Case Law Details
Indian Oil Corporation Ltd. Vs Deputy Director of Income Tax (IT) 3(1) (ITAT Mumbai)
Explore the tax implications as ITAT Mumbai rules on IOCL’s sponsorship payments for international cricket events, clarifying “Royalty” under tax laws.
Introduction: The recent decision in the case of Indian Oil Corporation Ltd. vs. Deputy Director of Income Tax sheds light on the tax treatment of sponsorship payments made by an Indian entity for international cricket events. The Income Tax Appellate Tribunal, Mumbai, provided significant insights into the interpretation of tax laws, particularly in the context of Article 12 of the India-Singapore Double Taxation Avoidance Agreement (DTAA).
Background: Indian Oil Corporation Ltd. (IOCL), the appellant, was the official sponsor of various International Cricket Council (ICC) Events, as per the Official Sponsor (Worldwide) Agreement dated 16/12/2004. The payments made by IOCL for sponsorship rights became a subject of dispute with the Income Tax Department.
Controversy: The primary contention revolved around whether the payments made by IOCL to Global Cricket Corporation PTE Ltd. (GCC) for sponsorship rights constituted “Royalty” under Section 9 of the Income Tax Act and Article 12 of the India-Singapore DTAA.
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