Royalty

TDS 1029 views 7 replies

Whether purchase of theatrical rights will be considered as royalty for the purpose of deduction of tax under section 194J?

The client is of the view that TDS is attracted only in case of satellite rights. Please clarify the same.

Replies (7)

what do u mean theatrical rights??

is the theatre given on rent to other person by the owner?  Please clarify your question clearly.

The client is involved in the business of production, distribution & exhibition of films. The theatrical rights means the right they get to exhibit the film in theatres which is produced by some other producer. My question is whether this purchase of theatrical right be treated as royalty and will it attract TDS under section 194J.

Such rights are not coverd u/s 194J. They are covered u/s 194C (rent).

Dear Ravi, please refer Explanation 2 to cluase vi of section 9.  Accorindg to the expln theatritical rights are covered by Royalty.  So TDs would be made u/s 194J & not u/s 194C

Explanation 2.—For the purposes of this clause, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for—

(v)  the transfer of all or any rights (including 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 television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films ; or

but not including consideration for the sale, distribution or exhibition of cinematographic films 

As the section clearly excluded "the exhibition of cinematographic films" from the plain reading of the explanation 2 to section 9 above. Therefore such rights are not covered u/s 194J.

 

But that is relating to cinematographic films.  I dont think that Priyamurli is talking about cinematographic films.

The right relates to cinematographic films only. Thanks a lot for clarifying my doubt.

Can you please explain how section 194C applies for the theatrical rights?


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