assessee appeal to the first appellate authority.
7. Before the CIT(A), assessee contended that assessee is a non-profit making Welfare organisation/association which does not enter into any contract with the artists, and the associations’ only source of income is the subscription fees from its members. In fact, assessee is only an agent between the artists and the film producers and no professional services are rendered by the stunt artists to the association, the services are rendered by the artists directly to the producers of the film and hence assessee is not at all responsible to make deductions as contemplated under section 194J, if at all 194J can be applied only to the film producers. Hence, it was contended that assessee is not in default within the meaning of section 201(1) of Income-tax Act.
8. It was further submitted that persons specified in rule 6F of the I.T. Rules are an Actor, a Director, on the same footing. As regards the Directors, music director, art director, dance director etc. are mentioned whereas a stunt actor is not at all mentioned. Further, it was contended that even an Assistant Director who assists the director find the reference in Rule 6F, but not stunt director. Thus it is evident that if the intention of the literature was included stunt actors as well in the definition of any person under rule 6F, it should have been mentioned specifically. It was further submitted that general meaning of an actor is a person who acts as per the story of the film. The stunt man/actor does not act as per the story of the film, but he acts as a dupe of the real actor. Therefore, the actor cannot mean and includes stunt actor as well. Thus he held that the stunt actor is not covered by the provisions of section 194J. Squarely he held that the finding of Assessing Officer that assessee is a defaulter vide section 201(1) is erroneous on facts as well as in law. Aggrieved by the above order revenue is in appeal before the Tribunal.
9. The learned Departmental Representative supported the order of the Assessing Officer and submitted that the services rendered by stunt artists are covered by professional services as contemplated under Rule 4F as notified for the purpose of section 44AA. An artist means any person engaged in his professional capacity in the production of a cinematograph film whether produced by him or by any other person. There is no doubt, assessee is a person engaged in his professional capacity in the production of cinematograph film as an actor. An actor is an artist. Actor included stunt actor. It is the assessee who made the payment to the artist or to its members. Hence, the DR submitted assessee is a defaulter under section 201(1). Hence, he submitted the order of the Assessing Officer may be restored.
10. On the other hand, the learned Counsel for the assessee submitted that assessee is a voluntary organization, which came into existence for ameliorating the exploitation of the stunt artists. The assessee is not making any payment to the artists/stunt actor. There is no agreement between the assessee and the recipient. The assessee is not responsible for making payments. The artist has not rendered any services to the assessee either professionally or technically. The learned Counsel submitted that professional services has been explained below Proviso to section, Professional services means rendering some kind of services either legal, medical, engineering or architectural or profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as notified by the Board for the purpose of section 44AA or of this section. Hence, the counsel submitted that the order of the CIT(A) is liable to be upheld.
11. We heard the rival submissions and gone through the order of the revenue authorities. Section 194J came into effect from 1-7-1995 and it reads as under :
"Section 194J - Any person, not being an individual or a Hindu Undivided Family, who is responsible for paying to a resident a sum by way of—
(a)fees for professional services, or
(b)fees for technical services,
shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to five per cent of such sum as income-tax on income comprised therein."
12. Now, coming to section 44AA, referred to an explanation the rules are notified. The rule 6F explains the means of film artist. The rule 6F to Explanation (c) reads as under :
‘ "film artist" means any person engaged in his professional capacity in the production of a cinematograph film whether produced by him or by any other person, as—
(i )an actor;
(ii)a cameraman;
(iii)a director, including an assistant director;
(iv)a music director, including an assistant music director;
(v)an art director, including an assistant art director;
(vi)a dance director, including an assistant dance director;
(vii)an editor;
(viii)a singer;
(ix)a lyricist;
(x )a story writer;
(xi)a screen-play writer;
(xii)a dialogue writer; and
(xiii)a dress designer.’
13. First of all, section 194J is applicable to any person, but other than an individual or to a HUF. Secondly, such person should be responsible for making the payments to a recipient by way of fees either for professional services or for technical services. The services rendered by stunt artist is undoubtedly a professional service.
14. But the question is whether the assessee as the name itself indicates a voluntary organization formed to protect the interest of its members. The Association safeguards the rights of the members and the payments received from producers/film makers routed through the association to the artists who are its members. There is no agreement between the artists and the assessee. The agreement if any is between the producer/film makers and the services by the artists are rendered to them directly but the payment is made through the assessee to safeguard the interest of the recipient i.e., its members/stunt artists. Written submission of the assessee which is reproduced vide page 2 of the para 5 of the order of CIT(A) mentions that the association had been in existence since 1959 and it was formed primarily because of producers/film makers never used to make full payments to the stunt artists or never used to make the payments in-time. With the formation of the association, not only the payments made on time and the rate at which the payment is fixed by the association (in consultation with the producers guild). Hence, only the payment to the stunt artist is routed through the association. These facts have not been denied either. Therefore, the first criteria that the assessee should be a person responsible to make the payment is not satisfied.
15. Secondly, the explanation quoted above defines what is professional services. It says that for the purpose of section 194J, the services rendered should be either on legal, medical, engineering, architectural or in the nature of profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purpose of section 44AA or of this section. Specifically in this section no notification is made, but notification is made for the purpose of section 44AA only.
16. As rightly contended by the Counsel for the assessee, the omission to include the ‘stunt artist’ anywhere in the Rules referred in para 4 cannot be treated as accidental or immaterial. The case of the revenue is that stunt actor is also an actor, because he is also acting. Stunt Artist is not included in the notification made for the purpose of section 44AA/this section 194J. Nothing prevented the competent authority, while enumerating the persons engaged in the production of cinematograph film to include a stunt artist as well in this category, this is all the more so. It does not say an actor includes a stunt artist/dupe. Therefore, the contention that stunt artist is an actor within the meaning of the rules is far fetched and cannot be accepted. Particularly, considering the fact that while enumerating a director, a music director, art director, dance director and their assistants as well included. Had the Legislature any inclination to include ‘Stunt Artist’ it would have been specifically mentioned the same.
17. In the light of the above discussion and on the clear provision of law, we are of the view that there is no reason to disturb the order of the first appellate authority. Hence, the appeal by the revenue fails and dismissed.
18. In the result, the appeal of the revenue is dismissed.
