TaxTMI 
TaxTMI 
2014 (12) TMI 1015
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.... company. During survey u/s 133A conducted on 22/07/2009 to verify TDS compliance by assessee, it was found that assessee during FY 2007-08 corresponding to AY 2008-09 had made payments for acquiring satellite rights assigned by various producers in favour of assessee. AO, therefore, issued a show cause notice to assessee requiring him to furnish details of the tax deducted, if any, on the amounts paid towards assignment /purchase of satellite rights for broadcasting or telecasting. AO found that during the year assessee had made payment of Rs. 1,55,00,000 to different producers, which are in the nature of royalty as defined under Explanation 2 to clause (vi) of section 9(1) thereby attracting the provisions of section 194J. Though, assesse....
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....assessment order, the AO has discussed as to why he did not consider certain loans for the purpose of section 194 but he has not made any comment or observations as to how the payments made towards purchase of satellite rights amounts to royalty u/s 9 so as to attract the provisions of section 194J. Since the levy of tax and interest u/s 201(1) and 201(1A) is not substantiated with any cogent or even any reasons, I am afraid, the same cannot survive and therefore the appeal is allowed." 5. Being aggrieved of the aforesaid order, the department is before us. 6. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. Ld. DR justifying the order of AO, submitte....
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.... be inferred that, according to AO, the payments by assessee are in the nature of royalty, accordingly, section 194J of the Act is applicable requiring assessee to deduct tax at source on such payment of royalty. In this context, it will be appropriate to look into the relevant statutory provisions. Section 194J of the Act, enjoins upon any person not being an individual or a hindu undivided family to deduct tax at source on certain payments, one of them being royalty, to a resident. Clause (ba) of Explanation to section 194J(1) defines royalty, by referring to the meaning given 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 t....
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....from the provision extracted hereinabove, royalty as per clause (vi) would take within its ambit rendering of any services in connection with the activities referred in sub-clause (i) to (v). It is further evident from the aforesaid provision that payments made by assessee can only be classified within clause (v) of the Explanation 2 to section 9(1). On careful reading of the said clause (v), it becomes clear that though consideration paid towards transfer of all or any rights in respect of copy right, literal, artistic or technical work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but, it specifically excludes consideration received for sale, distribution or ex....
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....s made by Hon'ble Madras High Court, is as under: "16. In the preceding paragraphs, we have made an elaborate reference to the nature of transaction entered into by the assessee with the third parties. The sample transfer deed, clearly states that the transfer in favour of the assessee is for a perpetual period of 99 years. The party, who executed the agreement in favour of the assessee was desirous of disposing World Negative Rights, Satellite Television Rights and all other rights pertaining to the picture and the assessee enjoys the exclusive status, as the World Negative rights including theatrical rights owner. The assessee was also entitled to assign the said rights, which was transferred in their favour. Further the agreemen....