Case Law Details
ESS (Formerly known as ESPN Star Sports) Vs ACIT (ITAT Delhi)
ITAT Delhi held that there is no copyright on live events, and therefore, the fee received towards live transmission cannot be taxed as ‘royalty’ in terms of Section 9(l)(vi).
Facts- The case of the assesse was picked for compulsory scrutiny through CASS. The Assessing Officer referred the matter to Transfer pricing Officer (“TPO”) after obtaining the prior approval of the Competent Authority. However, he did not propose any adjustment. Thereafter, a draft assessment order was passed whereby the Assessing officer proposed addition of royalty income amounting to Rs. 752,16,50,223/-. Aggrieved against this the assessee filed its objection before the learned Dispute Resolution Panel (DRP), who after considering the submissions and the objections of the assessee upheld the adjustment made by the AO. Thereafter, the Assessing Officer passed final order dated 8.10.2018. Thereby he assessed income of the assessee at Rs. 842,51,96,560/- after making the addition of Rs. 752,16,50,223/-. Aggrieved against this the assessee is in appeal before this Tribunal.
Conclusion- Hon’ble Jurisdictional High Court has 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 Section9(1)(vi).
ITAT Mumbai Bench in the case of Neo Sports Broadcast (P.) Ltd. and Nimbus Communication Ltd. have held that there is no copyright on live events, and therefore, it is not taxable as ‘royalty’ Thus, we hold that the fee received towards live transmission cannot be taxed as ‘royalty’ in terms of Section 9(l)(vi) as held by the Hon’ble Jurisdictional High Court and also by the Coordinate Bench of ITAT. Accordingly, we decide this issue in favour of the assessee.”
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