Case Law Details
BBC World Distribution Ltd Vs ADIT (ITAT Delhi)
ITAT Delhi held that revenue received towards to distribute the channel to cable operators, DTH operators, hotels, institutions etc. in India is not in the nature of royalty and hence addition not sustainable.
Facts-
BBC World News Ltd (in short ‘BBCWN’) is a company incorporated in United Kingdom (UK) and tax resident of UK. BBCWN is the owner of BBC World New Channel. BBCWN has granted non-exclusive global right to BBC World Distribution Limited (In short ‘BBCWD’), the present assessee, to distribute the channel. BBCWD, in turn, has entered into an agreement with BBC World India Pvt. Ltd. (in short ‘BWIPL’) to distribute the channel to cable operators, DTH operators, hotels, institutions etc. in India. In assessment year 2006-07, the assessee received an amount equivalent to Indian Rs.94,58,039/-from distribution of BBC World News Channel in India. Before the Assessing Officer, the assessee pleaded that the amount received from distribution of channel in India is not taxable.
AO, however, held that while granting right to distribute BBC World News Channel in India, the assessee had transferred the right to use copyright to BWIPL, hence, the amount received from distribution of the channel in India is in the nature of royalty, both, under the domestic law as well as under India – UK Double Taxation Avoidance Agreement (DTAA). Therefore, he held that the amount received by the assessee will be taxable at 15% on gross basis. Commissioner (Appeals) upheld the decision of AO.
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