ACIT., (TDS), TDS, Circle-2(1)(i/c), Hyderabad, Hyderabad V. Sri S Panduranga Rao, Hyderabad

ITA 1861/HYD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1863 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: N O N E
• Section: 133A; 201(1)

Judgement Text

ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT M EMBER & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS.1860 & 1861/HYD/2014 (ASSESSMENT YEARS: 2008-09 & 2009-10) ACIT ( TDS ) TDS CIRCLE 2(1) HYDERABAD VS. SRI S. PANDURANGA RAO PLOT NO.14, PHASE I, KAMALAPURI COLONY HYDERABAD PAN: AUOPS 0782 R (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI K.J. RAO, DR FOR ASSESSEE: N O N E DATE OF HEARING : 3.8.2015 DATE OF P RONOUNCEMENT : 5 .8.2015 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEALS BY THE DEPARTMENT ARE AGAINST A COMMON ORDER DATED 2.9.2014 OF LD CIT (A) II HYDERABAD PER TAINING TO A.YS 2008-09 AND 2009-10. 2. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE A PPEARED ON BEHALF OF THE ASSESSEE. CONSIDERING THE NATURE O F DISPUTE, WE PROCEED TO DISPOSE OFF THE APPEAL AFTER HEARING THE LD DR. 3. THE COMMON GROUNDS RAISED BY THE DEPARTMENT FOR BOTH THE A.YS, ARE AS UNDER: ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 2 OF 9 1. WHETHER THE LD CIT (A) IS CORRECT IN HOLDING TH AT THE PAYMENTS MADE BY THE ASSESSEE FOR PURCHASE OF TELECAST RIGHTS FROM THE FILM PRODUCERS IS NOT IN T HE NATURE OF ROYALTY PAYMENT AND THEREFORE NOT LIABL E FOR TDS U/S 194J?. 2. WHETHER LD CIT (A) IS CORRECT IN HOLDING THAT TH E TRANSACTION OF ACQUISITION OF RIGHTS TO TELECAST TH E FILM IN TV CHANNELS FROM FILM DISTRIBUTORS IS A PURCHASE TRANSACTION AND THEREFORE DOE NOT FALL UNDER DEFINI TION OF ROYALTY, WITHOUT APPRECIATING THAT THE RIGHT ACQ UIRED BY THE ASSESSEE IS ONLY AN ASSIGNMENT OF THE RIGHT AND NOT A PURCHASE TRANSACTION?. 4. AS COULD BE SEEN FROM THE GROUNDS RAISED, THE SO LITARY ISSUE ARISING FOR CONSIDERATION IS WHETHER THE CIT (A) IS CORRECT IN HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE FOR PURCHASING SATELLITE TELECASTING RIGHT OF FILMS IS IN THE NATU RE OF ROYALTY THEREBY REQUIRING DEDUCTION OF TAX AT SOURCE U/S 19 4J OF THE ACT. 5. BRIEFLY, THE FACTS ARE, ASSESSEE, AN INDIVIDUAL, IS THE MANAGING DIRECTOR OF M/S. AISHWARYA ART CREATIONS ( P) LTD. DURING A SURVEY U/S 133A CONDUCTED IN CASE OF AISHW ARYA ART CREATIONS (P) LTD, IT WAS FOUND THAT ASSESSEE HAS N OT DEDUCTED TAX AT SOURCE IN TERMS WITH SECTION 194J ON AN AMOU NT OF RS.14,14,53,471 PAID TO PRODUCERS TOWARDS PURCHASE OF SATELLITE