Vikram Book Links Pvt Ltd., Vijayawada V. THE ITO, WARD - 3(2), Vijayawada

ITA 488/VIZ/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0253 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 21-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C; 201(1)

Judgement Text

ITA NOS.487 & 488/VIZAG/2014 VIKRAM BOOK LINKS, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.A.NOS.487&488/VIZAG/2014 ( / ASSESSMENT YEARS : 2009-10&2010-11 ) VIKRAM BOOK LINKS VIJAYAWADA VS. ITO WARD-3(2) VIJAYAWADA [ PAN: AADFV 7913N ] (, , , , / APPELLANT) (-., -., -., -., / RESPONDENT ) , / / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR -., / / RESPONDENT BY : SHRI M.N. MURTHY NAIK, DR / 3 / DATE OF HEARING : 28.9.2015 / 3 / DATE OF PRONOUNCEMENT : 30.9.2015 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A), VIJAYAWADA DATED 26.6.2014 FOR THE ASSESSME NT YEARS 2009-10 & 2010-11. ITA NOS.487 & 488/VIZAG/2014 VIKRAM BOOK LINKS, VIJAYAWADA 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A PARTNE RSHIP FIRM AND IN THE BUSINESS OF PUBLICATION OF GUIDES AND TEST PAPERS F OR INTERMEDIATE AND DEGREE STUDENTS. FOR COMPILING THE GUIDES AND TEST PAPERS, THE ASSESSEE ENGAGED THE SERVICES OF ACADEMICIAN WRITER S. ON PAYMENT MADE TO SUCH ACADEMICIAN WRITERS, THE ASSESSEE DEDU CTED TAX AT SOURCE U/S 194C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER C ALLED ACT). HOWEVER, THE A.O. WAS OF THE OPINION THAT THE AMOUN T PAID TO THE WRITERS IS LIABLE FOR DEDUCTION OF TAX AT SOURCE U/ S 194J OF THE ACT. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER PASSED B Y THE A.O. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE T HE TRIBUNAL. 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHETHER THE TAX HAS TO BE DEDUCTED U/S 194C OR 194J OF THE ACT HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE ASSESSEES S ISTER CONCERN IN THE CASE OF VIKRAM PUBLISHERS VS. ITO IN ITA NOS.489 & 490/VIZAG/2014 RELATING TO ASSESSMENT YEARS 2009-10 & 2010-11 BY O RDER DATED 29.4.2015 DECIDED IN FAVOUR OF THE ASSESSEE AND PRA YED THAT SAME MAY BE FOLLOWED URGED THAT APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED. 4. ON THE OTHER HAND, THE LD. D.R. HAS STRONGLY SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NOS.487 & 488/VIZAG/2014 VIKRAM BOOK LINKS, VIJAYAWADA 3 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE O NLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE ASSESSEE HAS TO DEDUCT T DS ON AMOUNTS PAID TO THE ACADEMICIAN WRITERS U/S 194C OF THE ACT OR 1 94J OF THE ACT. THE VERY SIMILAR SET OF FACTS AND SIMILAR CIRCUMSTANCES OF THE CASE IN THE ASSESSEES SISTER CONCERN M/S. VIKRAM PUBLISHERS (S UPRA), THE TRIBUNAL HAS CONSIDERED THE VERY SAME ISSUE AND OBSERVED AS UNDER: 5. IN THIS CASE THE ASSESSEE WHO IS A PUBLISHER EMP LOYS SCRIPT WRITER FOR DOING A PARTICULAR JOB, THE PRIMARY BUSINESS OF THE ASSESSEE IS TO PUBLISH QUIDES, TEST PAPERS, ETC. FOR VARIOUS EXAMI NATIONS WHICH ARE CONDUCTED BY THE GOVERNMENT AND THE UNIVERSITIES. F OR PUBLISHING THESE GUIDES, TEST PAPERS, ETC, THE ASSESSEE APPOINTS CER TAIN PERSONS TO PREPARE ANSWERS FOR THE TEST PAPERS. THE ASSESSEE S UPPLIES MATERIAL TO THE SCRIPT WRITERS, TO PREPARE ANSWERS FOR THE TEST PAPERS. THE CONTENTS IN THE BOOKS AND THE GUIDES, TEST PAPERS AND OTHER SUC H BOOKS PUBLISHED BY THE ASSESSEE BELONG TO THE PUBLISHER ONLY AND THE S CRIPT WRITERS, WHO PREPARE THE ANSWERS TO THE TEST PAPERS, DO NOT OWN ANY RIGHTS AS TO THE CONTENTS IN THE BOOKS PUBLISHED. THE SCRIPT WRITER CANNOT HE TREATED AS AN AUTHOR OF THE GUIDE OR TEST PAPER PUBLISHED. ONL Y THE FIXED REMUNERATION IS PAID TO THE WRITERS FOR THE JOB ENTRUSTED TO HIM . 