Fees paid for live transmission of cricket matches is not royalty: ITAT Delhi
Cricket Australia (ITA No.1179/Del/2022)
Facts:
- The AO made addition of INR 5,12,77,558/- in respect of license fee for live and non-live transmission qua Sony Pictures Networks India Pvt.Ltd. on the ground that live transmission of sports events in the modern era is not merely a process of streaming event from the venue to the television set of the viewer.
2. As per the AO, there is a value addition in live transmission likely there are studios having hosts speaking vernacular languages, interviewing experts and celebrity guests and playing short bites of replay of important moments in the game/match even as the game continues.
- The assessee maintained that issue in question is squarely covered by the judgement of Hon’ble Delhi High Court in the case of CIT vs Delhi Race Course Club [2014] 51 taxman 550 (Delhi) and in the case of Director of Income Tax vs New Skies Satellite BV [2016] 68 taxmann 8 (Delhi). He laid great emphasis on the argument that live telecast would not fall under the term process. He submitted that the AO has incorrectly relied on section 9 of the Act.
ITAT Delhi held as below:
- The judgment of the Hon’ble Jurisdictional High Court clearly clinches the issue in favour of the assessee, wherein it has been categorically held that there is a clear distinction between a copyright and a broadcasting right, broadcast or live coverage which does not have a copyright, and therefore, payment for live telecast is neither payment for transfer of any copyright nor any scientific work so as to fall under the ambit of royalty under Explanation 2 to Section 9(1)(vi).
- Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word “royalty” in Asia Satellite, when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAS are amended jointly by both parties.
- The amended provision of section 9 of the Act, would have no application. The AO is therefore, directed to delete the addition.
