LG Electronics India Pvt. Ltd. & Anr. Vs Director of Income Tax (International Taxation) & Anr. (Delhi High Court)
ICC Logo Use Not “Incidental”: Delhi HC Upholds Royalty TDS on LG’s World Cup Sponsorship Payment- Delhi HC
Delhi High Court, in M/s LG Electronics India Pvt. Ltd. & Anr. vs. Director of Income Tax (International Taxation) & Anr. (W.P.(C) No.15181/2004, judgment dated 24.12.2025), dismissed the writ petition and upheld the order passed u/s 264, holding that 1/3rd of the USD 11 million payment made by LG to Global Cricket Corporation (GCC), Singapore constituted “royalty” for right to use ICC trademarks, liable for TDS @ 15% under s.195 read with s.9(1)(vi) and Article 12 of India–Singapore DTAA.
The Assessee had entered into a Global Partnership Agreement with GCC for advertising and sponsorship rights in ICC cricket events (including World Cups held outside India). LG contended that the use of ICC Mark / Event Marks was merely incidental to in-stadium advertising and that the entire payment was for advertisement/business income, not royalty.
The Court rejected this plea, noting that:
– LG itself conceded in writing (letter dated 19.03.2004) that there was an element of use of ICC trademark, though sought to downplay its value;
– the agreement granted LG a substantive, worldwide right to use ICC Marks / Event Marks on advertising material, packaging, websites and promotions, far beyond the stadium;
– the licensed territory was “the world”, and the rights were not confined to on-ground advertising;
– consideration under the agreement was a composite payment for both premium advertising space and trademark usage.
The High Court held that the right to use ICC trademarks was not incidental or ancillary, but a valuable commercial right, squarely falling within the definition of “royalty” under Explanation 2 to s.9(1)(vi) and Article 12 of the DTAA. It approved the apportionment made by the DIT u/s 264, attributing 2/3rd of the payment to advertisement and 1/3rd to royalty, observing that no serious challenge was made to the reasonableness of such apportionment.
The Court distinguished Formula One World Championship Ltd. and Sheraton International Inc., holding that in those cases the use of trademark was purely incidental to the main business activity, whereas in LG’s case, the agreement conferred independent and enforceable trademark usage rights.
Accordingly, the writ petition was dismissed, and the direction to deduct tax @ 15% on the royalty portion was sustained.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