RIGHTS FILMS FOR A.Y 2008-09. SIMILAR PAYMENTS MADE FOR A.Y 2009-10 WITHOUT DEDUCTION OF TAX WAS FOUND TO BE RS.3,26,72,500. AO WAS OF THE VIEW THAT PAYMENTS MA DE TO THE PRODUCER TOWARDS ACQUIRING SATELLITE RIGHTS OF FILM S IS IN THE NATURE OF ROYALTY, HENCE PROVISIONS OF SECTION 194J OF THE ACT IS ATTRACTED. HE, THEREFORE, INITIATED PROCEEDINGS U/S 201 OF THE ACT. AS ALLEGED BY THE AO, THOUGH A NUMBER OF ATTEMPTS W ERE MADE TO ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 3 OF 9 SERVE NOTICES ON THE ASSESSEE SEEKING HIS EXPLANATI ON ON THE ISSUE, BUT, ASSESSEE AVOIDED TO RECEIVE THE NOTICES . THEREFORE, FINDING NO OTHER ALTERNATIVE, AO PROCEEDED TO COMPL ETE THE PROCEEDINGS U/S 201 OF THE ACT VIDE ORDER DATED 15. 02.2013 IN BOTH THE A.YS UNDER CONSIDERATION BY HOLDING THAT T HE PAYMENTS MADE BY THE ASSESSEE TO ACQUIRE SATELLITE RIGHTS OF FILMS ATTRACTS THE PROVISIONS OF SECTION 194J OF THE ACT AS SUCH P AYMENTS ARE IN THE NATURE OF ROYALTY. ACCORDINGLY, FOR THE FAILURE ON THE PART OF ASSESSEE IN DEDUCTING TAX AT SOURCE ON SUCH PAYMENT S, AO PROCEEDED TO RAISE DEMAND U/S 201(1) OF THE ACT AS WELL AS LEVIED INTEREST U/S 201(1A) OF THE ACT FOR BOTH THE A.YS. 6. BEING AGGRIEVED OF SUCH ORDERS PASSED U/S 201(1) AND 201(1A) OF THE ACT, ASSESSEE PREFERRED APPEALS BEFO RE THE LD CIT (A). BEFORE THE FIRST APPELLATE AUTHORITY, PRIMARY CONTENTION OF THE ASSESSEE WAS, THE TRANSACTIONS INVOLVING ACQUISITIO N OF THE SATELLITE RIGHTS OF THE FILMS FROM THE PRODUCERS BE ING PURELY A PURCHASE/SALE TRANSACTION, THE PROVISIONS OF SECTIO N 194J ARE NOT ATTRACTED. IN THIS CONTEXT, ASSESSEE RELIED UPON A DECISION OF THE HON'BLE MADRAS HIGH COURT IN CASE OF SMT. K. BHAGYA LAKSHMI VS. DCIT (97 DTR 377). IT WAS SUBMITTED BY ASSESSEE THA T SINCE ASSESSEE PURCHASED THE SATELLITE RIGHTS FOR A PERIO D OF 99 YEARS AND SUCH RIGHTS ARE IRREVOCABLE, THE PAYMENTS MADE CANNOT BE TREATED TO BE TOWARDS ROYALTY. LD CIT (A) AFTER CON SIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE RAT IO LAID DOWN BY THE HON'BLE MADRAS HIGH COURT IN CASE OF SMT. K. BHAGYALAKSHMI VS. DCIT (SUPRA) HELD THAT PROVISIONS OF SECTION 194J ARE NOT APPLICABLE TO THE PAYMENTS MADE BY THE ASSESSEE AS IT IS TOWARDS PURCHASE OF SATELLITE RIGHTS AND NOT TOWARDS ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 4 OF 9 PAYMENT OF ROYALTY. FINDING OF THE LD CIT (A) IS EX TRACTED HEREUNDER FOR THE SAKE OF CONVENIENCE: 7.2. