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2015 (9) TMI 1105 - ITAT CHENNAI

2015 (9) TMI 1105 - ITAT CHENNAI - TMI - TDS u/s 194J - satellite right transferred in favor of assessee for a period 99 - Disallowance u/s 40(a)(ia) - mere satellite right without permanently transferring the right to the assessee for a particular period, is subject to deduction of TDS under Section 194J as per revenue - Held that:- The transfer in favour of the assessee for a period 99 years is sale, therefore, it was excluded from the definition of royalty. In this case also, as we have extra .....

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013 (2) TMI 373 - ITAT CHENNAI) may not be applicable to the facts of the case. This Tribunal is of the considered opinion that the judgment of Madras High Court in the case of K. Bhagyalakshmi (2013 (12) TMI 1215 - MADRAS HIGH COURT) would be squarely applicable wherein held that 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) .....

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peals)-VI, Chennai, dated 24.12.2012. We heard both the appeal and the cross-objection together and disposing of the same by this common order. The only issue arises for consideration is with regard to disallowance of ₹ 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 ₹ 22,01,25,000/-. However, no tax .....

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not an agreement to purchase. The Ld. D.R. further submitted that the assessee was described in the agreement as "assignee" and not as "buyer". The assessee was given the rights for a period of 99 years. Therefore, it is not a sale. According to the Ld. D.R., it is only granting satellite rights for the movie produced by the producer. According to the Ld. D.R., in view of the satellite rights, the assessee only gets a specific right for satellite exhibition. Therefore, the ju .....

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ACIT v. Shri Balaji Communications (2013) 140 ITD 687. 4. On the contrary, Sh. Sandeep Bagmar. R., the Ld.counsel for the assessee, submitted that the assessee was assigned the right of telecasting the films through satellite for a specific period. Referring to the copy of the agreement dated 15.07.2008, the Ld.counsel submitted that the assessee has approached the assignor only for assigning of satellite right of the film. Therefore, according to the Ld. counsel, what was given to the assessee .....

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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 relevant material on record. The only issue arises for consideration is whether the right to telecast the cinematographic film through satellite is a mere assignment of right or it is a purchase of the feature films. The assessee claims that it amounts to purchase of films since the satellite right was given to .....

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ision was given to the assessee for 99 years. In fact the right given to the assessee is described in the Schedule to the said agreement which reads as follows:- "RIGHTS : Exclusive copyright for broadcasting our Film through any Satellite Television Broadcasting Rights mean Rights to use Satellites in extra terrestrial orbit to beam down a microwave signal to Satellite antennas, Direct Broadcasting, Point to point broadcasting and any other Television Systems and rebroadcast in any territo .....

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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 case before this Tribunal was that t .....

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nt agreement was nothing but purchase agreement whereby the assessee purchased exclusive ownership of satellite copyright by virtue of purchase. Though the assessee was described in the agreement as "assignee", in fact, the assessee is only a purchaser. Referring to Explanation 5 to Section 9(1)(vi) of the Act, the Commissioner came to a conclusion that the assessee is not liable to deduct tax under Section 194J of the Act. On further appeal before this Tribunal by the Revenue, this Tr .....

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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 .....

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hagyalakshmi (supra), found that what was transferred to the assessee is only a right of telecast for a fixed period. Therefore, it is not a case of purchase and sale of the film. Hence, the payment made by the assessee would fall within the definition of "royalty". On those facts, the High Court after referring to agreement between the parties, found that the exclusive right, including theatrical and commercial rights of distribution, exhibition and exploitation was given to the asses .....

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period of 99 years from the date of the transfer deed. The Madras High Court further found that though the agreement speaks of perpetual transfer for a period of 99 years, the copyright of the film under Section 26 of the Copy Right Act, 1957, shall subsist 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. T .....

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