2017 (5) TMI 1271

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....al before the Tribunal. An affidavit in that regard has been filed stating that the person authorised to sign the appeal memo was out of station on the due date of filing the appeal, that there was no malafide intention in not filing the appeal in time. The AR reiterated the arguments that are part of the affidavit and the application filed for condoning the delay.Considering the peculiar facts and circumstances of the case,we have decided to adjudicate the appeal on merits and condone the delay in filing the appeal. 3.Effective ground of appeal(GOA-2)is about addition of Rs. 7,26,49,359/-.Assesseecompany, engaged in the business of production and distribution of TV serials, filed its return of income on 30/09/ 2009,declaring total incom....

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....bunal had decided the identical issue in case of Moti Sagar, a group entity,on 06/01/2017(ITA/5629/Mum/2012,AY.2009-10).The Departmental Representa -tive (DR) stated that matter could be decided on merits. 6.We find that in case of Moti Sagar,the Tribunal had deliberated upon the similar issue. We would like to reproduce the relevant portion of the order of the Tribunal and it reads as under: 2.The effective Ground of appeal is about addition of Rs. 41.66 lakhs.During the assessment proceedings the AO found that the assessee had entered into an agreement for sale of a TV serial vide agreement dt.10.4.2008 for Rs. 50.00 lakhs, that the assessee had offered income of Rs. 8.33 lakhs for the year under consideration. The AO directed the a....

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....tions of the assessee the FAA held that the assessee had entered into an agreement with Moser Baer for the period dt. 31.5.09 to 31.5.14, that being a licensor he was the sole and absolute owner of the Home video rights, that he had sold his rights to the licensee, that he had received Rs. 50.00 lakhs during the year under considera - tion,that he had sold the license as per agreement for a period of 6 years, that he had handed over deliverables to the buyer, that the consideration received by him was in lieu of transfer of sale of rights and goods,that the AO was right in bringing to tax the entire consideration received during the year under appeal to tax. Finally, he upheld the order of the AO. 5.During the course of hearing before us....

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.... and perused the material before us. We find that the assessee had entered into an agreement with Moser Baer India Ltd., that he received Rs. 50 lakhs in pursuance of the Agreement, that he distributed the income over a period of 6 years, that a sum of Rs. 8.33 lakhs (being 1/6th ) was recognised as income for the year under appeal, that the balance amount of Rs. 41.66 lakhs was deferred for the remaining 5 years and was recognized as liability in the balance sheet,that he offered income of Rs. 8.33 lakhs in the subsequent AY.s and same was taxed by the AO.s in those years. Before proceeding further we would like to refer to para 6 and 7 of the Agreement and same read as under :- "6.2. Effect of Event of Default. 6.2.1. In addition....

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.... to reimburse Licensee for the entire consideration amount paid by Licensee to the Licensor within 15 days along with interest @ 12% per annum from the date of payment of the consideration till the date of payment and /or realization." A perusal of the above conditions reveal that the agreement could be terminated within a period of 6 years and amount had to be refunded.The assessee had allowed licensee to use the rights and therefore, the payment received by it has to be treated as royalty. The assessee is following mercantile system of accounting and is entitled to recognise his revenue on accrual basis.The rights of the TV Serial were to come back to the assessee after a period of 6 years.Thus, it is not a case of sale. But receipt is....