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2011 (12) TMI 195 - AT - Income Tax
Royalty for exclusive rights of distribution of Cinematographic films – India-USA Treaty assessee is a non-resident company having no PE in India – agreement with Warner Bros Pictures (India) Pvt. Ltd(WBPIPL) for grant of rights – WBPIPL deducted tax at source – assessee claimed refund of the same - Held that:- There is no dispute that the assessee has entered into agreement with WBPIPL outside India and the amounts were also received outside India. Further, Definition of royalty u/s 9(1)(vi) Explanation 2 to (v) excludes the payment received with reference to sale, distribution and exhibition of cinematographic films. Moreover, provisions of India -USA treaty notify that the term royalty used in the Article 12 does not include payment of any gain received as consideration for the use of any copyright or literary, artistic or scientific work including cinematographic films or work on films, tape or other means of production for use in connection with Radio or T.V. broadcasting. In view of this specific provisions, the amount received by the assessee cannot be considered as royalty.
In this case, assessee has a business connection in India but does not have any P.E. in India. Since the Indian company who obtained the rights is acting independently, Agency PE provisions are not applicable to the assessee company. Thus, the incomes arising outside Indian Territories cannot be brought to tax – Decided against the Revenue