6, UNDER THE INCOME TAX ACT THE TERM 'ROYALTY' HAS BEEN DEFINED IN EXPLANATION 2 TO SEC. 9(1)(VI) OF THE AC T AND IT READS AS FOLLOWS: 'EXPLANATION 2. FOR THE PURPOSES OF THIS CLAUSE, 'R OYALTY' MEANS CONSIDERATION (INCLUDING ANY LUMP SLIM CONSIDERATIO N BUT EXCLUDING ANY CONSIDERATION WHICH WOULD BE THE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS) FOR- I. THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING THE GRANTING OF A LICENSE) IN RESPECT OF A PATENT INVENTION, MODEL, DESIGN, SE CRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY: II. THE IMPARTING OF ANY INFORMATION CONCERNING THE 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, DESIG N, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY,' ITA NOS.487 & 488/VIZAG/2014 VIKRAM BOOK LINKS, VIJAYAWADA 4 IV. THE IMPARTING OF ANY INFORMATION CONCERNING TEC HNICAL INDUSTRIAL, COMMERCIAL OR SCIENTIFIC KNOWLEDGE, EXPERIENCE OR S KILL. V. THE TRANSFER OF ALL OR ANY TIP/ITS (INCLUDING TH E GRANTING OF A LICENSE) IN RESPECT OF ANY COPYRIGHT, LITERARY, ARTISTIC OR SCIENTIFIC WORK INCLUDING FL/INS OR VIDEO TAPES FOR USE IN CONNECTI ON WITH TELEVISION OR TAPES FOR USE IN CONNECTION WITH RADIO BROADCASTING , BUT NOT INCLUDING CONSIDERATION FOR THE SALE, DISTRIBUTION, EXHIBITIO N OF CINEMATOGRAPHIC FILMS,' OR VI. THE RENDERING OF ANY SERVICES IN CONNECTION WITH TH E ACTIVITIES REFERRED TO IN SUB-CLAUSES (I) TO [(IV), (IVA) AND (V).J 7. WHEN THE FACTS IN THE CASE OF THE APPELLANT ARE EXAMINED IN THE LIGHT OF THE ABOVE DEFINITION OF ROYALTY, IN OUR CONSIDER ED VIEW, THE AO AS WELL AS THE FIRST APPELLATE AUTHORITY ERRED IN COMI NG TO A CONCLUSION THAT THE FIXED REMUNERATION PAID TO THESE WRITERS, WAS I N THE NATURE OF ROYALTY AND CONSEQUENTLY INCOME TAX HAS TO BE DEDUCTED U/S 1943 OF THE ACT. THE PERSONS TO WHOM THE IMPUGNED PAYMENTS WERE MADE DID NOT HAVE ANY RIGHT WHATSOEVER IN THE CONTENTS OF THE BOOKS R EFERRED TO ABOVE AND HENCE THERE IS NO QUESTION OF TRANSFER OF ANY RIGHT S INVOLVED IN THIS TRANSACTION. THEREFORE, WE SET ASIDE THE ORDERS OF BOTH THE LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO CANCEL THE DEMA NDS RAISED U/S 201(1) AND U/S 201(1A) OF THE ACT, 6. IN VIEW OF THE ABOVE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES SISTER CONCERN CASE, WE ARE OF THE OPINION THAT THE ASSESSEE HAS RIGHTLY DEDUCTED TAX AT SOURCE U/S 194C OF THE ACT. BY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, THIS GROUND OF THE APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30 TH SEPT15. SD/- SD/- ( (( ( . . . . ) ( ) ( ) ( ) ( . .. . ) )) ) ( (( ( G. MANJUNATHA) ( (( ( V. DURGA RAO ) )) ) / // / ACCOUNTANT MEMBER / // / JUDICIAL MEMBER /VISAKHAPATNAM: 6 / DATED : 30.09.2015 VG/SPS ITA NOS.487 & 488/VIZAG/2014 VIKRAM BOOK LINKS, VIJAYAWADA 5 / - 7 / COPY OF THE ORDER FORWARDED TO :8 1. , / THE APPELLANT M/S. VIKRAM BOOK LINKS, D.NO.30-4-15, DURGA AGRAHARAM, RAMASWAMY STREET, VIJAYAWADA 2. -., / THE RESPONDENT ITO WARD-3(2), VIJAYAWADA 3. ; / THE CIT, VISAKHAPATNAM 4. ; () / THE CIT(A), VISAKHAPATNAM 5. -, , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // AB ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM