2019 (2) TMI 1803 - HC - Income Tax

Royalty receipt - payment received by the Assessee from the BCCI - whether payment received by the Assessee from the BCCI for such work, was in the nature of Fee for technical services - India UK Double Taxation Avoidance Agreement (DTAA) - HELD THAT - Tribunal interpreted this definition to hold that to include in the expression royalty, the payment in question should have to be made for the use of or right to use any copyright etc. The Tribunal referred to the decision of the Delhi High Court in the case of CIT v/s. Delhi Race Club Ltd., 2014 (12) TMI 265 - DELHI HIGH COURT in support of its conclusions. We are in agreement with the view of the Tribunal. Considering the nature of payments received by the Assessee from BCCI and considering the definition of term royalty contained in DTAA between two countries, it cannot be stated that Assessee received payment from the BCCI by way of royalty. There was no copyright vested in the Assessee for which the payment in question was being made. The Assessee merely prepared a coverage of live cricket matches under the contact, for such purpose, awarded by the BCCI. This question is, therefore, not entertained.

Summary

Issues:
1. Whether the Tribunal was justified in directing the AO not to treat the amount received by the assessee as "fees for technical services"?
2. Whether the Tribunal was justified in directing the AO not to treat the amount received by the assessee as "royalty"?

Analysis:

Issue 1:
The Tribunal was questioned on the justification of directing the Assessing Officer (AO) not to consider the amount received by the assessee as "fees for technical services." The Revenue argued that the payment received by the assessee from the Board of Control of Cricket in India (BCCI) for preparing live feed of cricket matches should be classified as "fees for technical services." However, the Tribunal rejected this contention. The Tribunal analyzed the nature of the payment and referred to the definition of royalty under the India UK Double Taxation Avoidance Agreement (DTAA). It concluded that the payment in question did not fall under the definition of royalty as it was not made for the use of any copyright or right to use any industrial, commercial, or scientific equipment. The Tribunal's decision was supported by the Delhi High Court's ruling in a similar case. The Tribunal found that the payment received by the assessee was not for the use of any copyright and, therefore, cannot be categorized as royalty. The Tribunal upheld its decision based on the specific nature of the payments made by the BCCI to the assessee for preparing live cricket match coverage.

Issue 2:
The second question raised by the Revenue was whether the Tribunal was justified in directing the AO not to treat the amount received by the assessee as "royalty." The Revenue contended that the payment made to the assessee was for imparting information concerning commercial or scientific knowledge, experience, or skill, falling under the definition of royalty as per the DTAA between India and the UK. The Tribunal examined the definition of royalty under the DTAA, emphasizing that the payment in question must be for the use of or right to use any copyright or industrial, commercial, or scientific equipment to qualify as royalty. After reviewing the facts and documents, the Tribunal concluded that the payment received by the assessee did not involve the use of any copyright or transfer of rights in respect of any copyright or scientific works. Therefore, the Tribunal upheld its decision not to treat the payment as royalty, as there was no copyright vested in the assessee for which the payment was being made. The Tribunal found that the assessee was engaged in providing live cricket match coverage under a contract with the BCCI, and the payment did not constitute royalty under the DTAA.

This comprehensive analysis of the judgment highlights the Tribunal's reasoning behind its decision regarding the classification of the payment received by the assessee from the BCCI, addressing both issues raised by the Revenue in detail.