Licence Fees Received Towards Live Transmissions Of Cricket Matches Held In Australia, Not Taxable In India As Royalty: Delhi ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the licence fees received by the assessee towards live transmissions of cricket matches held in Australia are not taxable in India as royalty.

The bench of G.S. Pannu (Vice President) and Anubhav Sharma (Judicial Member) have observed that Balkrishna Industries Limited (BAL) as sponsor did not have any exclusive rights in the use of the logo of the assessee or the event of Big Bash League. The logo was to be used in restricted spaces and on limited goods and services of BAL. Then as sponsor the responsibility of BAL was, to use the log and other rights in intellectual property of assessee, to increase the viewership of the event. The rights were merely for advertising, communications, and sales and marketing campaigns showcasing the Sponsor's association with the Big Bash League (BBL). The use of intellectual property rights like logo of assessee or BBL, was incidental to the objective of promotion of BBL and products of sponsor. The rights given were not of the nature of 'copyright' but a simplistic right to represent in the advertising, communications, and sales and marketing campaign showcasing the Sponsor's association with the BBL. Any payment falling within the scope of royalty, there has to be some kind of transfer of rights.

The appellant's/Assessee's return of income was taken up for scrutiny for examination of receipt of large value foreign remittance and low receipts in ITR. The assessee is incorporated in Victoria and is a Company Limited by guarantee. It is a national government body for the game of cricket in Australia. It is a tax resident of Australia and has a valid tax residency certificate.

The AO had questioned the receipts of Rs. 375,48,27,288 received from Sony Pictures alleging that the same amounts to license fee and be treated as royalty consideration for use of, or the right to use, any copyright, trademark or other like property or right, to be royalty under the provisions of the Act and be treated as royalty for use of, or the right to use, motion picture films, films or videotapes for use in connection with television; or tapes for use in connection with radio broadcasting as royalty under the provisions of Article 12(3)(e) of the DTAA. The AO also questioned the receipts of 13,70,00,000 from Balkrishna Industries in lieu of Commercial partnership agreement to treat the same also as royalty under the Act or as well as under Article 22 of the DTAA.

The assessee had given a detailed submissions which was not found satisfactory and the AO had made addition on account of license fee of Rs. 350,54,35,665 received from Culver Max Entertainment Private Limited in respect of granting rights for live transmission of programmes i.e. cricket matches played in Australia under the sole control and auspices of the appellant as royalty income.

The AO added an amount on the basis of difference in the amounts reported by the appellant and amounts reported by Culver Max Entertainment Private Limited in Form 15CA/CB. An addition was made, on account of consideration received from Balkrishna Industries Limited, in lieu of Commercial Partnership Agreement, treating it as Royalty.

The assessee contended that the amount received by the appellant under the Broadcasting Agreement cannot be regarded as royalty under the India-Australia DTAA.

The department contended that the right to use the logo was given to use 'with or without' the joint logo, so receipts are in the nature of royalty.

The tribunal noted that the commercial partnership agreements nowhere indicates that BAL, as sponsor, had any claim in the logo or other intellectual property of assessee, beyond the event of BBL.

The tribunal while allowing the appeal held that there was failure on part of AO and DRP also, to have not gone into the recitals of agreements in holistic manner, but very summarily the conclusion was drawn that, BAL as sponsor had got any exclusive right in the logo or other intellectual property of assessee. The right was not in the logo or other intellectual property of assessee, but right to be part of Big Bash League, organized by assessee, as sponsor and represent it to the viewers of this event, the said association, to market its own product or brand.

Counsel For Appellant: Nitesh Joshi

Counsel For Respondent: Vizay B. Vasanta

Case Title: Cricket Australia Versus ACIT

Case No.: ITA No.3200/Del/2023

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