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2020 (6) TMI 264 - ITAT DELHITDS u/s 194J - Payment of Minimum Guarantee Royalty (MGR) - non deduction of TDS - Disallowance u/s 40(a)(ia) - whether consideration for transfer of rights in respect of any copyright for films used in connection with would fall within the definition of royalty? - as argued that the assessee did not purchase the cinematographic film but purchased only theatrical distribution rights - HELD THAT:- The non-inclusive part consists of consideration for the sale distribution or exhibition of cinematographic films. The Assessing Officer misread the provision in the second part of the clause with regard to exhibition of cinematographic films. He wrongly held that what the assessee purchased is copyrights and hence liable to TDS. In fact, the copyrights are always with the producer. The distributor is only given the right exhibition of cinematographic films. Hence, such transactions do not attract the provisions of TDS. Further, the minimum guarantee amount which is paid by the distributor for acquiring the exhibition rights of a movie is a fixed expenditure for the distributor that is paid to producers irrespective of the fact whether the film generates a profit or incurs losses. Hence, the payments made by the assessee do not fall under the term "Royalty" and do not attract the provisions of TDS. The appeal of the revenue on this ground is dismissed. Deemed Dividend addition u/s 2(22)(e) - advances out of commercial transaction - HELD THAT:- Assessee has received ₹ 1,50,000/- as commercial advance for granting rights for distribution of movie and the amount was paid to M/s Sukrit Pictures on 03.05.2010 was commercial advance for screening of the movie. It is a fact on record that the amount received from ACEL which is running a Cinema Theatre in Rohtak has given loan to Sukrit Pictures which is the distributor. Thus, this is the amount received from the theatre owner to the distributor of the films. It is a pure commercial transaction between the movie theatre and the distributor. In view of the judgment of CIT Vs Creative Dyeing & Printing Pvt. Ltd. . [2009 (9) TMI 43 - DELHI HIGH COURT] wherein it has been held that amounts advanced to the assessee by another company for the business purpose wherein both the entities are having common Directors and if it is in the nature of a commercial transactions, the provisions of Section 2(22)(e) of the Act are not attracted. - Decided in favour of assessee. Unexplained Investments - difference in opening and closing balance - HELD THAT:-Addition made by the Assessing Officer can be said to be an addition made cursorily without looking into the capital introduced and the profits of the year. Therefore, the addition is hereby directed to be deleted. AO observed that the assessee made cash deposits of ₹ 9,17,000/- in the bank account of Karur Vysya Bank Ltd. and treated the same as unexplained. Before us the ld. DR argued that the assessee could not prove the sources of this cash deposits satisfactorily. We find as per ld. CIT (A), the cash was duly reflected in the cash book and the same has been deposited in the bank account. The ld. CIT (A) held that the assessee has earned an amount of ₹ 2,06,73,705/- which was generated during the course of film distribution business. CIT (A) has examined the cash book and tallied the same with the sales register. CIT (A) thereafter deleted the addition since no discrepancy has been found. Hence, we hereby decline to interfere with the order of the ld. CIT (A). Unrealized Rent addition - claiming deduction u/s 24(a) - HELD THAT:- We find that the ld. CIT (A) has confirmed the addition owing to failure of the assessee to fulfill the conditions laid down in the Rules. Hence, we decline to interfere in the order of the Id. CIT (A). Sale of Jewellery - HELD THAT:- Before the Assessing Officer, the assessee submitted that they sold 500 gms gold bars standard @1950 per gm and the purchase was of ornaments. It was argued before the ld. CIT (A) that the bullion was received at the time of marriage and cost of acquisition should be taken as Nil. Thus, we find that there are two different explanation offered by the assessee. No evidence of gold bars received by the assessee. We have gone through the order of the ld. CIT (A) wherein the issues relating to purchase of gold ornaments in the year 1999 and 2000 have been adequately demolished by going through the items purchased and items sold which do not tally and could not be reconciled. Hence, we hereby uphold the decision of the ld. CIT (A) on this issue. Unexplained cash deposits in Karur Vysya Bank - HELD THAT:- The fact that assessee is an authorized signatory of those accounts does not establish that accounts belonged to the assessed when both these entities are separately assessed. Therefore, the nature and source of deposits needs to be examined in the hands of M.S. Education Society and Tyagi Public School respectively but not in the hands of the assessee. Hence, we hereby direct that the addition is liable to be deleted in the hands of the assessee.
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