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2018 (10) TMI 1261 - AT - Income TaxConsideration received for providing Line production Services - India-South Africa DTAA - FTS or Royalty - amount received by the assessee for rendering of administrative services cannot be characterised as “FTS” - consideration received by the assessee for providing Line production Services as “royalty” and “Fees for technical services” - payments are neither taxable under Article 12 of the India- South Africa Tax Treaty nor under Section 9 of the Income Tax Act, 1961. Held that:- As the various coordination/facilitation services rendered by the assessee viz. arranging for locational crew, producer, transportation, paper work for various stunts to be performed and other requirements for setting up and filming the series etc, are in the nature of Line Production Services, thus, the same cannot be termed as technical, managerial or consultancy services. Thus, the consideration received by the assessee for rendering of the aforesaid services, which are purely administrative in nature, cannot be brought within the sweep of the definition of “FTS” within the meaning of Explanation 2 to Sec.9(1)(vii) of the Act or Article 12 of the India-South Africa tax treaty. The amount received by the assessee for rendering of the aforesaid administrative services cannot be characterised as “FTS”. we have already observed that the services rendered by the assessee to Endemol India Pvt. Ltd. are not in the nature of a managerial, technical or consultancy services, therefore, we refrain from further adverting to and adjudicating upon the observations arrived at by the A.O/DRP in context of the rulings of the Hon’ble AAR [2014 (2) TMI 902 - AUTHORITY FOR ADVANCE RULINGS]. We are of the considered view that as the term royalty under Article 12 of the India-Sought Africa Tax Treaty, takes within its sweep only consideration received for the use or right to use, any copyright, thus, the observations of the lower authorities that the consideration received by the assessee was for ‘transfer’ of the copyright to Endemol India Pvt. Ltd., in any way, would on the said count also fall beyond the sweep of the term “royalty” as defined in Article 12 of the India20 South Africa tax treaty. We thus, after deliberating on the contentions advanced by the assessee to buttress its claim that the lower authorities had wrongly characterised the amount received from Endemol India Pvt. Ltd. as ‘royalty”, are inclined to accept the same. In terms of our aforesaid observations, we are of the considered view that the lower authorities had erred in characterising the consideration received by the assessee for providing Line production Services as “royalty” and “Fees for technical services”. - Addition to be deleted - decided in favour of assessee.
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