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TMI Blog2015 (9) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... nly issue arises for consideration is with regard to disallowance of Rs. 17,60,79,987/- under Section 40(a)(ia) of the Income-tax Act, 1961 (in short 'the Act'). 2. Sh. Pathlavath Peerya, the Ld. Departmental Representative, submitted that the assessee purchased copyrights of film for an amount of Rs. 22,01,25,000/-. However, no tax was deducted either under Section 194C or under Section 194J of the Act. According to the Ld. D.R., the assessee claimed that the term "royalty" does not include consideration paid for sale, distribution or exhibition of cinematographic film. According to the Ld. D.R., the assessee's further claim was that it was in the business of buying and selling of satellite rights of the feature films. On veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the Ld. counsel, what was given to the assessee is only a right to telecast the feature film for the satellite media. Hence the provisions of Section 194J of the Act is not applicable. The Ld.counsel further submitted that the assessee is engaged in the purchase and sale of satellite right of feature films as a trader for consideration. The satellite right was given to the assessee for 99 years. According to the Ld. counsel, the life of any film is less than 99 years. Therefore, when the exclusive right of exhibition is given to the assessee, it amounts to sale of films. Therefore, there is no question of deduction of tax under Section 194J of the Act. 5. We have considered the rival submissions on either side and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for professional service or fees for technical service or remuneration fees or commission to a Director of a company or respectively or any sum referred to in Section 28(va) of the Act, deduction has to be made at 10% of the sum as income-tax. In this case, the assessee claims that it is neither a fee nor a royalty. The assessee claims that it is only a purchase price paid to the owner of the film. However, the Revenue claims that what was given to the assessee is a right to telecast a film for a definite period, therefore, what was paid was royalty. Therefore, tax has to be deducted under the provisions of Section 194 of the Act. We have gone through the decision of this Bench of the Tribunal in Shri Balaji Communications (supra). The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for satellite broadcasting. The Tribunal came to a conclusion that as long as the transfer of right relates to copyright of a film, which is used in connection with television or tapes, the consideration paid would be royalty only. Accordingly, the assessee was duty bound to deduct tax under Section 194J of the Act. 7. We have also gone through the judgment of Madras High Court in K. Bhagyalakshmi v. DCIT (2014) 265 CTR (Mad) 545 . In the case before the Madras High Court, the assessee was in the business of sale and purchase of television right for films. The assessee obtained satellite right and all other rights pertaining to Telugu feature films. The assessee before the High Court was given right of telecast for 99 years. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sist for a period of 60 years from the beginning of the calendar year next following the year in which the film was published. Therefore, the agreement in the case on hand is beyond the period of 60 years for which the copyright would be valid. Therefore, the agreement between the parties would be treated only as a sale. Referring to the decision of this Tribunal in the case of Shri Balaji Communications (supra), the right in that case was transfer only for a period of 20 to 25 years and not of permanent nature. Therefore, the High Court found that the decision is clearly distinguishable. Ultimately, the High Court found that the transfer in favour of the assessee for a period 99 years is sale, therefore, it was excluded from the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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