Clarification regarding applicability of provisions of section 194-I to film distributors and exhibitors
Representations have been received from the various quarters regarding applicability of the provisions of section 194-I of the Income-tax Act to the sharing of the proceedings of film between film distributor and a film exhibitor owning a cinema theatre. The matter has been examined by the Board and the Board are of the view that the provisions of section 194-I are not attracted to such payment because :
(i) The exhibitor does not let out the cinema hall to the distributor;
(ii) Generally, the share of the exhibitor is on account of composite services; and
(iii) The distributor does not take cinema building on lease or sub-lease or tenancy or under any agreement of similar nature.
You are requested to bring these instructions to the notice of the Assessing Officer under your charge.
Circular : No. 736, dated 13-2-1996.