TaxTMI 
TaxTMI 
2024 (7) TMI 432
X X X X Extracts X X X X
X X X X Extracts X X X X
....ferred to as Ld. DRP), erred in considering that the license fees amounting to Rs. 350,54,35,665 earned by the appellant from Culver Max Entertainment Private Limited (formerly known as Sony Pictures Networks Private Limited) pertaining to live' transmissions of the programmes i.e., cricket matches held in Australia as 'Royalty' under the Act as well as under the India - Australia Double Tax Avoidance Agreement. 3. Based on facts and circumstances of the case and in law, the Ld AO, pursuant to the directions of the Ld. DRP erred in holding that the receipts amounting to Rs. 350,54,35,665 fromn Culver Max pertaining to live' transmissions of the programmes i.e., cricket matches held in Australia involves transfer of rights in respect of a 'Process' as per Explanation 6 to Section 9(1 X(vi) of the Act as well as under Article 12 of India- Australia Tax Treaty. 4. Based on facts and circumstances of the case and in law, the Ld. AO, pursuant to the directions of the Ld. DRP erred in holding that a unilateral amendment of the term 'process under the Act would get imported into the definition of 'royalty' given under Article 12 of the India- Austra....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Act and be treated as royalty for use of, or the right to use, motion picture films, films or videotapes for use in connection with television; or tapes for use in connection with radio broadcasting as royalty under the provisions of Article 12(3)(e) of the DTAA. AO also questioned the receipts of 13,70,00,000/- from Balkrishna Industries in lieu of Commercial partnership agreement to treat the same also as royalty under the Act or as well as under Article 22 of the DTAA. 3. Assessee had given a detailed submissions which was not found satisfactory and the AO had made addition on account of license fee of Rs. 350,54,35,665/- received from Culver Max Entertainment Private Limited (formerly known as Sony Pictures Networks Private Limited) in respect of granting rights for live transmission of programmes (i.e. cricket matches played in Australia under the sole control and auspices of the appellant) as royalty income. AO added an amount of Rs. 4,05,65,051/- on the basis of difference in the amounts reported by the appellant and amounts reported by Culver Max Entertainment Private Limited in Form 15CA/CB. Further an addition of Rs. 13,70,50,000/-, was made, on account of considera....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Coordinate Bench decision in the case of assessee in AY 2018-19 (Supra) and sustain the Grounds No. 2 to 5 in favour of the appellant-assessee. 5. As regards with regard to Ground No. 6, Ld. AR has pointed that the difference of Rs. 4,05,65,051/- arises out of the difference in exchange rates applied by the Culver Max Entertainment Ltd. while making remittances and exchange rates adopted by the appellant in computing the INR equivalent to US Dollar invoiced rates raised on Culver Max. Ld. Counsel relied Rule 115 read with Rule 26 of the I.T. Rules, 1962 to submit that when there is any income is expressed in foreign currency such income is converted into Indian Rupees at the State Bank of India telegraphically transfer buying rate prevailing on the date on which taxes are required to be withheld and where the taxes are not required to be deducted as per the Telegraphic Transfer buying rates as on the last date of the year. 5.1 Ld. Counsel has also pointed out that the addition of Rs. 4,05,65,051/- to the extent attributable to the live portion does not merit addition since live portion is not taxable at the first instance, as challenged in Grounds No. 2 to 5 and it is the only ba....
X X X X Extracts X X X X
X X X X Extracts X X X X
....age Package * BAL can advertise in the LED perimeter, sightscreen display and advertisement to be displayed on the big screen at each international men's match played in Australia. 4. Venue Media * BAL could display a TVC or sponsored segment displayed on the Venue vision screen at each BBL match. * At each BBL match, BAL Would have branding rights for two Integrated Moments 5. Team Appearance and Signed memorabilia * Appearance at any BAL promotion event or activity by a minimum of four BBL players. * CA will provide BAL with 2 signed bats and 5 signed replica playing shirts for promotion purpose 6. Match Branding and Activation * Set up a promotion or activation at Australian stadiums on the internal or external concourse to engage with attendees * BAL would have a right to have one of its person present at post match award * BAL would have a right to take the official BBL trophy on a tour of Australia for fan engagement 7. Money Can't Buy Experience * This is a bespoke experience for BAL customers or fans in Australia that includes player access or some form of memorable experience promoted and facilitated in Australia. 8. Tickets and Hospitality * To pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is also placed of the Hon'ble Delhi Tribunal in the case of Hero Motocorp Ltd. 36 Taxman 103, to submit that payment received by assessed, in lieu of right to use logo and images of Big Bash League (BBL) as sponsor, does not amount to royalty. 7.3 On the other hand, Ld. DR relied upon the orders of the Ld. Tax authorities below. He relied various clauses of the commercial partnership agreement to submit that right to use logo was given to use 'with or without' the joint logo, so receipt are in the nature of royalty. 7.4 In regard to this controversy, we find that the AO has dealt the issue with the following relevant findings:- "7.1 The assessee was show-caused why the receipts in lieu of this agreement should not be treated as royalty. Assessee furnished its response which was examined. 7.2 Assessee is in a Commercial partnership agreement with the party where the party is the sponsor. The party being a sponsor will get designated rights like- being holder of licensed logo of BBL(big bash league- the Australian intra-country łeague), first right to purchase advertising, Exclusive advertisement right, access to sign package (all the advertisements done in league and inte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sor through any medium now known or hereafter devised, including, without limitation, by television, radio, newspaper magazine, catalogue, Internet, point of sale advertising displays, signs posters, packaging, or bill board or outdoor advertising." 8.1 This clause shows that in regard to Big Bash League, the sponsor BAL had right to use the Cricket Australia's intellectual property rights merely to indicate sponsor's association with the BBL. The sponsor was required to use reasonable endeavours to spend the planned minimum amount specified in item 10 of Schedule 1 in each relevant Contract Year on leveraging, the marketing, advertising and promotion of Sponsor's sponsorship of Cricket Australia and on costs associated with the Sponsorship Benefits to help grow the BBL to new audiences, including for fan promotion, activations, artwork costs, rope production, install, removal costs, broadcast and digital (Leverage Spend). 8.2 Then, the licence to use logos was granted to sponsor as a limited nonexclusive royalty free licence as per clause 6.1. There was a specific bar that: "(c) Sponsor acknowledges that it is not entitled to use any Cricket Australia Intellectual Property....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Cricket Australia nor Sponsor will use or permit the use of the Joint Logo in any manner whatsoever after the termination (for whatever reason) of this Agreement without the other party's prior approval which may be granted or withheld in its absolute discretion" 8.5 Not only this, the agreement further provide that: "(a) Subject to clause 11(c), Privacy Laws, and any applicable privacy policies of Sponsor, if requested by Cricket Australia. Sponsor agrees to provide to Cricket Australia the Personal Information (in a reasonable and timely manner) which Sponsor obtains during Sponsor promotions which use Cricket Australia Intellectual Property in relation to this Agreement, to enable Cricket Australia to use such Personal Information for the purposes of building and/or maintaining relationships." 8.6 As we take into consideration the sponsorship benefits given on the agreement, it comes up that designation rights were given to BAL as a sponsor, being entitled to promote the Nominated Brand, including, without limitation, through advertising on products and at points of sale, with or without use of the Joint Logo or the Licensed Logos, as the following together with such oth....