Asia Today Ltd. Vs ADIT (International Taxation) (ITAT Mumbai)
Non-Exclusive Film Broadcasting Licence Is Not “Royalty”: ITAT Mumbai Holds ₹1 Cr Film-Rights Receipt of Mauritius Company Not Taxable in India
ITAT Mumbai (I Bench) in Asia Today Ltd. vs ADIT (International Taxation) (ITA No. 1403/Mum/2008, AY 2004-05, order dated 24.12.2025) has allowed the assessee’s appeal and held that consideration of ₹1 crore received for granting non-exclusive broadcasting rights of Hindi feature films does not constitute “royalty”, and hence is not taxable in India.
The Assessee, a Mauritius-resident foreign telecasting company, granted non-exclusive satellite broadcasting rights of 100 Hindi feature films to an Indian broadcaster (Usha Kiron Television / E-TV Network) for 2 years and 6 months. The AO taxed the receipt as royalty @15% under Article 12 of the India–Mauritius DTAA, holding that the Assessee had a PE in India and that cinematographic films were specifically covered under the treaty definition of royalty. CIT(A) confirmed the addition.
Reversing the lower authorities, ITAT held that:
- The agreement granted only non-exclusive broadcasting rights, without transfer of copyright or right to commercially exploit the films
- Broadcasting rights are distinct from copyright rights under the Copyright Act
- Explanation 2 to s.9(1)(vi) expressly excludes consideration for sale, distribution or exhibition of cinematographic films
- DTAA cannot widen the tax base when income is not taxable under domestic law
- Even otherwise, non-exclusive telecast rights do not amount to “use or right to use copyright”
- Reliance placed on Bombay HC in MSM Satellite (Singapore) Pte Ltd and ITAT decisions in Warner Brothers Pictures Inc. and Asia Vision Home Entertainment
- Mere execution of agreement in India or delivery of films in India does not convert the receipt into royalty
The Tribunal also rejected the Revenue’s argument of perpetual rights, holding that the licence period was clearly restricted to 2 years and 6 months, and that even a perpetual transfer would amount to sale, which is expressly excluded from royalty.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
