TaxTMI 
TaxTMI 
2025 (3) TMI 591
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut properly appreciating the facts of the case that the payments partake the nature of royalty and fees for technical services as Rights and Title of the movie vest in the assessee company and accordingly as per provision of Income Tax Act, TDS needs to be deducted on such payment made." 2. Whereas, the assessee company has filed cross objections and challenged the validity of re-opening proceedings by raising the following grounds as under: "1. The Learned CIT(A) has erred in confirming the actions of the Learned Assessing Officer in reopening the assessment u/s. 147 of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 2. The Learned CIT(A) has erred in confirming the actions of the Learned Assessing Officer in reopening the assessment u/s. 147 of the Income Tax Act, 1961, without appreciating the fact that there was no new tangible material for reopening the concluded assessment. 3. The Learned CIT(A) has erred in confirming the actions of the Learned Assessing Officer in reopening the assessment u/s. 147 of the Income Tax Act, 1961, without appreciating the fact that there was no application of mind by Pr. CIT while granting approval U....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ter, notice u/s. 143(2) dt. 25.09.2019 was issued and served upon the assessee. Objections filed by the assessee were disposed off by the AO on 08.11.2019. Thereafter, AO passed order u/s 143(3) r.w.s. 147 of the Act dt. 30.12.2019, computing the income of the assessee at a loss of Rs. (-) 11,87,07,913/-. 5. The Learned Counsel for the assessee challenging the reopening proceedings submitted that the case was reopened beyond 4 years sand without any tangible material. He draws out attention to the reasons recorded which start with the sentence that "as per assessment records......". He thus submitted that with regard to the issue involved, during assessment proceeding, Ld. AO verified the same and passed the order. He referred details available in paper book which was submitted during original assessment proceeding. Further with regard to salary paid to Mr. Shahrukh Khan, he submitted that the reasons recorded is irrelevant and there is no such facts exist and in the order passed U/s 143(3) r.w.s. 147 no addition made on this issue. Accordingly, he submitted that reopening notice issued beyond four years without any tangible material is nothing but change of opinion, which is not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be satisfied whether there was any failure on the part of the assessee to disclose fully and truly all material facts or not. In the case under consideration, notice u/s 148 had been issued only on 29.3.2019, that is, after four years from the end of relevant assessment year and apparently, no such failure is either evident from the assessment order or the reasons recorded by the AO nor has been pointed out before us by the ld. Department Representative. 8. Further, the law is very well settled that even if the reopening is after four years from the end of the relevant assessment year in which the original assessment was framed, the assessment cannot be reopened based on 'change of opinion' of the ld. AO, as held by the Hon'ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. [2010] 187 Taxman 312/320 ITR 561. Moreover, similar issue on merits of reopening was also subject matter of adjudication by the Hon'ble Jurisdictional High Court in the case of Marico Ltd. v. Asstt. CIT [2019] 111 taxmann.com 253/[2020] 425 ITR 177 (Bom). The Special Leave Petition (SLP) preferred by the Revenue against this decision, was dismissed by the Hon'ble Supreme Court which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered to tax as per the findings given by the AO. 14. On the other hand, the learned AR of the assessee submitted that the issue is with regard to production of film 'Ra One' and the assessee company has given all the rights to Eros International Media Ltd(EIML) as per agreement available on page 36-56 of paper book for a total consideration of Rs. 130 Crore and the same was duly considered as receipt in the hands of assessee company. Reference was also drawn to page 10 & 12 of the paperbook which was the business receipt statement of Film RA. One given by EIML to the assessee company wherein EMIL considering receipt of USD 3609465 as tax credit incentive receipt from UK Govt. This receipt is part of total receipt by EMIL out of which share of assessee company as per agreement i.e. 130 crore received by it. Further it was argued that since the tax incentive has been accounted for by EIML, no further addition can be made in the hands of the assessee company. 15. We have considered the rival submission as well as relevant material on record. From the combined reading of the aforementioned documents, we find merit in arguments made by the Ld.AR. As per the agreement entered in Octobe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent taxes, exhibitor's share and all costs, charges, expenses including but not limited to expenses towards prints, publicity, advertising freight and transportation expenses and all other expenses incurred by the Assignee for exhibition, exploitation and distribution of all said rights of the said film. The Parties hereby agree that this First Addendum Agreement shall form part of the Said Agreement. Save and except any changes that have been carried out in this First Addendum, all other terms and conditions of the said Agreement remain unchanged/unaltered and fully effective." 17. Thereafter, it is seen that the assessee company is entitled to receive Rs. 130 crores irrespective of success or failure of the film. Further as per business statement provided by EMIL, it is seen that the credit of tax as alleged by the AO has been received and accounted for EMIL amounting to Rs 19,29,34,109/- (USD 3609465) while arriving at Net Realisation figure. Therefore, in our opinion CIT(A) has rightly deleted the addition as the same receipt cannot be added again in the hands of assessee company. 18. The second ground raised by the revenue relates to disallowance of Rs. 61,69,68,987/-u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....now how, the payment does not fall within the Article 13 of Indo-UK DTAA. Alternatively, the learned AR has submitted that even in case the payment are not treated as reimbursement the same are not taxable in India as business profits in the absence of P.E in India. He has also relied upon the following decisions: * CIT Vs De Beers India Minerals (P.) Ltd. 346 ITR 467 (Kar.) * CIT Vs Siemens Aktiongesellschaft 310 * ACIT Vs CMS (India) Operations & Maintenance Co. (P.) * Abbey Business Services (India) (P.) Ltd. Vs DCIT 23 Taxman 346 (Bang.) * ITO Vs ISE Securities & Services Ltd. in ITA No. 6391/M/2009 22. We have considered the rival submissions as well as relevant material on record. The present case is a case of part reimbursement of expenses and therefore there is no income element present in part reimbursement. The services rendered by Winford Production Ltd. are generic expenses which are incurred for making of film and can no way be said to be technical services within the scope of treaty between India and U.K. Further, from the above it also cannot be said that the services have been 'made available' to the assessee to be taxable in India. Reference in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orized signatory or nominee or in any other lawful personal capacity for the assessee company, would also be out of place in the agreement for rendering technical services as it cannot be imagined that a technical person would also be required to act in non-technical capacities under an agreement for rendering technical services. Clause (H) on which considerable reliance was placed by the Department to contend that the agreement is one for rendering technical services, is merely a clause ensuring secrecy and confidentiality of the information accessed by the seconded employee in the course of his employment with the assessee company. Such confidentiality extends not only to technical information, which would be the case if the agreement is one for rendering technical services but also to financial or accounting Marks and Spencer Reliance India information, price or cost data and any other proprietary or business related information. Article VI which provides for indemnity, that is to say, the liability of the assessee company to indemnify the US company from all claims, demands, etc., consequent to any actor omission by the seconded employee is also inconsistent with the claim of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w, and the like. The service should be aimed at and result in transmitting technical knowledge, etc, so that the prayer of the service could derive on enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words, to fit into the terminology 'making available' the technical knowledge, skills, etc, must remain with the person receiving the services even after the Marks and Spencer Reliance India particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skill of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider. Technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service that may require technical knowledge, skills, etc. Does not mean that technology is made available to the person purc....