By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi Chartered Accountants
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Section 194J of the Income-tax Act, 1961 – The transaction of
acquiring the right to telecast a cinematographic film through satellite
for a period of 99 years is in the nature of purchase of
cinematographic film and not fees paid for technical services and
therefore is not liable to TDS.
FACTS
The assessee
company was in the business of buying and selling rights of the feature
films as a trader for consideration. During the year under
consideration, it was granted rights to telecast films through satellite
for a period of 99 years. The transaction was observed by the AO to be
in the nature of fees paid for technical services and therefore he
disallowed the payment u/s. 40(a)(ia) on the grounds that no TDS u/s.
194J was deducted on the same. The CIT(A) held the transaction to be in
the nature of purchase of cinematographic film by the assessee and
therefore deleted the disallowance made by the AO.
On revenue’s appeal –
HELD
The
issue before the Tribunal was whether the right to telecast the
cinematographic film through satellite is a mere assignment of right or
it is a purchase of the feature film.
The assessee claimed that
it amounted to purchase of films since the satellite right was given to
the assessee for 99 years. However, the Revenue claimed that it is only
an assignment, therefore, the assessee had to deduct tax u/s. 194J of
the Act.
The Tribunal relied on the decision of the Madras High
Court in K. Bhagyalakshmi vs. Dy. CIT [2014] 221 Taxman 225 wherein it
was held the copyright subsists only for a period of 60 years.
Therefore, the right given to the assessee beyond the period of 60 years
has to be treated as sale of the right for cinematographic film. The
order of CIT(A) was upheld and the issue was decided in favour of the
assessee.
