ACIT, Circle- 34(1), New Delhi V. Yashovardhan Tyagi, New Delhi

ITA 175/DEL/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2295 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 05-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARHAT KHAN
• Keywords: Depreciation; Salary income; TDS
• Section: 9(1); 9(1); 9(1)

Judgement Text

1 ITA NO. 175/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G. S. PANNU, VICE PRESID ENT AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER (ITA NO.175/DEL/2018 ( A.Y 2013-14) ACIT CIRCLE-34(1), NEW DELHI (APPELLANT) VS YASHOVARDHAN TYAGI 1-140, ASHOK VIHAR, PHASE-1 NEW DELHI AAAPT0403G (RESPONDENT) APPELLANT BY SH. FARHAT KHAN, SR. DR RESPONDENT BY SH. SATISH AGGARWAL, CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 25/09/2017 PASSED BY CIT(A)- 12, NEW DELHI FOR ASSESSMENT YEAR 2013-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- WHETHER THE ORDER OF LD.CIT(A) IS NOT ERRONEOUS ON FACTS AND ON LAW? 2. THE CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF T HE CASE BY DELETING THE ADDITION OF RS.4,96,00,000/- IN RESPECT OF CLAI M OF ROYALTY FOR NON DEDUCTION OF TDS OBSERVING THAT THE MINIMUM GUARAN TEE ROYALTY DEBITED BY THE ASSESSEE IN THIS P & L ACCOUNT WHICH DOES NOT FALL IN THE DEFINITION OF ROYALTY. DATE OF HEARING 23.06.2021 DATE OF PRONOUNCEMENT 23.06.2021 2 ITA NO. 175/DEL/2018 3. DURING THE YEAR, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF FILM DISTRIBUTION UNDER THE NAME AND STYLE OF M/S S UKRIT PICTURES AND SHOWN INCOME FROM SALARY, HOUSE PROPERTY AND OTHER SOURCE S. INCOME TAX RETURN DECLARING INCOME OF RS. 4,00,000/- WAS E-FILED ON 3 0.09.2013. THE ASSESSEE CLAIMED A SUM OF RS. 4,96,00,000/- AS MINIMUM GUARA NTEE ROYALTY FOR ACQUIRING RIGHTS FOR THEATRICAL DISTRIBUTION OF VAR IOUS MOVIES DURING THE ASSESSMENT YEAR. THE ASSESSING OFFICER MADE ADDITIO N OF RS. 4,96,00,000/- AND DISALLOWED THE SAME. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS. 36,808 TOWARDS CAR DEPRECIATION EXPENSES AS CLAIMED BY THE ASSESSEE. THUS, THE ASSESSING OFFICER ASSESSED THE INCOME AT RS. 5, 0036,810/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND SUBMITTED THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 4,96,0 0,000/- IN RESPECT OF CLAIM OF ROYALTY FOR NON DEDUCTION OF TDS OBSERVING THAT THE MINIMUM GUARANTEE ROYALTY DEBITED BY THE ASSESSEE IN HIS P & L ACCOU NT WHICH DOES NOT FALL IN THE DEFINITION OF ROYALTY. 6. THE LD. AR SUBMITTED THAT THE ISSUE IS COVERED I N FAVOUR OF THE ASSESSEE IN A.Y. 2010-11 AND 2011-12 BY THE TRIBUNAL AS MENT IONED IN THE ORDER OF THE CIT(A). THE LD. AR RELIED UPON THE ORDER OF THE CIT (A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ISSUE CONTESTED BY THE REV ENUE IS ALREADY DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN A.YS. 2010-1 1 AND 2011-12. THE TRIBUNAL IN A.Y. 2011-12 BEING ITA NO. 2880/DEL/201 6 ORDER DATED 27.04.2020 HELD AS UNDER: 9. WE FIND THAT CLAUSE (V) OF EXPLANATION 2 TO SEC TION 9(1) CONSISTS OF TWO DIFFERENT TRANSACTIONS, ONE INCLUSIVE ANOTHER NON-I NCLUSIVE. THE INCLUSIVE PART 3 ITA NO. 175/DEL/2018 CONSISTS OF THE TRANSFER OF ALL OR ANY RIGHTS (INCL UDING THE GRANTING OF A LICENCE) IN RESPECT OF ANY COPYRIGHT, LITERARY, ARTISTIC OR SCIENTIFIC WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONNECTION WITH TELEVISIO N OR TAPES FOR USE IN CONNECTION WITH RADIO BROADCASTING. THE NON-INCLUSI VE PART CONSISTS OF CONSIDERATION FOR THE SALE DISTRIBUTION OR EXHIBITI ON OF CINEMATOGRAPHIC FILMS. THE ASSESSING OFFICER MISREAD THE PROVISION IN THE SECOND PART OF THE CLAUSE WITH REGARD TO EXHIBITION OF CINEMATOGRAPHIC FILMS. HE WRONGLY HELD THAT WHAT THE ASSESSEE PURCHASED IS COPYRIGHTS AND HENCE LIAB LE TO TDS. IN FACT, THE COPYRIGHTS ARE ALWAYS WITH THE PRODUCER. THE DISTRI BUTOR IS ONLY GIVEN THE RIGHT EXHIBITION OF CINEMATOGRAPHIC FILMS. HENCE, S UCH TRANSACTIONS DO NOT ATTRACT THE PROVISIONS OF TDS. FURTHER, THE MINIMUM GUARANTEE AMOUNT WHICH IS PAID BY THE DISTRIBUTOR FOR ACQUIRING THE EXHIBI TION RIGHTS OF A MOVIE IS A FIXED EXPENDITURE FOR THE DISTRIBUTOR THAT IS PAID TO PRODUCERS IRRESPECTIVE OF THE FACT WHETHER THE FILM GENERATES A PROFIT OR INC URS LOSSES. HENCE, THE PAYMENTS MADE BY THE ASSESSEE DO NOT FALL UNDER THE TERM ROYALTY AND DO NOT ATTRACT THE PROVISIONS OF TDS. THE APPEAL OF TH E REVENUE ON THIS GROUND IS DISMISSED. THESE FINDINGS WERE CONFIRMED BY THE TRIBUNAL IN AS SESSEES OWN CASE FOR A.Y. 2010-11 VIDE ORDER DATED 27.05.2021 IN ITA NO. 5998/DEL/2014. THE REVENUE COULD NOT BROUGHT ON RECORD ANY DISTINGUISH ABLE FACTS IN THE PRESENT ASSESSMENT YEAR. THEREFORE, THERE IS NO NEED TO INT ERFERE WITH THE FINDING OF THE CIT(A). THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IN PRESENCE OF B OTH THE PARTIES ON THIS 23 RD DAY OF JUNE, 2021. SD/- SD/- (G. S. PANNU) (SUCHITRA KAMBLE) VICE PRESIDENT JUD ICIAL MEMBER DATED: 23/06/2021 R. NAHEED 4 ITA NO. 175/DEL/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI