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2015 (7) TMI 1012 - AT - Income TaxAcquiring satellite rights of films - whether are in the nature of 'royalty' as defined u/s. 9(1) Explanation (2) of the Income Tax Act thereby requiring deduction of tax at source in terms with Section 194J - Held that:- The ratio laid down in case of K.Bhagyalakshmi Vs. DCIT [2013 (12) TMI 1215 - MADRAS HIGH COURT] clearly applies to the facts of the case of assessee wherein held The transfer deed clearly states that the transfer in favour of the assessee is for a perpetual period of 99 years - The assessee was also entitled to assign the said rights, which was transferred in their favour - Further the agreement was irrevocable and shall remain in force for a period of 99 years - The nature of transaction, being a perpetual transfer for a period of 99 years, would undoubtedly fall within the scope of sale - 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. In the aforesaid view of the matter, we have no hesitation in holding that the payments made by assessee not being in the nature of royalty, the provisions of section 194J will not apply. Consequentially, order passed u/s 201(1) and 201(1A) will have no legs to stand. Accordingly, we uphold the order of ld. CIT(A) and dismiss ground raised by revenue. - Decided in favour of assessee. Penalty u/s. 271C - Held that:- Ld.CIT(A) correctly following the decision of CIT(A) in AY.2008-09 held that the transaction is primarily is in the nature of purchase and sale of telecast rights and therefore not liable to TDS under 194J, therefore penalty levied u/s. 271C cannot be sustained - Decided in favour of assessee.
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