TMI Blog2015 (7) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st mainly with Sun Network and as per the information filed by the Gemini TV of Sun Network, assessee made a turnover of ₹ 30.07 Crores during the FY.2008-09. Since the purchase consideration paid corresponding to the turnover made with Gemini TV was not available, Assessing Officer (AO) estimated the purchase consideration by applying GP rate of 11.5 declared by MD of the company in his individual status. This worked out to ₹ 26.61 Crores and AO considered this amount as 'royalty' towards purchase of satellite rights paid to various purchasers/satellite right holders and since no TDS we made from the said payments, treated assessee as assessee in default as per the provisions of Section 194J of the Act and levied tax an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clause (vi) of Explanation 2 to section 9(1). For ready reference, Explanation 2 of section 9(1) is extracted hereunder: Explanation 2.-For the purposes of this clause, 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- (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n connection with television or tapes for use in connection with radio broadcasting, but, it specifically excludes consideration received for sale, distribution or exhibition of cinematographic films. On a perusal of assignment agreement between assessee and producers of film, a sample copy of which is placed at page 3 of paper book, it becomes clear that right over the films have been assigned in favour of assessee perpetually for a period of 99 years without any restriction of geographical area. It is further evident that the assignee has assigned all the rights without retaining any right, for a consideration. That being the case, the payment made by assessee to the producers for acquiring satellite rights is towards outright sale, distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive rights including theatrical rights owner. 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. In such a factual situation the nature of transaction, being a perpetual transfer for a period of 99 years, would undoubtedly fall within the scope of sale. 17. We have seen the various conditions contained in the sample transfer deed and there is a transfer of copy right in favour of the assessee. Though the agreement speaks of perpetual transfer for a period of 99 years, in terms of Section 26 of the Copy Right Act, 1957, in the case of cinematographic film, copy right shall subsist until 60 years from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is already decided in favour of assessee, we set aside the order of CIT(A) and uphold assessee's contentions. In the result, appeal of the assessee is allowed. 5. Other two appeals are consequential appeals in the sense that AO levied penalty u/s. 271C for not deducting tax. Ld.CIT(A) 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. Revenue is aggrieved. Since in both the AYs of 2008-09 and 2009-10, the ITAT upheld that the purchase and sale of telecast rights does not involve any payment of royalty u/s. 194J orders of CIT(A) is to be upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