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SMT.K. BHAGYALAKSHMI VS. DCIT (2014) 97 DTR (MAD) 377 HELD THAT THE ROYALTY DOES NOT INCLUDE CONSIDER ATION FOR SALE/ DISTRIBUTION/EXHIBITION OF CINEMATOGRAPHI C FILMS, THEREFORE, PROVISIONS OF SECTION 194J ARE NO T APPLICABLE. THE FACTS IN THAT CASE WERE, THE ASSESS EE WAS IN THE BUSINESS OF PURCHASE AND SALE OF TELEVIS ION RIGHTS, HE PURCHASES SUCH RIGHTS FOR A PERIOD OF 99 YEARS. THE HON'BLE HIGH COURT HELD THAT THE ASSESSEE ACQUI RED ABSOLUTE RIGHTS INCLUDING THE RIGHT TO EXHIBIT THE FILMS IN THEATERS WITHOUT ANY GEOGRAPHICAL RESTRICTIONS FOR A PERPETUAL PERIOD. THEREFORE, IT WOULD AMOUNT TO SAL E AND PURCHASE, AND PROVISIONS OF SECTION 194J DO NOT APP LY. EVEN IN THE PRESENT CASE THE APPELLANT ENTERED INTO AN AGREEMENT WITH FILM PRODUCERS FOR PURCHASE OF SATEL LITE RIGHTS FOR PERIOD OF 99 YEARS AND SUCH RIGHTS ARE IRREVOCABLE. THEREFORE, THE APPELLANT IS SIMPLY ENG AGED IN THE BUSINESS OF BUYING AND SELLING THE TELECAST RIGHTS OF CINE FILMS. THEREFORE, PROVISIONS OF SECTION 194 J ARE NOT APPLICABLE. FURTHER, THE CINEMATOGRAPH ACT, 195 2, REFERS TO EXHIBITION OF FILMS IN A PARTICULAR PLACE , THEATRES. FROM CAREFUL READING OF THIS ACT, ONE CAN CLEARLY UNDERSTAND THAT THE PURPOSE OF THIS ACT WAS TO ENSURE THE SAFETY OF CINE GOERS. IN 1952 OBVIOUSLY THERE WERE NO TELEVISION CHANNELS AND TELECAST THROUGH TV CHANNELS WOULD NOT HAVE BEEN IMAGINED IN 1950S. THEREFORE, I CONSIDER EXHIBITION OF FILM CANNOT BE RESTRICTED TO ONLY THEATRES. FURTHER, THE COMMON UNDERSTANDING OF THE TERM 'ROYALTY' IS THE AMOUNT RECEIVED BY A PERSON WHO HAS EXCLUSIVE RIGHT OVER A PROPERTY, FOR ALLOWING ANOTHER PERSON TO MAKE USE O F SUCH PROPERTY [CIT VS. NEYVELI IGNITE LTD. (2000) 2 43 ITR 459.] IN THE INSTANT CASE, THE FILM PRODUCERS HAVE TRANSFERRED THE TELECAST RIGHTS TO THE APPELLANT FO R A PERIOD OF 99 YEARS. SUCH RIGHTS ARE ABSOLUTE AND IRREVOCABLE. THEREFORE, IT CANNOT BE CONSIDERED THA T THE PAYMENT MADE BY THE APPELLANT TO THE FILM PRODUCERS IS IN THE NATURE OF ROYALTY. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROVISIONS OF SECTIO N 194J ARE NOT APPLICABLE. ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 5 OF 9 7. THUS WITH THE AFORESAID OBSERVATIONS, LD CIT (A) ALLOWED ASSESSEES APPEAL FOR BOTH THE A.YS. