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TMI Blog2011 (1) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... p; Manufacturing of audio and visual recordings, the development, manufacture and exploitation of audio and visual carriers or combinations thereof in the broadest sense of the word; l Development and exploitation of internet activities; l The acquisition, alienation exploitation, assignment and managing of copyrights, production and reproduction rights, licenses, patents and trademarks and all other forms of industrial and intellectual property rights, royalty rights and similar rights, as well as the production and publishing of sheet music, musical scores and similar publications; and l The acquisition, managing, administrating, financing and alienating of participation and interests in other companies and enterprises with a similar or related aim. 3. During the relevant years the assessee had received royalty income from Universal Music India Pvt. Ltd. for granting commercial exploitation rights of musical tracks. The details of royalty income received during the relevant years were as under : A.Y Amount Rs. 1. 2000-01 1,69,46,150 2. 2001-02 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also explained that as per group policy, for any business outside the home territory of the repertoire company, the commercial exploitation rights were transferred to other group company and on request from any universal group company other group companies license the right to them to exploit the same in the home territory of the requesting company. Thus ultimately the group companies were license holders to commercially exploit the rights around the world. The assessee had given such rights of exploitation to Universal Music India Pvt. Ltd. in the Indian territory for which royalty had been received. However as per the AO the assessee could not file copies of the agreement between the assessee and repertoire companies. The AO therefore held that the assessee was not the beneficial owner of the royalty and was only a collecting agent for the repertoire companies. The AO therefore did not give the benefit of amended Article 12 and levied tax @ 30%. 6. In appeal the assessee submitted that the AO had denied the benefit of concessional rate of tax only on the ground that the assessee was not the owner of beneficial rights of royalty. It was explained that Article 12 had conferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate from the revenue authorities of Netherlands confirming that the assessee was resident of Netherlands and was the beneficial owner of the royalty. He therefore accepted the claim of beneficial ownership and directed the AO to levy tax @ 10%. Aggrieved by the said decision the revenue is in appeal in all the years. 8. Before us the Learned DR appearing for the revenue assailed the order of CIT(A). It was submitted that CIT(A) had entertained additional evidence in the form of agreements between the assessee and repertoire companies and other agreements as mentioned in para 5.4 of CIT(A) order without any opportunity to AO which was in violation of rule 46A. An additional ground in this regard has also been filed. It was accordingly urged that the order of CIT(A) should be set aside and the matter should be restored to AO for considering such evidence for verifying the claim of beneficial ownership. 9. The Learned AR for the assessee on the other hand submitted that the assessee was the beneficial owner of the recordings licensed to Universal Music India Ltd. It was submitted that the agreement dated 5.6.2000 between the assessee and the Universal Music India Pvt. Ltd had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire company are transferred to other group companies for the purpose of exploitation in other territories. The assessee who is one of the group companies located at Netherlands had acquired musical recording rights from other repertoire companies and had granted the commercial exploitation rights of such musical tracks in India to Universal Music India Pvt. Ltd. from whom the assessee in all the four years under reference had received royalty. The assessee had filed copy of the agreement dated 5.6.2000 with Universal Music India Pvt. Ltd. regarding licensing of the catalogue of recordings owned/controlled by the assessee. As per the amended Article 12 of DTAA between India and Netherlands royalty arising in India in case the assessee is beneficial owner of the royalty has to be taxed as the concessional rate of 10%. The AO had taken the view that the assessee had not filed the evidence regarding ownership of royalty such as copies of the agreement with the repertoire companies from whom such right had been acquired and therefore held that the royalty had to be taxed @ 30% and not @ 10%. Before CIT(A) the assessee filed copies of sample agreements with repertoire companies regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding the royalty income received from Universal Music India Pvt. Ltd. It was certified that the assessee was tax resident of Netherlands and further certified that the assessee was beneficial owner of royalty income received Universal Music India Pvt. Ltd. from time to time within the meaning of article 12 of the convention between Netherlands and India for avoidance of double taxation. Such certificate of residence issued by the tax authority of the contracting state has to be accepted as sufficient evidence regarding the status of the assessee and the beneficial ownership in terms of the circular No. 789 dated 13.4.2000 of CBDT. The said circular was subject matter of dispute before the Hon'ble Supreme Court in case of Union of India and Anr. v. Azadi Bachao Andolan (supra) in which the Hon'ble Supreme Court upheld the validity of circular issued by CBDT. The AO has not doubted the tax residence certificate issued by the Netherland tax authority. Therefore in our view based on such certificate the assessee has to be treated as beneficial owner of royalty even if no agreements with repertoire companies regarding acquisition of rights by the assessee had been filed. Therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest and the same is therefore upheld. 12. In assessment year 2001-02 the revenue has also challenged the decision of CIT(A) holding that the royalty income amounting to Rs. 49,81,636 was not taxable in assessment year 2001-02. The royalty income amounting to Rs. 49,81,636 for the last quarter of the year 1999 and the first quarter of year 2000 had been declared by the assessee in assessment year 2000-01 on accrual basis that the same was accounted in assessment year 2001-02. The AO however tax the income in A.Y. 2001-02 also. In appeal CIT(A) noted that he already held the tax of Rs. 49,81,636 in assessment year 2000-01 he therefore deleted the addition made in assessment year 2001-02. Aggrieved by which the revenue is in appeal. 12.1 We have heard both the parties in the matter. We find that the royalty of Rs. 49,81,636 had been taxed by the AO in A.Y. 2000-01 and the decision of the AO has been upheld by CIT(A). The revenue is not raised any dispute in assessment year 2000-01. Therefore since the income has already been taxed in A.Y. 2000-01 the same cannot be taxed again in A.Y. 2001-02. We therefore confirmed the order of CIT(A) deleting the addition. 13. In the result a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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