Case Law Details
BBC World Distribution Ltd. Vs DDIT (ITAT Delhi)
The appeal arises from an order dated 30.10.2025 passed by the Commissioner of Income Tax (Appeals) [CIT(A)] under Section 250 of the Income Tax Act, 1961 for Assessment Year 2024–25. The central issue concerns the taxability of distribution fees amounting to ₹2,55,08,846 received by the assessee for granting distribution rights of a television channel.
The assessee had originally declared this distribution fee as taxable income under the head “Royalty” in its return and paid tax accordingly, with tax deducted at source (TDS) at 15% under Article 13 of the India–UK Double Taxation Avoidance Agreement (DTAA). The Central Processing Centre (CPC) accepted the return under Section 143(1) without any adjustments.
Subsequently, in the assessee’s own cases for earlier assessment years (2006–07, 2007–08, and 2008–09), the issue of taxability of similar distribution fees was decided in favour of the assessee by both the Income Tax Appellate Tribunal (ITAT) and the High Court. Based on these favourable rulings, the assessee filed a belated appeal before the CIT(A), challenging the taxability of the distribution fee and seeking a refund of ₹38,26,327, representing TDS deducted.
The assessee also filed an application for condonation of delay, stating that the income had initially been offered to tax due to uncertainty regarding its taxability, and clarity emerged only after judicial decisions in its favour. However, the CIT(A) rejected the condonation request, holding that the reasons for delay were not bona fide. The CIT(A) noted that the return for the relevant year was filed after the favourable ITAT decisions, yet the assessee still declared the income as taxable. It was further observed that allowing condonation would prejudice the interests of the revenue, as the Assessing Officer (AO) would not have the opportunity to verify the claim. Additionally, since the CPC had made no adjustments under Section 143(1), the CIT(A) held that the issue was beyond the scope of appeal and dismissed the appeal in limine.
Aggrieved by this decision, the assessee appealed before the ITAT. After considering the submissions and examining the record, the Tribunal noted that the claim regarding non-taxability of the distribution fee had been raised for the first time before the appellate authority. The Tribunal also took into account the CBDT Circular dated 11.04.1955, which emphasizes that only legitimate taxes should be collected.
In the interest of justice, the Tribunal held that the matter required fresh examination on merits. Accordingly, it restored the issue to the jurisdictional Assessing Officer (JAO) for de novo consideration, directing that the matter be decided afresh after providing the assessee an adequate opportunity of being heard.
The appeal was thus allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
The above captioned appeal is preferred by the assessee against the order dated 30.10.2025, passed by CIT(A)-42, Delhi u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2024-25.
2. The assessee has raised the following grounds of appeal:
General
“1. On the facts and in the circumstances of the case and in law, the Hon’ble CIT(A) erred in treating the distribution income of Rs. 2,55,08,850 taxable as Royalty and thereby taxes of Rs. 38,26,327 deposited thereon is collected excessively in violation of the provisions of the Act.
Distribution fee received for granting rights for distribution of TV channel does not constitute ‘Royalty’ under the India-UK Double Taxation Avoidance Agreement (‘DTAA’)
2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in rejecting the application for condonation of delay in filing the appeal under section 246A of the Act.
3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in rejecting the fresh claim merely because it was not made in the return of income, despite having plenary appellate powers and the settled principle that there is no estoppel in law to make a legitimate claim even if it results in income lower than the returned income.
4. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not adjudicating on the Appellant’s contention that the distribution fee of INR 2,55,08,846 earned for granting distribution rights in relation to the TV channel (BBC News) does not fall within the definition of “Royalty” under section 9(i)(vi) of the Act or Article 13 of the India-UK DTAA, and accordingly, is not chargeable to tax in India.
5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not directing the Ld. AO to grant refund of INR 38,26,327, being the tax deducted at source on the distribution fee earned by the Appellant during the relevant year.”
3. The sole substantive issue involved in this appeal is regarding the taxability of distribution fee of Rs.2,55,08,846/-earned by the assessee for granting distribution rights of BBC News Channel.
3.1 Brief facts related to this issue are that the assessee itself had offered distribution fee received of Rs.2,55,08,846/- as taxable in its hands as “Royalty” while filing its return for A.Y. 2014-15 and TDS @15% as per Article 13 of India-UK DTAA was also deducted. The CPC, while processing the return u/s 143(1) accepted the returned income without making any adjustment. However subsequently, in assessee’s own case for A.Ys. 2006-07, 2007-08 & 2008-09, the issue was decided in favour of the assessee by the ITAT as well as the Hon’ble High Court. This led the assessee to file an appeal before Id. CIT(A) against section 143(1) order belatedly raising this ground for the first time. The assessee also applied for condonation of delay before the Id. CIT(A) on the ground that the impugned amount was shown in income adopting a conservative approach as there was lack of clarity on taxability of TV channel distribution fees till the matter was finally decided in assessee’s favour by the Hon’ble High Court. Ld. CIT(A) however, did not condone the delay and dismissed the appeal in limine. Ld. CIT(A) observed in her order that the reasons of delay given by the assessee are not bonafide as it filed the return for A.Y. 2024-25 much after the favourable decision of ITAT in earlier years and still declared the impugned amount as income in the return. Further, she held that condonation would cause serious prejudice to the interests of revenue as the AO cannot examine and verify the claim and moreover no adjustment was made by the CPC while passing order u/s 143(1) and therefore the issue fell outside the scope of appeal. Further aggrieved, the assessee is in appeal before the Tribunal.
4. We have heard the rival submissions and perused the material placed on record as well as the relevant judicial pronouncements. After careful consideration of the facts and circumstances as well as various decisions and the CBDT circular dated 11.04.1955 stating that only legitimate tax must be assessed and collected, relied upon by the Id. AR. Although this claim has been raised for the first time before the appellate authority, in the interest of justice, we deem it appropriate to restore the matter to Ld. J.A.O. for denovo consideration and to decide the issue on merits after giving due opportunity of being heard to the assessee.
5. In the result, the assessee’s appeal is allowed for statistical purposes.
Order Pronounced in the Open Court on 23/04/2026.
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