TaxTMI 
TaxTMI 
2018 (4) TMI 331
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....13 08/03/2013 Rs. 2, 64, 06, 329/- 31/01/2017 Rs. 27. 51 crores ITA/1783/Mum/2016, AY. 2011-12: 2. During the course of hearing before us, the Authorised Representative (AR)and the Departmental Representative(DR)agreed that basic issue to be decided was as to whether sums received by the assessee during both the AY. s could be assessed under the head 'fees for technical services' (FTS)/Royalty, that in AY. 2011-12 the DRP had decided the issue in favour of the assessee, that in the next AY. , it confirmed the order of the AO. It was further agreed that the assessee had claimed that there existed a service PE and that income attributable to the Indian operations was to be computed under TNMM method, that the AO assessed the entire amount of gross receipts. 3. It was also brought our notice that the Tribunal, while deciding the appeals for AY. s 2010-11 and 2009-10(ITA/1513/Mum/2014, dated 26/8/2015 and ITA. s/1555 &1933/Mum/ 2014, dated 26/02/2016)respectively, had deliberated upon the nature of the receipt at length and had decided the identical issue. We are reproducing the relevant portion of the order of the Tribunal for the AY. 2010-11(supra), whe....
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....eriod, beginning from March 22, 2008 to March 21, 2009, a service permanent establishment ('PE'') of the assessee was constituted in India under Article 5(2)(k) of 'India-UK DTAA and the income attributable was computed on the basis of Transactional Net Margin Method ('TNMM') prescribed under the Indian transfer pricing regulations. The assessee further submitted the summary of returned income and proposed addition made by the AO as under : xxxx According to the assessee, it has carried out its business activities in connection with the capture and delivery of live audio & visual coverage of IPL 2008 and IPL 2009 matches. Accordingly, the assessee has contended that there existed a service PE and income attributable to the Indian operations was computed under TNMM method. However, the assessing officer has taken the view that the amount received by the assessee was in the nature of "Fee for Technical Services" and also in the nature of "Royalty" and accordingly assessed the entire amount of gross receipts. The Ld Dispute Resolution Panel (DRP) held that the concept of "Service PE" does not have application, once it is held that the gross re....
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....cle is received; or c) Make available technical knowledge, experience, skill know how or processes or consist of the development and transfer of a technical plan or technical design" xxxx 6. We notice that the Article 13(4)(c) of the India-UK DTAA also uses the expression "make available". Though the said expression has not been explained in the context of India-UK DTAA, it is the plea of the assessee that the principle or concept of "make available‟ explained in the India-US protocol should also be applied in respect of India-UK treaty also. Before us, the revenue could not submit any other decision or material to oppose the above said plea of the assessee. Since the India- UK DTAA and also India-US DTAA uses the same expression, i. e. , "make available" in the context of "Fee for technical services", we are of the view that the principle or concept of "make available‟ explained in the context of IndiaUS DTAA can be imported to understand the provisions of Article 13(4)(c) of the India-UK DTAA also. 7. Now we shall examine the question on the basis of discussions made in the earlier paragraphs. We notice that the assessee produces th....
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....have the compatible technology and equipments so that the live coverage can be broadcast without compromising the quality. Thus, in our view, the technical aspects are specified in the agreement in order to ensure that the program content is broadcast at the same quality in which it was produced. The same was sought to be achieved by synchronizing the quality of technical equipments between the assessee and the broadcasters (licensees). Such kind of synchronization of technology would ensure seamless function and complete coordination between the assessee and the broadcasters. Thus, there is a difference between the technology involved in the production of live coverage feed of cricket matches and the technology required to broadcast the same in the required quality. Hence, in order to ensure and maintain quality of live coverage feed, it becomes necessary on the part of the assessee to specify or oversee the technology available with the broadcasters so that the same does not compromise on the quality and compatibility. The specification of the technical requirements does not mean that the assessee has supplied the technology involved in the production of live coverage feed to the....
