TMI Blog2012 (7) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the value of the rights acquired by the assessee and has attributed 25% of the payments made as attributable to TV rights which would be royalty taxable in the hands of the non-resident in India - in favour of assessee. Additions on Payment made on Studio Hire Charges - CIT(A)deleted additions made by AO - Held that:- As the assessee had utilized the services of dubbing studio by using their equipments as well as the artists who were working for Studio, the assessee had thus carried out the work of dubbing by engaging services and the same was of the nature of getting work done through a sub-contractor - that the provisions of section 194C were applicable and the assessee has rightly deducted tax at source at 2% treating the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch payment arising in India chargeable to tax in the hands of the non-resident in India. If it is found chargeable to tax in India and if the Assessee fails to deduct tax at source, then the assessee will not be entitled to claim payment as a deduction, in view of the provisions of section 40(a)(ia) of the Act. The plea of the assessee was that the payment was made in connection with distribution and exhibition of Cinematographic films and, therefore, the payment cannot be construed as royalty within the meaning of section 9(1)(vi) Explanation-2 clause(v) of the Income Tax Act, 1961 (the Act). The Assessing Officer however held that the payment was in the nature of royalty and therefore chargeable to tax in India. Since the assessee had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the payment in question was consideration for distribution or exhibition of Cinematographic films. The assessee also had right to exhibit the aforesaid Cinematographic films. 4. The CIT(A) was of the view that out of the consideration ₹ 26,87,310/- a portion of the payment has to be attributed to the rights in respect of pay TV, free TV and other TV rights. The CIT(A) therefore called upon the Assessee to show cause as to why least a portion of the royalty payment be not attributable to the Rights in respect of pay TV, free TV and other TV rights. In response Assessee submitted that in so far as the film Boa was concerned the receipts from TV rights distribution were 4,75,000/- as compared to the total collection of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 40(a) (ia) may be worked out accordingly by the AO while giving effect to this order. 5. Aggrieved by the order of the CIT(A) the revenue has raised ground No.1 before the Tribunal. 6. We have heard the submissions of the ld. D.R who relied on the order of the Assessing Officer. It is clear from the order of the CIT(A) that the payment in question was made by the assessee for obtaining certain rights over the film Boa and Passion. The rights acquired by the assessee comprises of several rights. Such rights included distribution and exhibition of cinematographic films and also satellite TV protecting rights. In view of the specific provisions of Explanation2, clause (v) of section 9(1)(vi) of the Act consideration for distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted by the assessee to another studio by name Ninety Degrees the assessee had made a payment of ₹ 1,60,000. According to the assesse, the payment was made to a subcontractor for execution of a contract and, therefore, in terms of section 194C the assessee deducted tax at source at 2%. The Assessing Officer however, was of the view that the payment in question was rent paid by the assesee and, therefore, in terms of section 194-I of the Act the assessee ought to have deducted tax at source at 20%. Since the assessee did not deduct tax at source at the proper rate the Assessing Officer disallowed the claim of the assessee for deduction of a sum of ₹ 1,60,000/- under the head studio hire charges by invoking the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 194C under which tax was deduced. On facts, therefore, the disallowance made u/s. 40(a)ia) is deleted. 11. Aggrieved by the order of the CIT(A) the revenue has raised ground No.2 before the Tribunal. 12. We have heard the rival submissions. As can be seen from the order of the CIT(A), the assessee had utilized the services of dubbing studio Ninety Degrees by using their equipments as well as the artists who were working for Studio Ninety Degrees. The assessee had thus carried out the work of dubbing by engaging services and the same was of the nature of getting work done through a sub-contractor. The findings of the CIT(A) in this regard are not in challenge before us. In such circumstances we are of the view that the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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