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TMI Blog2013 (9) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessee by Nimbus to live broadcast the matches for a defined consideration, in our considered opinion, would not constitute a business connection in India. In the case of R.D. Aggarwal And Company And Anothers (1964 -TMI - 49330 - SUPREME Court) the Hon'ble Supreme Court has held that the expression "business connection" undoubtedly mean some thing more than "business". A business connection has been held to be involving a relation between the business carried on by a nonresident yielding profits or gains and some activity in the taxable territories which provides directly or indirectly to the earning of those profits or gains. A stray or isolated transaction has been held to be not constituting a business connection. As the consideration for live broadcasting does not fall either u/s 9(1)(i) or u/s 9(1)(vi), such amount is not chargeable to tax under the provisions of this Act in the hands of non-resident - Following decision of Asstt. Director of Income-tax, (International Taxation), 4(2) Versus Neo Sports Broadcast (P.) Ltd. [2011 (11) TMI 23 - ITAT MUMBAI] - Decided in favor of assessee. - - - - - Dated:- 23-11-2012 - Order The order of the Bench was deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts to M/s. Nimbus Sports International Pte Ltd. is deemed to accrue or arise in India. (b) The broadcast of live matches means capturing the image on cameras, and then editing the same before sending the signal for transmission and also arranging for replays to be provided during the match itself. Thus, payment for purpose of broadcast of live feed is in the nature of royalty as per the provisions of Explanation 2 to section 9(1)(vi) of the Income-tax Act, 1961. (c) The applicant has stated that the payments are solely to be taxed as per the provisions of the Income-tax Act, 1961, i.e., as per the provisions of section 115A governing the taxability of royalty. For the reasons given above, the Assessing Officer held that the entire amount of Rs. 4 crores payable by the assessee to NSI was in the nature of royalty and tax at the rate of 10 per cent. was deductible from the said payment. He also noted from clause No. 4.3 of the agreement dated January 21, 2009 that the amount payable by the assessee-company to NSI was net of taxes and the tax liability was to be borne by the assessee-company. He held that the amount payable by the assessee-company to NSI was thus liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... royalty payment, hence, there was no requirement of deduction of tax under section 195." Keeping in view the above decision of his predecessor in the case of Neo Sports Broadcast P. Ltd. [2011] 133 ITD 468 (Mumbai) on a similar issue as well as the definition of the term "royalty" given in the Income-tax Act as well as in article 12(3) of the Indo-Singapore Double Taxation Avoidance Agreement ([1994] 209 ITR (St.) 1), the learned Commissioner of Incometax (Appeals) held that the amount payable by the assessee to NSI as per the agreement dated January 21, 2009 was not in the nature of royalty and the same not being taxable in India, the assessee was not required to deduct tax at source from the said amount. As regards the other issue raised by the assessee in its appeal relating to the business connection of NSI in India, the learned Commissioner of Income-tax (Appeals), however, held that NSI had business connection in India for the following reasons given in paragraph No. 4.3 of his impugned order : "I have carefully gone through the order of the Assessing Officer and also the submissions as made by the authorised representative of the appellant-company. However, I am incline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Broadcast P. Ltd. [2011] 133 ITD 468 (Mumbai) rendered vide order dated November 9, 2011 passed in I. T. A. No. 99/Mum/2009. A copy of the said order is placed on record before us and perusal of the same shows that similar issues have been decided by the Tribunal in favour of the assessee. As regards the nature of payment for live broadcasting of matches, the Tribunal has discussed the issue in the light of the relevant facts in paragraph 13 which reads as under: "Adverting to the facts of the instant case it is noticed that the dispute has arisen on the consideration for live broadcasting of matches, which has been categorised by the DDIT as synonymous with the granting of copyright in such work. The learned Departmental representative has accentuated on the point that the live telecasting itself involves the transfer of copyright. In support of this contention he referred to para 6.4 of the impugned order as per which the assessee itself submitted that for live telecasting, images of the matches have to be captures which are transferred to control room by different cameras. The director then chooses the best image out of those received from different angles to be telecasted s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of copyright so as to fall within the domain of Explanation 2 to section 9(1)(vi). Respectfully following the said decision of the coordinate bench of this Tribunal rendered in the case of Neo Sports Broadcast P. Ltd. [2011] 133 ITD 468 (Mumbai), we uphold the impugned order of the learned Commissioner of Income-tax (Appeals) holding that the amount paid by the assessee for live coverage of cricket matches to NSI is not taxable in the hands of NSI and the assessee was not required to deduct tax at source from the said amount. The appeal of the Revenue is accordingly dismissed. As regards the appeal of the assessee, it is observed that the solitary issue involved therein is also squarely covered by the decision of the Tribunal in the case of Neo Sports Broadcast P. Ltd. [2011] 133 ITD 468 (Mumbai) wherein a similar issue regarding business connection in India has been decided by the Tribunal in favour of the assessee for the following reasons given in paragraph Nos. 26 to 29 : "26. We are unable to approve this point of view of the authorities below for the reason that Nimbus has provided licence for the live broadcast of certain matches to the assessee for a definite cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erritories which provides directly or indirectly to the earning of those profits or gains. A stray or isolated transaction has been held to be not constituting a business connection. In this case the assessee procured orders in taxable territories for non-resident for which he was not duly authorised and contracted for the sale of goods. The orders were accepted by the non-resident. Price was received and delivery was given outside India. No operation such as procuring of material or manufacture of finished goods took place within India. The hon'ble Supreme Court held that there was no business connection of the non-resident. 29. From this judgment it can be easily deduced that what is relevant is the business connection of the non-resident by carrying out some operations in India. Mere sale of goods by a non-resident in India on principal to principal basis does not establish any business connection of non-resident with India. If we presume for a moment without agreeing that contention advanced on behalf of the Revenue in this regard merits acceptance, even then no income will be deemed to accrue or arise to the non-resident in India by reason of application of Explanation 1(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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