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TMI Blog2017 (5) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... nsee. AS-9 allows deferment of royalty income. Thus, in our opinion the assessee had rightly offered the incomes in six AY.s proportionately. Therefore, reversing the order of the FAA and considering the peculiar facts and circumstances of the case, we decide the effective Ground of appeal in favour of the assessee. Addition on account of value added tax(VAT) - Held that:- There is no evidence to prove that same was not part of the payment received from Moser Bayer. The amount received by the assessee included VAT. Therefore,we hold that the order of the FAA cannot be endorsed - Decided in favour of the assessee. - I.T.A. 3493/Mum/2016 - - - Dated:- 23-5-2017 - Shri Rajendra,Accountant Member, And Ram Lal Negi,Judicial Member For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and ₹ 32.07 lakhs on account of value added tax(VAT). 4. Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority (FAA).Before him,it was argued that assessee was following Mercantile system of accounting,that income was to be determined only on accrual basis,that it had entered into an agreement with Moser Baer India Ltd for telecasting re-edited TV serials,that the tenure of the said agreement was 6 years, that during the relevant year it had received a sum of ₹ 1.08 crore only out of the entire agreement value and had offered the same for tax, that the balance amount had been amortised in next 5 AY.s,that the addition made by the AO of ₹ 7.26 crores was unjustifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission of the assessee the AO referred to the terms of contract, (Cl1.15),(Cl.3),(Cl.6)and held that there was nothing in the agreement that allowed termina - tion of the agreement by the licensor,that the deliverables and performance of obligations under the agreement were completed at the time of signing the agreement, that there was no deferment of contractual obligation to any future date,that the rescinding of the contract vested only with the licensee and not with the assessee,that the agreement was conclusively binding on the assessee, that the entire income, being the contract values, had fructified on the date of signing and execution of agreement, that there was no scope of any kind of deferment of income, that the entire cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of 6 years,that the assessee received royalty for using the asset, royalty was intangible asset. He referred to the case of K.E. Gnanavelraja (361ITR446) and T.N.K. Govindrajulu Chetty (165 ITR 231).On a query by the Bench he stated that the assessee had offered income of ₹ 8.33 lakhs in all the subsequent years, that orders for AY.s 2011-12 to 2013-14 were passed u/s. 143(3) of the Act, that the AO had taxed income of ₹ 8.33 lakhs in all these years as well as in the year 2010-11,when an intimation u/s. 143(1) was issued, that the AO had doubly taxed the same income.He referred to para 6-7 of the Agreement and stated that Home Video Licensing agreement could not be construed as agreement for sale, that the agreement clearly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportionate to the said film. 6.2.2 the Licensor fails to cure the event of Default within the stipulated 10(Ten) Days, the Licensor may offer to replace the said Title with another Cinematograph Title of same value ( Alternative Titles ), which Licensee may agree to but shall not be under obligation to accept the Licensor shall provide source material of such Alternative Tiles agreed by Licensee within 15 days from the date of such agreement and due amendment of Schedule 1 of the present agreement. 6.2.3. If the Licensor fails to provide Alternative Titles acceptable to Licensee as set out in Clause 6.2.2 above, Licensee shall at its sole discretion restrict the scope of the license and reduce the Consideration payable in respect t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersing the order of the FAA and considering the peculiar facts and circumstances of the case, we decide the effective Ground of appeal in favour of the assessee. Respectfully following the above order, we decide first ground of appeal in favour of the assessee,as the facts of both the case are identical. 6. With regard to addition made on account of VAT,we want to mention that there is no evidence to prove that same was not part of the payment received from Moser Bayer.The amount received by the assessee included VAT.Therefore,we hold that the order of the FAA cannot be endorsed.Ground no.3 is decided in favour of the assessee. A result,appeal filed by the assessee stands partly allowed. Order pronounced in the open court on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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