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE LD DR AND PERUSED THE ORDERS O F THE REVENUE AUTHORITIES ON THE ISSUE. THOUGH LD DR VEHE MENTLY ARGUED SUPPORTING THE REASONING OF THE AO TO IMPRES S UPON US THAT THE PAYMENTS MADE BY THE ASSESSEE FOR ACQUISIT ION OF SATELLITE RIGHT OF FILMS IS IN THE NATURE OF ROYALT Y, HOWEVER, ON GOING THROUGH THE FACTS ON RECORD, WE FIND THAT WHA T THE ASSESSEE HAS PAID TO THE PRODUCERS IS CONSIDERATION TOWARDS ACQUISITION OF SATELLITE RIGHTS OVER THE FILMS FOR A PERIOD OF 99 YEARS, WHICH IS ALSO IRREVOCABLE. THIS FINDING OF FACT RECORDED BY THE LD CIT (A) HAS NOT BEEN CONTROVERTED BY THE LD DR BY BRINGING ANY EVIDENCE ON RECORD. THUS, ONCE IT IS ESTABLISHED THAT THE AS SESSEE HAS ACQUIRED AN IRREVOCABLE RIGHT OVER THE EXHIBITION O F FILMS FOR A PERIOD OF 99 YEARS, IT CANNOT BE SAID THAT PAYMENTS MADE FOR ACQUIRING SUCH RIGHTS IS IN THE NATURE OF ROYALTY. RATHER IT IS A CONSIDERATION PAID TOWARDS OUTRIGHT PURCHASE OF FEA TURE FILMS TO BE EXHIBITED THROUGH TELEVISION. THE HON'BLE MADRAS HIGH COURT IN CASE OF SMT. K. BHAGYALAKSHMI VS. DCIT (SUPRA) W HILE CONSIDERING ACQUISITION OF SATELLITE RIGHTS OF FEAT URE FILMS FOR A PERIOD OF 99 YEARS HELD THAT SINCE SUCH RIGHT IS A PERPETUAL RIGHT, THE PAYMENT MADE CANNOT BE TREATED AS ROYALTY, SO A S TO ATTRACT PROVISIONS OF SECTION 194J. THE COORDINATE BENCH OF THIS TRIBUNAL WHILE CONSIDERING IDENTICAL NATURE OF DISP UTE IN CASE OF ACIT VS. M/S AISHWARYA ART CREATIONS (P) LTD IN ITA NO.516/HYD/2012 DATED 10.12.2014 FOR A.Y 2008-09 FO LLOWING ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 6 OF 9 THE AFORESAID DECISION OF THE HON'BLE MADRAS HIGH C OURT HELD AS UNDER: 8. BEFORE TAKING A DECISION ON THE ISSUE, LET US EXAMI NE THE RELEVANT FACTS OF THE CASE. AS CAN BE SEEN, FROM TH E ASSESSMENT ORDER, THOUGH AO HAS NOT GIVEN ABSOLUTELY ANY REASO N WHY, HE CONSIDERS THAT PROVISIONS OF SECTION 194J OF THE ACT IS ATTRACTED TO THE PAYMENTS MADE BY ASSESSEE TO THE PRODUCERS T OWARDS ASSIGNMENT OF SATELLITE RIGHTS, BUT, FROM THE TENOR OF THE ORDER PASSED BY AO, IT CAN BE INFERRED THAT, ACCORDING TO AO, THE PAYMENTS BY ASSESSEE ARE IN THE NATURE OF ROYALTY, ACCORDINGLY, SECTION 194J OF THE ACT IS APPLICABLE REQUIRING ASSESSEE TO DEDUCT TAX AT SOURCE ON SUCH PAYMENT OF ROYALTY. IN THIS CONTEXT, IT WILL BE APPROPRIATE TO LOOK INTO T HE RELEVANT STATUTORY PROVISIONS. SECTION 194J OF THE ACT, ENJOINS UPON ANY PERSON NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY TO DEDUCT TAX AT SOURCE ON CERTAIN PAYMENTS, ONE OF TH EM BEING ROYALTY, TO A RESIDENT. CLAUSE (BA) OF EXPLANATION TO SECTION 194J(1) DEFINES ROYALTY, BY REFERRING TO THE MEANING GIVEN IN CLAUSE (VI) OF EXPLANATION 2 TO SECTION 9(1) . FOR READY REFERENCE, EXPLANATION 2 OF SECTION 9(1) IS EXTRACTED HEREUNDER: 'EXPLANATION 2.