Royalty u/s 9(1)(vi): Broadcasting rights for live event not chargeable to tax as royalty

Lex Sportel Vision Pvt. Ltd. Vs ITO (ITAT Delhi)

ITAT Delhi held that broadcasting “Live events” does not amount to a work in which copyright subsists i.e., “Live Rights”, is not “copyright” and therefore any payment made thereto can’t be said to be chargeable to tax as royalty under section 9(1)(vi).

Facts- The assessee company engaged in the business of broadcasting or sub-licensing right to broadcast, sport events e.g., golf, cricket, soccer etc. on live and non-live basis. During the Financial Year 2017-18, the assessee had entered into agreements with various non-residents. The agreements and invoices pertaining to acquisition of “Live Rights” and “Non-Live Rights” clearly bifurcate the total consideration between consideration for “Live Rights” and consideration for “Non-Live Rights”.

The assessee has deducted tax at source u/s 195 of the Income Tax Act, 1961 on the payment remitted in lieu of acquisition of “Non-Live Rights” considering the same to be “Royalty” u/s 9(1)(vi) of the Act chargeable to tax in the hands of the non-resident overseas rights holder in India. The assessee has not deducted any tax at source u/s 195 on the payment made for “Live Rights”.

CIT(A) passed the order u/s 201 of the Act by observing that the payment for “Live Rights” is chargeable to  tax as “Royalty” in the hands of the non-resident overseas rights holder warranting withholding of tax u/s 195 of the Act.

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