TaxTMI 
TaxTMI 
2026 (8) TMI 1826
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....ed to the assessee from India during the relevant assessment year is as under:- Nature of revenue Amount of revenue (in Rs. ) Fee for grant of non-live broadcasting rights 14,60,64,457 Fee for grant of live broadcasting rights 2,44,78,38,154 Rights Fees 4,96,14,735 3. The assessee offered revenue from non-live broadcasting rights and Rights fees to tax in its return of income for the subject assessment year. The Assessing Officer (AO) held that there is no difference between non-live broadcasting and live broadcasting, therefore, the fee received by the assessee for live broadcasting rights is also liable to be taxed in India as royalty. 3.1. Further, the AO held that the fee received for release of player Rs. 6,26,00,764/- is also liable to be taxed in India under Article 18(2) of India-UK Double Taxation Avoidance Agreement (DTAA). The assessee in appeal has assailed both the aforesaid additions made by AO. 4. Shri Ajay Vohra, appearing on behalf of the assessee submits that the assessee has offered to tax non live broadcasting rights fee and Right fee to tax as royalty. Whereas, fee recieved for grant of live broadcasting rights is not in the nat....
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....addition with respect of fee received for grant of live broadcasting rights as royalty. Without prejudice, the ld. DR submits that the assessee in an arbitrary manner has allocated Rights fee between live rights and non-live rights in the ratio of 95:5, respectively. There is no rational for such allocation. The ld. DR placed reliance on the following decisions to contend that the allocation of rights fee for non-live broadcast be increased from 5% to 25%: ADIT (IT) vs. Global Cricket Corporation P Ltd., 145 taxmann.com 570 (Mum Trib); & Trans World International LLC vs. DCIT in ITA 1960-61 and 2146/Del/2024 for AY 2013-14 to 2015-16 decided on 18.06.2025 7. In respect of release fee received from Indian Premier League (IPL) franchise, the ld. DR furnished following written submissions: - "The Assessee has received release fees from IPL franchises towards granting consent to English players to participate in the IPL tournament through various teams. The fees have been paid after the conclusion of IPL 2022 and is based on agreement entered into between the IPL franchise/team, ECB and the individual players). The release fees are also contingent to the L....
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....t such a close causal and economic connection and should be analyzed similarly. (5) The economic and legal substance of the release fee arrangement reveals that the assessee is not a passive bystander granting "permission," but an active participant with control and beneficial interest and determines which athletes may participate, receives a fixed financial benefit contingent on participation, enters into contractual arrangements with franchises and league bodies ;and exercises control over the terms and conditions of athlete participation. (6) The Assessee is clearly in a position to profit from the athlete's personal activities and, under Article 18(2), should be taxed on such income in the country where those activities are performed. The assessee's labeling of this arrangement as "permission" rather than "profitsharing" does not change the legal character; the substance is that the assessee is economically benefiting from the athlete's performance in India and should bear tax thereon in India. (7) The receipt of release fees by the assessee terminates upon the player's withdrawal or nonparticipation (hence the fee is conditional on co....
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....ts received by the assessee is in the nature of royalty. We find that the similar issue has been considered by the Hon'ble Delhi High Court in the case of CIT vs. Delhi Race Club (1940) Ltd. (supra). The Hon'ble High Court after examining the meaning of expression 'copy right' under the provision of Copy Right Act 1957 and the expression royalty as defined under section 9(1)(vii) of the Act held that the payment made for live telecast of horse races is not royalty within the meaning of section 9(1)(vii) of the Act. The relevant excerpts from the judgment in the aforesaid case is 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). 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 exclusive right to do certain acts. A reading of Section 14 would reveal that "copyright" means....
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.... the judgment of this Court in the case of Akuate Internet Services (P) Ltd. & Anr. vs. Star India (P) Ltd. & Anr. FA(OS) 153/2013 as relied upon by learned counsel for the respondent assessee wherein a Division Bench of this Court has applied the test of'minimum requirement of creativity' for claiming a right under the Copyright Act, which is absent in a'live telecast of an event'. We note for benefit that the United States Court of Appeal Second Circuit Ruling in National Basket Ball Association and NBA Properties NIC vs. Motorola INC 105 F3d 841 (1997) held that a sports event is a performance and not a work. It is not copyrightable. 19. Insofar as the submission of Mr.Sawhney that the live telecast of an event is the outcome of "scientific work" and payment thereof would be covered under the definition of "royalty" is concerned, the said submission is also liable to be rejected first it runs contrary to his earlier submission and also for the simple reason the clause (v) to explanation 2 to clause (vi) or sub section 1 of Section 9 would relate to work which includes films or video tapes for use in connection with television or tapes for use in connection with....
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....r issue followed the decision rendered in the case of Delhi Race Club (1940) Ltd. (supra) and held as under:- "6. 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." [Emphasized by us] Similar view has been taken with respect to remuneration received from live broadcasting rights for sports in the case CIT vs. Fox Network Group Singapore PTE Ltd. (supra). The Hon'ble High Court following the decision rendered in the case of Delhi Race Club (1940) Ltd. (supra) concluded tha....
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....ghts fee mutually agreed between two parties by virtue of agreement without there being any material to substantiate that the ratio mutually decided is unjustified. The DR has referred to the decision in the case of Trans World International LLC vs. DCIT (supra) and ADIT vs. Global Cricket Corporation P. Ltd. (supra) wherein the allocation was modified from 95:5 to 90:10 and 90:25, respectively. We find that the ratio of allocation in the aforesaid cases was changed in peculiar facts of the said cases and, hence, the said principle cannot be applied universally. In the case of Global Cricket Corporation Ltd. (supra)the agreement did not provide any breakup of consideration for live and non-live feed. Hence, we find no merit in the alternate prayer made by ld. DR. 15. In light of our above findings, the assessee succeeds on ground no. 2 and 3 of appeal 16. In ground no. 4, 5.1 and 5.2 of appeal, the assessee has assailed the assessment order with regard to Release fee of Rs. 6,26,00,764/- received from IPL franchises. The AO has held that the said amount received by the assessee from IPL franchises for allowing English players to participate in IPL is taxable under Article 18 ....
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.... Management Company based outside India to bring artists in India, the payment made to agent did not arise from personal activities, clause (2) of Article 18 would not apply. Therefore, we find merit in ground no. 4. 5.1 and 5.2 of appeal, hence, the same are allowed. 18. In ground no. 5 and 6 of appeal, the assessee has assailed levy of interest u/s. 234A and 234B of the Act, respectively. Charging of interest u/s. 234A and 234B of the Act is mandatory and consequential, hence, ground no. 5 and 6 of appeal are dismissed. 19. In the result, appeal of the assessee is partly allowed in the terms aforesaid. Order pronounced in the open court on Friday the 21st day of August, 2026. ============= Document 1 Knight ider 9th February 2023 To, England and Wales Cricket Board Lords Cricket Ground, St John's Wood Road, London NW8 8QZ, UK Dear Sirs, We write in connection with each agreement (a "Release Agreement") between England and Wales Cricket Board, us and player in our Indian Premier League ("IPL") squad mentioned In Schedule 1 to this letter (the "Player") under which you granted to us approval for each such Player to play for our IPL Team during the 202....