--FOR THE PURPOSES OF THIS CLAUSE, ' ROYALTY' MEANS CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDE RATION BUT EXCLUDING ANY CONSIDERATION WHICH WOULD BE THE INCO ME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' ) FOR-- (I) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING TH E GRANTING OF A LICENCE) IN RESPECT OF A PATENT, INVENTION, MODEL, DESIGN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERT Y ; (II) THE IMPARTING OF ANY INFORMATION CONCERNING TH E WORKING OF, OR THE USE OF, A PATENT, INVENTION, MODEL, DESIGN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY ; (III) THE USE OF ANY PATENT, INVENTION, MODEL, DESI GN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERT Y ; (IV) THE IMPARTING OF ANY INFORMATION CONCERNING TE CHNICAL, INDUSTRIAL, COMMERCIAL OR SCIENTIFIC KNOWLEDGE, EXP ERIENCE OR SKILL ; [(IVA) THE USE OR RIGHT TO USE ANY INDUSTRI AL, COMMERCIAL OR SCIENTIFIC EQUIPMENT10A BUT NOT INCLUDING THE AMOUN TS REFERRED TO INSECTION 44BB ;] (V) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING TH E GRANTING OF A LICENCE) IN RESPECT OF ANY COPYRIGHT, LITERARY, ART ISTIC OR SCIENTIFIC WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONN ECTION WITH TELEVISION OR TAPES FOR USE IN CONNECTION WITH RADI O BROADCASTING, ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 7 OF 9 BUT NOT INCLUDING CONSIDERATION FOR THE SALE, DISTR IBUTION OR EXHIBITION OF CINEMATOGRAPHIC FILMS ; OR (VI) THE RENDERING OF ANY SERVICES IN CONNECTION WI TH THE ACTIVITIES REFERRED TO IN SUB-CLAUSES (I) TO [(IV), (IVA) AND] (V). 9. AS CAN BE SEEN FROM THE PROVISION EXTRACTED HERE INABOVE, ROYALTY AS PER CLAUSE (VI) WOULD TAKE WITHIN ITS AM BIT RENDERING OF ANY SERVICES IN CONNECTION WITH THE AC TIVITIES REFERRED IN SUB-CLAUSE (I) (V). IT IS FURTHER EVIDE NT FROM THE AFORESAID PROVISION THAT PAYMENTS MADE BY ASSESSEE CAN ONLY BE CLASSIFIED WITHIN CLAUSE (V) OF THE EXPLANATION 2 TO SECTION 9(1) . ON CAREFUL READING OF THE SAID CLAUSE (V), IT BEC OMES CLEAR THAT THOUGH CONSIDERATION PAID TOWARDS TRANSFER OF ALL OR ANY RIGHTS IN RESPECT OF COPY RIGHT, LITERAL, ARTISTIC OR TECHNICAL WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONN ECTION WITH TELEVISION OR TAPES FOR USE IN CONNECTION WITH RADI O BROADCASTING, BUT, IT SPECIFICALLY EXCLUDES CONSIDE RATION RECEIVED FOR SALE, DISTRIBUTION OR EXHIBITION OF CI NEMATOGRAPHIC FILMS. ON A PERUSAL OF ASSIGNMENT AGREEMENT BETWEEN ASSESSEE AND PRODUCERS OF FILM, A SAMPLE COPY OF WHICH IS PL ACED AT PAGE 3 OF PAPER BOOK, IT BECOMES CLEAR THAT RIGHT O VER THE FILMS HAVE BEEN ASSIGNED IN FAVOUR OF ASSESSEE