TaxTMI 
TaxTMI 
2024 (1) TMI 20
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....ricket Corporation PTE Ltd. -Singapore (GCC), World Sports Nimbus PTE Ltd-Singapore (WSN) and the assessee. The aforesaid sponsorship agreement was in respect of sponsorship of the ICC Cricket Events commencing from the ICC Champions Trophy -2004 scheduled in England to ICC Cricket World Cup 2007 to be held in West Indies. The GCC had raised three invoices towards sponsorship including display of signage and other associated benefits during ICC Champions Trophy 2004 held in England and the ICC Trophy 2005 at Ireland. The details of invoice are as under: Invoice No. Date of Invoice Amount in US$ GCC/2006/014 28/3/2006 2,97,500 GCC/2006/015 28/3/2006 1,48,750 GCC/2006/016 28/3/2006 1,48,780 Total 5,95,000 3. The assessee filed an application dated 23/08/2006 before the DDIT(IT)- 3(1), Mumbai to issue an authorization for remittance of the aforesaid amounts to GCC without deduction of tax at source. It was categorically mentioned in the application that GCC-Singapore does not have a Permanent Establishment(PE) in India and that display of signage is done outside India. Therefore, as per Article-7(1) of India- Singapore Tax Treaty the said payment is not liable t....
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....ditions of the Sponsorship Agreement came to the conclusion that the payments made by the assessee to GCC and WNS are not in the nature of "Royalty" as the payment was not for the use of trademark or brand name. Hence, there was no requirement to deduct tax at source on the payments so made. The ld. Authorized Representative of the assessee also placed reliance on the decision in the case of Global Cricket Corporation PTE Ltd. in ITA No.3130/Mum/2006 and 31135/Mum/2006 in cross appeals for Assessment Year 2002-03 decided on 15/12/2022. He submitted that Schedule -4 to the Sponsorship Agreement was also considered by the Tribunal in the said case. The Tribunal after considering the terms and conditions of the agreement including annexures thereto came to the conclusion that the payment received by GCC is not in the nature of "Royalty" u/s.9(1)(vi) of the Act. The ld. Authorized Representative of the assessee prayed for modifying the findings of CIT(A) to the extent payment made by the assessee to GCC is held as "Royalty" under Article-12 of the Treaty. 4.1 The ld. Authorized Representative of the assessee submitted that in ground No.7 and 8 of appeal, the assessee has prayed for re....
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....that the income is to be grossed up since IOCL is bearing the tax burden, the effective rate for deduction of tax works out to 24%. In view of this, IMOC was issued to IOCL to remit the sum of US $ 5,95,000 subject to withholding of tax @ 24% + 2% EC" The ld. Departmental Representative further placed reliance on the decision in the case of SoktasTekstil Sanayi Ve Ticaret AS vs. ACIT in ITA No.1712/Del/2022 for Assessment Year 2019-20 decided on 22/12/2022. He submitted that in the aforesaid case Tribunal has held payments for use of brand name/trademark are in the nature of Royalty as defined u/s. 9(1)(iv) of the Act r.w. Article 12(3) of India Turkey Tax Treaty. 6. We have heard the submissions made by rival sides and have examined orders of authorities below. In so far as the facts relevant to the issue in appeal are concerned, they are not in dispute. The issue before us for adjudication is, "Whether the payments made by the assessee in terms of Sponsorship Agreement fall within the meaning of "Royalty" u/s. 9 of the Act and/or under Article- 12 of India - Singapore, DTAA?" 7. Before we proceed to decide the issue in hand it would be relevant to refer to Official Sponsor (Wo....
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....DI and/or GCC) for the use of such footage. For the avoidance of any doubt, the Sponsor shall be solely responsible for obtaining the consents and approvals required hereunder (including as to costs of obtaining the same). GCC shall use its reasonable endeavours where it does not act as Designated Broadcaster for the Events to procure that the Designated Broadcaster provides free access (subject to payment of reasonable duplication costs) for the Sponsor to use footage of the Events for promotional purposes including the right to include excerpts of such footage not exceeding thirty (30) seconds duration for use in television commercials advertising the Sponsor's products during the Term in the Licensed Territory provided that the provisions set out in paragraphs 4.1(a)-(e) above shall apply equally to the footage so accessed. All out of pocket expenses including tape costs, transfer costs and shipping costs arising in relation to the access of any footage referred to herein shall be for the account of the Sponsor. 4.2 The Sponsor shall have the non-exclusive right to access such still images relating to the Event and/or to ICC events or matches which IDI and/or GCC owns ....
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....se of such footage or still images (as applicable) prior to such use provided always that the provisions of paragraphs 4.1 (b) to (e), 4.2(b) to (d) and 4.3 shall, as applicable, apply equally in respect of the use of such footage or still images of the Events." 8. A perusal of the aforesaid terms and conditions would show that the assessee (sponsor) has non-exclusive rights, but exclusively within the brand sector during the term to use, reproduce and publishing of the "Event Marks". The term "Event Marks" has been defined in the agreement to mean : " Means the official title(s), music, trade mark(s), word(s) logo(s), mascots(s) and /or device(s) (including all registrations and applications in relation thereto) relating to any of the Events as GCC and/or IDI may, from time to time, notify the Sponsor pursuant to clause 6.3." The 'Term' has also been defined in Clause-2 of the agreement, the same is reproduced herein below: " This Agreement shall be deemed to take effect on, and forom, 9 September 2004 and shall expire on the ninetieth (90th) day after the date on which the final Match of the ICC Cricket World Cup 2007 Event is officially concluded ( the "Term"), subject to ....
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....ource." [Emphasized by us] Thus, the Tribunal came to the conclusion that since the payment made to GCC and Nimbus Sports International are not taxable in India, there is no need to deduct tax at source u/s. 195 on such payments. Consequently, no disallowance can be made u/s. 40(a)(ia) of the Act. 11. The Co-ordinate Bench in the case of Global Cricket Corporation PTE Ltd. (supra) while considering the issue of taxability of the amounts received from the sponsors for use of Event marks, signages, etc. held that such payments cannot be considered as royalty in the hands of recipient u/s. 9(1)(vi) of the Act. We find that while adjudicating taxability of amount received as Sponsorship Fee in hands of the recipient, the Tribunal referred to the decision in the case of Hero MotorCorp Ltd.(supra). For the sake of completeness the relevant extract of the decision in the case of Global Cricket Corporation PTE Ltd.(supra) is reproduced herein below: " 6.15. A co-joint reading of the Master Rights Agreement and the sponsorship agreement (i.e. GPA/SA), shows that GCC was in control of the stadium and the advertising sites by virtue of contractual rights and obligations arising from agre....
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.... and not payment of royalty in terms of Article 12(3) of DTAA. The relevant extract of the decision of the Tribunal rendered in identical facts and circumstances reads as under: "53.38 Applying the propositions laid down in these case laws to the facts of the case, we are of the considered view that the claim of the assessee that the payment was purely for advertisement and publicity of the brand name of the assessee and for promotion of its product during the Cricketing events of ICC and not the payment of royalty as defined used in para 3 of Article 12 of DTAA between India and Singapore has much force. The agreement in question includes sponsorship rights like advertising on bill boards, advertisement in official brochure, Web site of ICC etc., which is purely incurred for the promotions, advertisement and publicity of the assessee's brand name and products. If incidentally, the proprietary trade mark or logo of ICC is put alongside the assessee's logo it is only incidental to the main services obtained by the assessee. The ratio of the Judgment in the case of Sheraton International Inc. (supra), and the judgment of Sahara India Financial Corporation (supra), in our view s....