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TMI Blog2012 (7) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... ee fails to comply with the TDS provisions, the entire amount paid as royalty warrants disallowance u/s. 40(a)(ia)." 2. The assessee is an individual. He carries on business as proprietor of M/s. Visual Reality and does business of dubbing work and dealing in movies. During the previous year the assessee had made a payment of Rs. 26,87,310/- to one M/s. Sahamongkofilm International Co. Ltd., 388, S.P. Bldg., 9th Floor, Zone-3, Phaholyothin Road, Samsennai, Phayathai, Bangkon - 10400, Thailand. Since the person to whom the payment was made was a non-resident, the Assessing Officer examined the question as to whether the assessee should deduct tax at source on the payment made to the non-resident and as to whether there was any income embed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of Sec. 9(1)(vi), explanation (2) clause (v):Explanation 2, which provides that for the purpose of this clause, (i.e., Clause (v) of Expln. 2 to Sec 9(1)(vi) of the Act), "royalty" means consideration (including any lump sum consideration, but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for transfer of all or any rights (including the granting of a licence) in respect of any copy right, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting , but not including consideration for the sale, distribution or exhibition of cinematographic films;. The assessee submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned by Appellant, there would be royalty payment attributable to these beyond the 11% for Sattellite TV Rights also. Therefore, on the facts of the case it is held that 25% of the amount paid on royalty was attributable to the taxable portion on which tax should have been deducted. In respect of Passion though Appellant had paid royalty of Rs. 4,47,885/-, the film was stated to have not been imported as Appellant considered it would not be censored for theatrical rights due to bold scenes in the movie. Nevertheless, royalty paid included the rights for TV also. Based on the above arguments, 25% of royalty paid is held to be attributable to TV rights on which Appellant ought to have deducted tax. The disallowance u/s. 40(a) (ia) may be work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs. 1,45,455/- made on account of payment made on Studio Hire Charges @ 2.04% instead of @ 22.44% u/s. 194 I of the I.T. Act by wrongly relying on the provisions of Sec. 194C(7) Explanation (iv)." 8. We have already seen that the assessee is engaged in the business of doing dubbing work. The assessee was having his own studio comprising of various dubbing equipments and professional artist to carry on the work of dubbing. Whenever the assessee's own studio could not be used the assessee used to give the job of carrying out dubbing work to other dubbing studios. In respect of one such work entrusted by the assessee to another studio by na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which showed that in respect of TV serial Karma the Assessee undertook dubbing work. The agreement between the Assessee and Turner Entertainment a telecasting Company was also filed. 10. On consideration of the above submissions, the CIT(A) held as follows: "2.3.2. Facts and materials on record are considered. It is seen that AO had only asked Appellant to explain the payment but had not specified any evidence to be furnished. The submissions made during the appeal indicate that the studio was hired for utilizing the dubbing facilities which included service through the studio staff. Condition of Sec. 194C(7) Explanation (iv) are met also. As such the payment made was coverable u/s. 194C under which tax was deduced. On facts, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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