PERPETUALL Y FOR A PERIOD OF 99 YEARS WITHOUT ANY RESTRICTION OF GEOGR APHICAL AREA. IT IS FURTHER EVIDENT THAT THE ASSIGNEE HAS A SSIGNED ALL THE RIGHTS WITHOUT RETAINING ANY RIGHT, FOR A CONSIDERA TION. THAT BEING THE CASE, THE PAYMENT MADE BY ASSESSEE TO THE PRODUCERS FOR ACQUIRING SATELLITE RIGHTS IS TOWARDS OUTRIGHT SALE, DISTRIBUTION OR EXHIBITION OF CINEMATOGRAPHIC FILMS , WHICH ARE SPECIFICALLY EXCLUDED UNDER CLAUSE (V) OF EXPLANATION 2 FROM BEING IS TREATED AS CONSI DERATION PAID TOWARDS ROYALTY. IN THAT VIEW OF THE MATTER, T HE PAYMENTS ARE OUTSIDE THE PURVIEW OF SECTION 194J OF THE ACT. HENCE, ASSESSEE CANNOT BE FASTENED WITH LIABILITY U/S 201( 1) AND 201(1A) FOR HAVING DEFAULTED IN DEDUCTING TAX AT SO URCE IN TERMS OF SECTION 194J . 10. IT WILL BE WORTH MENTIONING HERE THAT THE HON'B LE MADRAS HIGH COURT IN JUDGMENT DATED 03/12/2013 IN CASE OF K.BHAGYALAKSHMI VS. DCIT IN TAX CASE (APPEAL) NO. 7 48 OF 2013 WHILE CONSIDERING IDENTICAL NATURE OF PAYMENT MADE TOWARDS ACQUISITION OF SATELLITE RIGHTS FOR PERPETU AL PERIOD OF 99 YEARS, HELD THAT SUCH PAYMENTS BEING TOWARDS SAL E, DISTRIBUTION OR EXHIBITION OF CINEMATOGRAPHIC FILMS WOULD FALL OUTSIDE THE SCOPE OF ROYALTY AS DEFINED UNDER EXPLA NATION 2 OF SECTION. THE OBSERVATIONS MADE BY HON'BLE MADRAS HI GH COURT, IS AS UNDER: ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 8 OF 9 '16. IN THE PRECEDING PARAGRAPHS, WE HAVE MADE AN E LABORATE REFERENCE TO THE NATURE OF TRANSACTION ENTERED INTO BY THE ASSESSEE WITH THE THIRD PARTIES. THE SAMPLE TRANSFE R DEED, CLEARLY STATES THAT THE TRANSFER IN FAVOUR OF THE ASSESSEE IS FOR A PERPETUAL PERIOD OF 99 YEARS. THE PARTY, WHO EXECUTED THE AGR EEMENT IN FAVOUR OF THE ASSESSEE WAS DESIROUS OF DISPOSING WO RLD NEGATIVE RIGHTS, SATELLITE TELEVISION RIGHTS AND AL L OTHER RIGHTS PERTAINING TO THE PICTURE AND THE ASSESSEE ENJOYS T HE EXCLUSIVE STATUS, AS THE WORLD NEGATIVE RIGHTS INCLUDING THEA TRICAL RIGHTS OWNER. THE ASSESSEE WAS ALSO ENTITLED TO ASSIGN THE SAID RIGHTS, WHICH WAS TRANSFERRED IN THEIR FAVOUR. FURTHER THE AGREEMENT WAS IRREVOCABLE AND SHALL REMAIN IN FORCE FOR A PERIOD OF 99 YEARS. IN SUCH A FACTUAL SITUATION THE NATURE OF TRANSACTION, BEING A PERPETUAL TRANSFER FOR A PERIOD OF 99 YEARS, WOULD UNDOUBTEDLY FALL WITHIN THE SCOPE OF SALE. 17. WE HAVE SEEN THE VARIOUS CONDITIONS CONTAINED I N THE SAMPLE TRANSFER DEED AND THERE IS A TRANSFER OF COPY RIGHT IN FAVOUR OF THE ASSESSEE. THOUGH THE AGREEMENT SPEAKS OF PERPETUAL TRANSFER FOR A PERIOD OF 99 YEARS, IN TERMS OF SECTION 26 OF THE