Case Law Details
Cricket Australia Vs ACIT (ITAT Delhi)
ITAT Delhi held that as there is no copyright on live events, the license fees for live and non-live transmission right cannot be taxed as royaty in terms of section 9(1)(vi) of the Income Tax Act. Accordingly, addition deleted.
Facts- The case of the assessee was selected for scrutiny. The reason for scrutiny was stated to be high ratio of refund to TDS relating to Section 195 (Business ITR). AO noticed that the assessee did not offer certain income for tax i.e. license fee for live and non-live transmission rights of INR 5,81,43,665/- and tournament fee of INR 2,48,266/-. Therefore, a draft assessment order was passed u/s 144C of the Act on 02.09.2021. Thereby, the AO had proposed to assess the income at INR 5,83,91,931/- after proposing addition in respect of Royalty of INR 2,48,266/- qua tournament fee and in respect of license fee of INR 5,12,77,558/-. DRP sustained the findings of the AO related to license fee received for live and non- live transmissions rights. However, in respect of Royalty, the AO was directed to pass a speaking order in accordance with law. In pursuance of the direction of Ld.DRP, the impugned assessment order was passed. AO sustained its findings and made addition of Royalty of INR 2,48,266/- and license fee of INR 5,12,77,558/-.
Being aggrieved, the present appeal is filed.
Conclusion- ITAT Mumbai Bench in the case of Neo Sports Broadcast Pvt. 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(1)(vi). Accordingly, held that we are of the considered view that the AO was not justified in making the impugned addition.
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