9911796707
TMI Blog2015 (8) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Department. See Mrs. K. Bhagyalakshmi Versus The Deputy Commissioner of Income Tax [2013 (12) TMI 1215 - MADRAS HIGH COURT ] - Decided in favour of assessee. - ITA Nos.1860 & 1861/Hyd/2014 - - - Dated:- 5-8-2015 - Shri P.M. Jagtap and Shri Saktijit Dey, JJ. For The Revenue: Shri K.J. Rao, DR For The Assessee: NONE ORDER Per Saktijit Dey, J.M. Aforesaid appeals by the Department are against a common order dated 2.9.2014 of ld CIT (A) II Hyderabad pertaining to A.Ys 2008-09 and 2009-10. 2. When the appeal was called for hearing, no one appeared on behalf of the assessee. Considering the nature of dispute, we proceed to dispose off the appeal after hearing the ld DR. 3. The common grounds raised by the Department for both the A.Ys, are as under: 1. Whether the ld CIT (A) is correct in holding that the payments made by the assessee for purchase of telecast rights from the film producers is not in the nature of royalty payment and therefore not liable for TDS u/s 194J?. 2. Whether ld CIT (A) is correct in holding that the transaction of acquisition of rights to telecast the film in TV channels from film distributors is a purchase tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this context, assessee relied upon a decision of the Hon ble Madras High Court in case of Smt. K. Bhagyalakshmi vs. DCIT (97 DTR 377). It was submitted by assessee that since assessee purchased the satellite rights for a period of 99 years and such rights are irrevocable, the payments made cannot be treated to be towards royalty. Ld CIT (A) after considering the submissions of the assessee in the light of the ratio laid down by the Hon ble Madras High Court in case of Smt. K. Bhagyalakshmi vs. DCIT (Supra) held that provisions of section 194J are not applicable to the payments made by the assessee as it is towards purchase of satellite rights and not towards payment of royalty. Finding of the ld CIT (A) is extracted hereunder for the sake of convenience: 7.2. The Hon ble Madras High Court in the case of Smt.K. Bhagyalakshmi Vs. DCIT (2014) 97 DTR (Mad) 377 held that the royalty does not include consideration for sale/ distribution/exhibition of Cinematographic films, therefore, provisions of section 194J are not applicable. The facts in that case were, the assessee was in the business of purchase and sale of television rights, he purchases such rights for a period of 99 y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the ld CIT (A) has not been controverted by the ld DR by bringing any evidence on record. Thus, once it is established that the assessee has acquired an irrevocable right over the exhibition of films for a period of 99 years, it cannot be said that payments made for acquiring such rights is in the nature of royalty. Rather it is a consideration paid towards outright purchase of feature films to be exhibited through Television. The Hon ble Madras High Court in case of Smt. K. Bhagyalakshmi vs. DCIT (Supra) while considering acquisition of satellite rights of feature films for a period of 99 years held that since such right is a perpetual right, the payment made cannot be treated as royalty, so as to attract provisions of section 194J. The Coordinate Bench of this Tribunal while considering identical nature of dispute in case of ACIT vs. M/s Aishwarya Art Creations (P) Ltd in ITA No.516/Hyd/2012 dated 10.12.2014 for A.Y 2008-09 following the aforesaid decision of the Hon ble Madras High Court held as under: 8. Before taking a decision on the issue, let us examine the relevant facts of the case. As can be seen, from the assessment order, though AO has not given absolutely any r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities referred to in sub-clauses (i) to [(iv), (iva) and] (v). 9. As can be seen from the provision extracted hereinabove, royalty as per clause (vi) would take within its ambit rendering of any services in connection with the activities referred in sub-clause (i) (v). It is further evident from the aforesaid provision that payments made by assessee can only be classified within clause (v) of the Explanation 2 to section 9(1). On careful reading of the said clause (v), it becomes clear that though consideration paid towards transfer of all or any rights in respect of copy right, literal, artistic or technical work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but, it specifically excludes consideration received for sale, distribution or exhibition of cinematographic films. On a perusal of assignment agreement between assessee and producers of film, a sample copy of which is placed at page 3 of paper book, it becomes clear that right over the films have been assigned in favour of assessee perpetually for a period of 99 years without any restriction of geographical area. It is further evident that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cinematographic film, copy right shall subsist until 60 years from the beginning of the calendar year next following the year in which the film is published. Therefore, the agreement in the case on hand, is beyond the period of 60 years, for which the copy right would be valid, the document could only be treated as one of sale. 18. As far as the decision of the Co-ordinate Bench in the case of Balaji Communications (cited supra), the rights which was the subject matter of the said decision were only for a period of 20 to 25 years and not of permanent nature. Therefore, the said decision is clearly distinguishable on facts and cannot be applied to the assessee s case. 19. In the light of the above discussion, we have no hesitation to hold that the findings of the First Appellate Authority was perfectly justified in holding that the transfer in favour of the assessee as sale and therefore, excluded from the definition of Royalty as defined under clause (v) to Explanation (2) of Section 9(1) of the Act. 11. The ratio laid down by the Hon ble Madras High Court as aforesaid also clearly applies to the facts of the case of assessee. In the aforesaid view of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
