03 January 2021
The TDS rate in other cases under section 194J would remain the same at ten per cent. ... This will provide relief to the film distributors as currently tax is deducted at the rate of 10% on revenue they earn from sale, distribution or exhibition right of the film. Now, this will attract 2 per cent withholding tax.Apr 28, 2020
06 September 2023
Please refer the decision of Honourable Ahmedabad ITAT in the case of ITO Vs Eylex Films Pvt. Ltd. in ITA No. 1808/Ahd/2017 and 388/Ahd/2018 reported in (2019) 71 ITR_Trib (Trib) 332 (Ahd) wherein it has been held that payment for film distribution is not royalty hence s. 194J would not be applicable. It was held that "A perusal of the order of the CIT(A) would show that assessee is in the exhibition of films procured from distributors on revenue sharing basis. The Revenue shared by the assessee with the distributor to exhibit the cinematographic film is outside the scope of expression ‘royalty’ under cl. (v) to Expln. 2 to s. 9(1)(vi) of the Act referred to under the provisions of s. 194J of the Act. Therefore, such payment to distributor does not call for deduction of TDS. The CIT(A), in our view, has rightly held in applicability of s. 194J of the Act or other similar provisions of the Act and thus, rightly concluded that s. 40(a)(ia) of the Act do not come into play for disallowance of the expenses incurred by the assessee for exhibition of films. We thus find no infirmity in the process of reasoning adopted by the CIT(A) while determining the issue in favour of the assessee. Hence, the Revenue’s appeal is without any merit."
In judgment of the Hon’ble Gujarat High Court in the case of CIT vs. City Gold Entertainment Ltd. in ITA No. 236 of 2006, dt. 28th Nov., 2014 [reported at (2015) 118 DTR (Guj) 139 : (2015) 276 CTR (Guj) 539—Ed.] has held that exhibition of films are not covered under the definition of work under Explanation to s. 194C of the Act.
It is not rent hence s. 194I also would not get attracted.
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