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2014 (11) TMI 484 - AT - Income TaxChannel placement fees u/s 40(a)(ia) disallowed – TDS not deducted u/s 194J – Held that:- The DRP held that the disallowance u/s. 40(a)(ia) on account of short deduction of tax is not warranted - the channel placement fee paid to the cable TV operator/DTH provider cannot be regarded as royalty as it does not fall under the definition in terms of Explanation-2 of Section- 9(1)(vi) of the Income tax Act - Though there is an amendment in the provision and as per newly inserted Explanation-6 with retrospective effect the term process has been defined and it includes transmission, uplinking and down linking of signals etc. But the said retrospective amendment cannot be pressed into service for the purpose of disallowance u/s. 40(a)(ia) because of the reason that at the relevant time when the Assessee has deducted the tax at source it was not in the statute – relying upon M/s. Channel Guide India Limited vs. ACIT [2012 (9) TMI 95 - ITAT MUMBAI] - the amount in question paid by the assessee to SSA was not taxable in India in the hands of SSA either u/s.9(1)(vi) or 9(1)(vii) as per the legal position prevalent at the relevant time and the assessee therefore was not liable to deduct tax at source from the said amount paid to M/s. SSA and there was no question of disallowing the said amount by invoking the provisions of sec.40(a)(i) - when the royalty for transfer of right to use of computer software does not fall under Explanation 2 to sec. 9(1)(vi), but the same falls under Explanation 4 to sec. 9(1)(vi), then in view of the Explanation to sec. 40(a)(i), the amount cannot be disallowed under the provisions of sec. 40(a)(i) of the Act – Decided against revenue.
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