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of <h1>Live transmission fees for cricket matches ruled not to constitute royalty where rights confined to live telecast without recording rights</h1> Whether fees for live transmission of sporting events constitute royalty under the tax provision hinging on Explanation 2 was considered: the reasoning is ... Fees received for live transmission/live feed of cricket matches - Royalty receipts - service from which income was generated would clearly fall within the ambit of Explanation 2 as placed in Section 9(1)(vi) - distinction between a copyright and broadcast right - scope and ambit of the expression “the transfer of all or any rights (including the granting of a license), in respect of any copyright, literary, artistic or scientific work including films or video tube tapes” - whether broadcast/live telecast is not a work within the definition of 2(y) of the Copyright Act ? - test of ‘minimum requirement of creativity’ for claiming a right under the Copyright Act, as absent in a ‘live telecast of an event’. HELD THAT:- Issue involved in the present case is squarely covered by the judgment of this Court in the case of Fox Network Group Singapore Pte. Ltd. [2024 (1) TMI 1008 - DELHI HIGH COURT] in which the earlier judgment of this Court rendered in the case of CIT v. Delhi Race Club [2014 (12) TMI 265 - DELHI HIGH COURT] involving an identical fact-situation has been dealt with and held that ITAT did not commit any error in passing the impugned orders and that it was completely justified in arriving at the finding that the fees received by the respondents towards live transmission could not be classified as royalty income under Section 9(1)(vi) of the Act. Appellant has not been able to point out any fact which shows that the rights of exhibition given by the respondent Sri Lanka Cricket exceeded beyond the ‘live feed’. Since the right to show cricket matches was confined to live telecast and the payment made was only for the match(es) held in the series (within 12 months) and not subsequent matches, such amount paid to the respondent cannot be considered as a royalty. ‘Because, royalty presupposes enduring benefits’. In case the licensee has a right to record or preserve the feed and he continues to derive benefit of that recording and has right to re-telecast or show those matches in future, beyond the period or event(s) other than such event, then only, the payment made to the licensee in appropriate case, can be treated as royalty. However, it is not the case in the present agreement or transaction, hence the amount in question cannot be considered as royalty. Decided against revenue. Issues: (i) Whether fees received for live transmission/live feed of cricket matches constitute 'royalty' under Section 9(1)(vi) of the Income-tax Act, 1961 (including Explanation 2 and Explanation 6).Analysis: The dispute concerns characterization of payments for live telecast rights. The legal framework applicable includes Section 9(1)(vi) of the Income-tax Act, 1961 and its Explanation 2 and Explanation 6, as well as principles distinguishing copyright from broadcasting rights under the Copyright Act, 1957. Prior authoritative decisions treat live telecast/broadcast as distinct from copyrightable 'work' and apply tests such as the minimum requirement of creativity to determine copyright protection. The distinction between broadcasting rights and copyright leads to the conclusion that a live telecast, absent recording, re-telecast or enduring rights, does not attract the royalty concept in clause (v) of Explanation 2. Explanation 6's reference to 'process' including transmission by satellite or similar technology does not, in the facts of the present licence limited to live telecast within a series and without enduring recording or re-transmission rights, convert the receipts into royalty. The primacy of applicable DTAA provisions over domestic taxing provisions was also identified as relevant to assessing taxing character.Conclusion: The fees received for live transmission/live feed do not constitute 'royalty' under Section 9(1)(vi) of the Income-tax Act, 1961; the appeal by the revenue is dismissed.
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