Case Law Details
Dy. CIT (TDS)-2(3) Vs Yash Raj Films Pvt. Ltd. (ITAT Mumbai)
ITAT Mumbai held that consideration for sale distribution or exhibition of cinematographic films would not fall under the domain of “Royalty” and accordingly TDS not deductible on the same.
Facts- The assessee is engaged in the business of production & distribution of features films, selling of Audio & Video Cassettes, compact disc and digital discs of movies.
Notably, an agreement is executed between the assessee and Salman Khan Ventures Pvt. Ltd. (SKVPL) according to which Yash Raj Films Pvt. Ltd. has taken distribution rights of the film(s) from SKVPL, for a limited period of 1 (one) year. Further, royalty has been paid to SKVPL by Yash Raj Films Pvt. Ltd. for such rights. The transaction is not payment for purchase of cinematographic films but consideration for transfer of rights in respect of artistic work films. Therefore, the said transaction is covered within the meaning of royalty. Accordingly TDS @ 10% had to be deducted by Yash Raj Films Pvt. Ltd on royalty payment u/s 194J, however, the same has not been done.
Thus, AO held the assessee in default u/s. 201(1) of the Act and ultimately determined the demand/addition of Rs. 52,84,693/- (Rs. 46,61,753/- qua TDS @ 10% of the payment made u/s 194J of the Act + Rs. 6,22,940/- as interest @ 1% pm for delayed months).
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
