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TMI Blog2013 (2) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... s such through the transactions. Assessee had only received right for satellite broadcasting. The definition also does not say that it would apply only if the rights are considered only for a definite period. Even if the transfer of rights is perpetual or even if the transfer is only a part of the rights, as long as transfer is of any right relatable to a copyright of a film or video tape, which is to be used in connection with television or tapes, the consideration paid would be royalty only. Thus, the impugned transaction, would fall within the definition of "royalty". Thus the payments made would fall within the definition of "royalty" and the assessee was duty bound under Section 194J to deduct tax at source on the payments effected. Such deduction having not been made, rigours of Section 40(a)(ia) stood attracted. The additional ground raised by the assessee that the rigours of Section 40(a)(ia) are attracted only on amounts standing payable at the end of the relevant previous year, is justified in view of the decision of Special Bench of this Tribunal in the case of Merilyn Shipping & Transports v. Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] - allow appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired under Section 194J, which called for application of Section 40(a)(ia) of the Act. He disallowed the claim and completed the assessment. 4. In its appeal before CIT (Appeals), argument of the assessee was that there were various types of rights in a film. Examples were distribution right, dubbing right, audio right, video right, satellite right, television right, DTH right, internet right, etc. The assignee here had transferred the rights with regard to satellite transmission. The assignment agreements were nothing but purchase agreements whereby assessee purchased such rights. Accordingly, exclusive ownership of satellite copy right came to the assessee. As per the assessee, what assignor was doing was selling the rights. Assessee though called an assignee, was only a purchaser. Assignor had relinquished its right of ownership insofar as satellite copy right was concerned. Though assessee had received the rights only for a certain specific period, it had sold such rights with same period limitation. According to assessee, Section 194J was not applicable since, Explanation 5 to Section 9(1)(vi) clearly excluded from the scope of 'royalty', consideration received for sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration for purchase. According to him, therefore, CIT (Appeals) was justified in deleting the disallowance. 8. We have perused the orders and heard the rival submissions. Section 194J of the Act clearly mentions that it is incumbent on a person making payments for professional service, technical service and royalty, to deduct tax at source. Explanation (ba) to the said section also states that term 'Royalty' will have the same meaning as given in Explanation 2 to clause (vi) of Section 9(1) of the Act. The said Explanation is reproduced hereunder for brevity:- "Explanation 2.-For the purposes of this clause, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for- (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting, Private Communication/Broadcast, Terrestrial Broadcasting Service (Excluding Doordarshan Rights), Terrestrial digital Airborne Rights, Seaborne/Railborne Rights, Pay TV Rights, Broadband, Telephony, Local Delivery Service, Video on Demand, MOD (Movie on Demand), MMDS, Cable TV Rights, Web Based Technology Rights, DTH, Cable, Wire, Wireless and all other electric and electronic media now in existence and that may come into use in future, in any forms of communication like signs, signals, writing, pictures, images and sounds of all kinds by transmission of electro-magnetic waves through space or through cables intended to be received by the general public either directly or indirectly through the medium of relay stations and all its grammatical variations and cognate expressions shall be construed accordingly or any other systems without restriction of geographical area. (2) The Assignee does not have any rights in respect of (a) Doordarshan Kendra Rights, Doordarshan satellite telecasting by Government of India and its autonomous bodies and quasi - Government bodies etc., (b) enter Overseas Satellite Rights and Overseas TV Rights. The above mentioned rights are retained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. An additional ground has also been taken in the cross-objection by which it is stated that Section 40(a)(ia) would apply only on amounts standing payable at the end of relevant previous year and not on the amounts paid during the relevant year. Learned D.R. did not raise any objection to the additional ground. Such additional ground is admitted being a pure question of law. 10. We have considered both the averments of the assessee. Insofar as reliance placed on the decision of Teja Constructions (supra) is concerned, there the books of accounts of the assessee were rejected and estimation of income was done on percentage basis. The main reason why the Tribunal held invocation of Section 40(a)(ia) was not called for, was that it would result in double jeopardy. As per the Tribunal, once the books were rejected, there was no question of further invocation of Section 40(a)(ia) of the Act. It was, in such circumstances, Tribunal held that expenditure covered under Sections 30 to 38 of the Act alone were subject to Section 40 of the Act. Such observation of the Tribunal cannot be seen divorced from the facts of that case. Here, books of the assessee were not rejected. Therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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