Title sponsorship payments are not royalty where no copyright or right to use copyright is transferred under the treaty.

Title sponsorship payments and associated branding benefits did not constitute royalty under Article 13(3)(c) of the India-Canada DTAA because the arrangement conferred no transfer of copyright or right to use copyright. Royalty under the treaty applies only where consideration is paid for use of, or right to use, the specified intellectual property rights covered by Article 13(3). As the sponsorship rights were limited to promotional and branding benefits described in the agreement schedule, the payment fell outside the treaty royalty definition. The Tribunal's view in favour of the assessee was upheld and the revenue's royalty contention failed.

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Issues: Whether the payment made for title sponsorship rights and connected benefits under the agreement amounted to royalty under Article 13(3)(c) of the Double Taxation Avoidance Agreement between India and Canada.

Analysis: The payment was for title sponsorship and the benefits attached to that sponsorship, including branding and promotional rights described in the agreement schedule. Royalty under Article 13(3) applies only when the payment is consideration for the use of, or the right to use, one of the specified categories of intellectual property or related rights. The arrangement did not involve any transfer of copyright or the right to use copyright. The expression in Article 13(3)(c) refers to copyright and not to any broader or general right. The payment therefore did not fall within the royalty definition under the treaty.

Conclusion: The payment was not royalty under Article 13(3)(c) of the treaty and the finding of the Tribunal was upheld in favour of the assessee.

Final Conclusion: The appeal failed and the order of the Tribunal disallowing the revenue's royalty contention was affirmed.

Ratio Decidendi: A payment qualifies as royalty under Article 13(3) only if it is consideration for the use of, or the right to use, the specified intellectual property or copyright rights; title sponsorship rights without transfer of copyright do not constitute royalty.

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