Live sports coverage receipts not fee for technical services or royalty where no technology or copyright rights were made available.

Amounts received for producing and delivering live audio-visual cricket coverage were not taxable as fee for technical services under the India-UK DTAA because the service did not make technical knowledge, skill, know-how, or a technical plan available to the payer. The payer received only the final programme feed, not the ability to independently apply the technology. The same receipts were also not taxable as royalty under the treaty or the Income-tax Act because there was no grant of any right to use copyright, process, or equipment, and no material showed retention of ownership in the content with licensing of such rights. The additions on these grounds failed, and the remaining issues were remanded for fresh consideration, giving partial relief.

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Issues: (i) Whether the amounts received for production and delivery of live audio-visual coverage of cricket matches were taxable as fee for technical services under the India-UK DTAA; (ii) Whether the same receipts were taxable as royalty under the India-UK DTAA and the Income-tax Act, 1961.

Issue (i): Whether the amounts received for production and delivery of live audio-visual coverage of cricket matches were taxable as fee for technical services under the India-UK DTAA.

Analysis: The payment was for producing and delivering the final program content or live feed, not for transferring technical knowledge, skill, know-how, or a technical plan to the payer. The expression "make available" in the treaty required that the recipient of the service must be enabled to apply the technology on its own, which was not shown on the facts. The broadcaster or the payer did not acquire the technical expertise so as to produce the feed independently in future.

Conclusion: The receipts were not taxable as fee for technical services.

Issue (ii): Whether the same receipts were taxable as royalty under the India-UK DTAA and the Income-tax Act, 1961.

Analysis: Royalty under the treaty required consideration for the use of, or the right to use, copyright, process, or industrial, commercial or scientific equipment. The assessee was engaged to produce the program content and there was no material to show that it retained ownership in the content or granted any right to use a copyright or process. The commercial arrangement regarding equipment and production requirements did not convert the consideration into royalty.

Conclusion: The receipts were not taxable as royalty.

Final Conclusion: The principal additions treating the receipts as fee for technical services or royalty failed, while the remaining issues were sent back for fresh consideration, resulting in partial relief to the assessee.

Ratio Decidendi: A service is taxable as fee for technical services only when technical knowledge, skill, or know-how is made available to the recipient, and royalty arises only where there is consideration for the use of, or right to use, a protected right, process, or equipment.

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