Payment made for promotion purposes is not royalty: ITAT


Payment made for promotion purposes is not royalty: ITAT



1.The assessee was appointed as the official sponsor of International Cricket Council (ICC) Events.

2.An Official Sponsorhip (Worldwide) Agreement was entered into between the Global Cricket Corporation PTE Ltd. – Singapore (GCC), World Sports Nimbus PTE Ltd-Singapore (WSN), and the assessee.

3.The sponsorship agreement covered ICC Cricket Events from ICC Champions Trophy 2004 to ICC Cricket World Cup 2007.

4.The assessee filed an application to remit sponsorship amounts to GCC without deduction of tax at source, claiming no Permanent Establishment (PE) in India for GCC.

5.The Assessing Officer rejected the application, treating the amounts as “Royalty” and directed the assessee to deduct tax at 24%, plus education cess.

6.The CIT(A) upheld the observation but granted partial relief, considering 50% of the payment as “Royalty” taxable under the India-Singapore Tax Treaty.

7.The assessee argued that payments were for non-exclusive rights to use Event Marks, footage, and still images for advertising and promotion.

8.The assessee also referred to a Tribunal decision involving Hero MotorCorp Ltd., highlighting similar agreements where payments were not treated as “Royalty.”

9.The assessee also contended that the payments were for promotional purposes, not for the use of trademark or brand name.

ITAT Mumbai held as under:

1.The Official Sponsorship Agreement and Schedule-4, emphasized the non-exclusive rights granted to the assessee for using Event Marks, footage, and still images.

2.The payments are made for the purpose of promotion purposes and not for the purpose of use of brand or trademark.

3.The payments made by the assessee to GCC were not in the nature of Royalty as defined under the Act or India-Singapore DTAA.

4.The appeal is allowed.


The copy of the order is as under:

1703224752-987,988&989-I-SRR-INDIAN OIL CORPORATION