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....lity u/s 9(1)(vii) of the Income tax Act, 1963. 12. The AO/Ld DRP have also expressed the view that the payment received by the assessee would fall under the category of "Royalty" also. The relevant observations made by Ld DRP are extracted below:- "5. 5. Additionally, we find that the said services would also be in the nature of Royalty as per the provisions of section 9(i)(vi) of the Act and Article 13 of the DTAA between India and UK. The reasons for the same are, as under: (1) On a perusal of the agreement, it is clear that for doing this work, the assessee is required to bring in equipments for capturing the live feed. The same has been given in clause 1. 3 of the agreement which is reproduced as under: "1. 3 IMG shall be responsible for ensuring that equipment that it introduces into the Match venues complies with international standards of health and safety, it being acknowledged and agreed that IMG shall not be responsible for the compliance of the Match venues and their infrastructure with such international standards of health and safety" This makes it clear that the assessee is required to bring and use some equipment for recording live audio-visual fee....
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....xxxx 5. 5. 2 In view of the above discussions, it is held that the payments would be taxable as "Royalty" both under the provisions of Section 9(i)(vi) of the Act and Article 13 of the DTAA. The judgments related upon by the assessee have not been taken the above facts into consideration and hence the benefit of the same cannot be granted to the assessee. " 13. We have noticed earlier, the assessee was engaged by BCCI to produce live coverage of audio and video visuals of cricket matches. The assessee shall produce the program content, which is broadcast through the broadcasters appointed by BCCI. The job of the assessee ends upon the production of the "program content". According to the assessee, the program content shall become the property of the BCCI. We notice that the revenue has not brought any material on record to show that the assessee has kept the ownership rights over the program content. The Ld DRP has noticed that the BCCI is required to supply certain equipments and hence the Ld DRP has held as under:- "...the assessee would be using equipments to carry out this work which is nothing but equipment royalty as per the Act as well as the DTAA.....
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....ssessee had retained the ownership of the program content. The Hon‟ble Delhi High Court had an occasion to examine an identical issue in the case of CIT Vs. Delhi Race Club (2015)(273 CTR 503) in the context of the provisions of sec. 194J of the Act. In the above said case, the assessee was engaged in the business of conducting of horse races and it made payment for live telecast of races. The AO held that the said payment would fall under the definition of "royalty" falling within the purview of the provisions of sec. 194J of the Act and hence disallowed the payments u/s 40(a)(ia) of the Act. The Hon‟ble Delhi High Court observed as under:- "16. A live T. V coverage of any event is a communication of visual images to the public and would fall within the definition of the word "broadcast" in Section 2(dd) (of the Copyright Act). That apart we note that Section 13 does not contemplate broadcast as a work in which "copyright" subsists as the said Section contemplates "copyright" to subsist in literary, dramatic, musical and artistic work, cinematograph films and sound recording. Similar is the provision of Section 14 of the Copyright Act which stipulates the excl....
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....r appeal did not follow the order for the earlier year and held that the revenue earned by the assessee for live coverage of event was taxable as Royalty. It further observed that the order of the Tribunal for the AY. 2010-11 was challenged before the Hon'ble Bombay High Court by the Department. 5. It is true that principles of res judicata are not applicable to the income tax proceedings. But, it is equally true that rule of consistency is applicable to tax matters. In the case of Godrej & Boyce Manufacturing Co. Ltd. (394 ITR 449), the Hon'ble Supreme Court has held as under: "While it is true that the principle of res judicata would not apply to assessment proceedings under the Act, there is need for consistency and certainty and existence of strong and compelling reasons for a departure from a settled position has to be spelt out. ". In the matter of International Tractors Ltd. (397 ITR 696), the Hon'ble Delhi High Court ruled out that deductions allowed in the earlier assessment years should not be withdrawn unless the circumstances have changed. The Hon'ble Allahabad High Court in the case of Zazsons export Ltd. (397 ITR 400)has held that in order to maintain c....