COPY RIGHT ACT, 1957, IN THE CASE OF CINEMATOGRAPHIC FILM, COP Y RIGHT SHALL SUBSIST UNTIL 60 YEARS FROM THE BEGINNING OF THE CA LENDAR YEAR NEXT FOLLOWING THE YEAR IN WHICH THE FILM IS PUBLIS HED. THEREFORE, THE AGREEMENT IN THE CASE ON HAND, IS BE YOND THE PERIOD OF 60 YEARS, FOR WHICH THE COPY RIGHT WOULD BE VALID, THE DOCUMENT COULD ONLY BE TREATED AS ONE OF SALE. 18. AS FAR AS THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF BALAJI COMMUNICATIONS (CITED SUPRA), THE RIGHTS WHICH WAS THE SUBJECT MATTER OF THE SAID DECISION WERE ONLY F OR A PERIOD OF 20 TO 25 YEARS AND NOT OF PERMANENT NATURE. THEREFO RE, THE SAID DECISION IS CLEARLY DISTINGUISHABLE ON FACTS AND CA NNOT BE APPLIED TO THE ASSESSEE'S CASE. 19. IN THE LIGHT OF THE ABOVE DISCUSSION, WE HAVE N O HESITATION TO HOLD THAT THE FINDINGS OF THE FIRST APPELLATE AUTHO RITY WAS PERFECTLY JUSTIFIED IN HOLDING THAT THE TRANSFER IN FAVOUR OF THE ASSESSEE AS SALE AND THEREFORE, EXCLUDED FROM THE D EFINITION OF 'ROYALTY' AS DEFINED UNDER CLAUSE (V) TO EXPLANATIO N (2) OF SECTION 9(1) OF THE ACT.' 11. THE RATIO LAID DOWN BY THE HON'BLE MADRAS HIGH COURT AS AFORESAID ALSO CLEARLY APPLIES TO THE FACTS OF THE CASE OF ASSESSEE. IN THE AFORESAID VIEW OF THE MATTER, WE H AVE NO HESITATION IN HOLDING THAT THE PAYMENTS MADE BY ASS ESSEE NOT ITA NOS.1860 AND 1861 OF 2014 S PANDURANGA RAO HYDE RABAD PAGE 9 OF 9 BEING IN THE NATURE OF ROYALTY, THE PROVISIONS OF S ECTION 194J WILL NOT APPLY. CONSEQUENTIALLY, ORDER PASSED U/S 201(1) AND 201(1A) WILL HAVE NO LEGS TO STAND. ACCORDINGLY , WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS GROUND R AISED BY REVENUE. 9. FACTS BEING MATERIALLY SAME FOLLOWING THE AFORES AID DECISION OF THE COORDINATE BENCH, WE HOLD THAT THE PAYMENTS MADE BY ASSESSEE TOWARDS ACQUIRING SATELLITE RIGHTS OF FILM S ARE NOT ROYALTY, HENCE PROVISIONS OF SECTION 194J WOULD N OT APPLY. IN THE AFORESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER O F LD CIT (A) BY DISMISSING THE GROUNDS RAISED BY THE DEPARTMENT. 10. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTME NT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2015. S D/ - S D/ - (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 5 TH AUGUST, 2015. VNODAN/SPS COPY TO: 1. ASSTT. COMMISSIONER OF INCOME TAX (TDS), TDS CIRCLE 2(1), 4 TH FLOOR, ROOM NO.442, IT TOWERS, AC GUARDS, HYDERABAD 2. SRI S. PANDURANGA RAO, PLOT NO.14, PHASE-I, KAMALAP URI COLONY, HYDERABAD 3. CIT(A) - II HYDERABAD 4. CIT (TDS) HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER