9911796707
TMI Blog2015 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... a copy of tax residency certificate also before the AO in support of the same. The assessee is a world leader in the field of multimedia coverage of sports events including cricket. The BCCI engaged the assessee for capturing and delivering live audio and visual coverage of cricket matches conducted under the brand name IPL, 2008 and also IPL, 2009. The taxability of the amount received by the assessee from BCCI is the issue urged before us. The facts relating to the case are described as under by Ld CIT(A):- "3. It has further been submitted by the assessee that the assessee and the Board of Control for Cricket in India ('BCCI") had entered into an agreement for capturing and delivering of the live audio and visual coverage of the first Indian Premier League "IPL" 2008 event which was conducted in India during April 18, 2008 - June 01, 2008. Thereafter, the assessee also entered into another agreement dated April 15, 2009 with BCCI for the live audio and visual coverage of the matches for the second IPL 2009 event. The assessee further submitted that for IPL 2008 event, few personnel of the assessee had visited India for the live coverage of the matc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee from BCCI. The relevant discussions made by Ld DRP in order to hold that the amount received by the assessee is in the nature of "Fee for technical services" are extracted below:- "5.4.1 For clarity sake, Article 13(4)(c) of the DTAA is reproduced as under: "4. For the purpose of paragraph 2 of this Article, and subject to paragraph 5 of the Article, the terms "Fees for technical services" means payments of any kind of any person in consideration for rendering of any technical or consultancy services (including the provision of services of technical or other personnel) which : a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for ' which a payment described in paragraph 3(a) of this article is received: or b) Are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received; or c) Make available technical knowledge, experience, skill know how or processes or consist of the development and transfer of a technical plan or technical design" Thus the assessee is claiming that his case is covered by the "make available" clause of FTS and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol room or equivalent facility of the Match venues" SCHEDULE-3 1. IMG shall make available the feed to the Licensees at the production control room or equivalent facility of the venue of the relevant Match at no cost to the Licensees. 1. IMG shall liaise with the Licensees prior to the Event and on a daily basis during the Event as required, including providing personnel (including a Production Manager) for daily meetings with the Licensees as required. 3. The Licensees will, subject to space and the facilities at the relevant venue and subject to Licensee giving IMG and/or BCCI reasonable notice, have a right to request on-site facilities, and subject IMG shall coordinate and administer all such requests, rate card for all such additional facilities and production services as required." (Schedule 2 is not being produced for the sake of brevity as some part has been quoted by the AO in his order.) 5.4.3 We find from a plain reading the agreement that the assessee is a world leader in the field of multimedia coverage of sports events, including cricket. The brief facts of the case as explained by the assessee are that BCCI has engaged IMG Media to capture the live audio and vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the services i.e. final live audio and video coverage is converted into a digitalized signal and the same is given to BCCI for the purpose of telecasting and broadcasting. The services rendered by the assessee is to deliver programmed content i.e. the mix of live audio and video coverage which can be used freely in any manner whatsoever for its purposes. The production agreement for IPL has been perused, specifically, the services to be provide by IMG. The Chief engagement of IMG is for production and provisions of improved contents to the "Licensees" i.e. broadcasters, in this case, viz MSM Satellie Singapore Pte Ltd, world sport group (M) Ltd and Live Current Media matches and Production liaisoning and administration of arrangements with the licensees for the event as set out in schedule 3 (Services). These are parties in agreement with BCCI for Broadcasting. Further, a look at schedule 2 of the said agreement shows the minimum feed technical specification and requirements. There are exhaustive lists of quality of specification of video signal, which shall, at the least, match the international broadcasting standards. The details and the finer aspects of capture of video signal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & IPL-2009 cricket Matches conducted by BCCI. According to the agreement, the assessee shall produce the feed and deliver the same to the broadcasters, who are called licensees. Thus, it is noticed that the job of the assessee shall come to an end, once the feed is produced and delivered to the licensed broadcasters in the form of digitalized signals. As per the agreement, the BCCI shall supply the equipments like cameras, microphones etc. of the required quality to the assessee. 5. The question that arises is as to whether such kind of production of feeds would result in provision of technical services by the assessee to BCCI in terms of Indo-UK DTAA?. Article 13(4)(c) of the DTAA defines the terms "Fee for technical services" and for the sake of convenience, the same is extracted below: "4. For the purpose of paragraph 2 of this Article, and subject to paragraph 5 of the Article, the terms "Fees for technical services" means payments of any kind of any person in consideration for rendering of any technical or consultancy services (including the provision of services of technical or other personnel) which : a) are ancillary and subsidiary to the application or enjoyment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S protocol should also be applied in respect of India-UK treaty also. Before us, the revenue could not submit any other decision or material to oppose the above said plea of the assessee. Since the India-UK DTAA and also India-US DTAA uses the same expression, i.e., "make available" in the context of "Fee for technical services", we are of the view that the principle or concept of „make available‟ explained in the context of India-US DTAA can be imported to understand the provisions of Article 13(4)(c) of the India-UK DTAA also. 7. Now we shall examine the question on the basis of discussions made in the earlier paragraphs. We notice that the assessee produces the feed (program content) of live coverage of audio-video visuals of the cricket matches by using its technical expertise. After that it delivers the feed (program content) in the form of digitalized signals to the licensees (broadcasters). There should not be any dispute that the licensees (broadcasters) receive the feed on behalf of the BCCI. We notice that what is delivered by the assessee is a "final product in the form of program content" produced by it by using its technical expertise, i.e., the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oordination between the assessee and the broadcasters. Thus, there is a difference between the technology involved in the production of live coverage feed of cricket matches and the technology required to broadcast the same in the required quality. Hence, in order to ensure and maintain quality of live coverage feed, it becomes necessary on the part of the assessee to specify or oversee the technology available with the broadcasters so that the same does not compromise on the quality and compatibility. The specification of the technical requirements does not mean that the assessee has supplied the technology involved in the production of live coverage feed to the broad casters. If that be the case, the broadcasters should be in a position to use the technology in order to produce the live feed on their own. We notice that the revenue has not established that the broadcasters (who are acting on behalf of the BCCI) or the BCCI itself has acquired the technical expertise from the assessee which would enable them to produce the live coverage feeds on their own after the conclusion of IPL 2008 and IPL 2009 cricket matches. In that case the essential condition of "make available" clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is work, the assessee is required to bring in equipments for capturing the live feed. The same has been given in clause 1.3 of the agreement which is reproduced as under: "1.3 IMG shall be responsible for ensuring that equipment that it introduces into the Match venues complies with international standards of health and safety, it being acknowledged and agreed that IMG shall not be responsible for the compliance of the Match venues and their infrastructure with such international standards of health and safety" This makes it clear that the assessee is required to bring and use some equipment for recording live audio-visual feed of the matches. In schedule 2 of the said agreement as well, various minimum camera and equipment specification has been given. The same is also reproduced as under- (iii) Minimum camera and equipment specification (1) The feed shall be produced using 29HD cameras (of which 14 will be manned) HD, VT & graphics equipment along with Cricket Sound package. All of this equipment will be supplied by Zoom (please note section (d)(ii) below)". Likewise, in Schedule 4 to this agreement, the details of production budget have been specified. In this budget also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing a unique product and that‟s why they are demonstrating before the world that it is created by the assessee company. Hence, in a way the assessee is claiming copyright in at least producing this feed. Clause 14 is also relevant which is also being reproduced as under- Clause 14 Assignment This Agreement may not be assigned by either party without the express written consent of the other, however IMG shall be, entitled to perform its obligations hereunder through any of its associated companies within the International Group of Companies.:" As per this clause, the assessee cannot assign this work to any other party except its Associated Enterprises. This clearly shows that BCCI has given this work only to the assessee company and does not want it to assign this work to anybody else as it has got a unique process of producing the live feed. This also establishes that it has developed commercial and scientific experience in this field which is being used for proving these services. 5.5.2 In view of the above discussions, it is held that the payments would be taxable as "Royalty" both under the provisions of Section 9(i)(vi) of the Act and Article 13 of the DTAA. The j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; and (b) Payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic." A careful perusal of the definition of „royalties" extracted above, would show that the payment, in order to constitute royalty, should have been made "for the use of, or the right to use any copyright etc". In the instant case, we have noticed that the payment was made by BCCI to the assessee for producing the program content consisting of live coverage of cricket matches. Further, we have noticed that there is nothing on record to show that the assessee had retained the ownership of the program content. The Hon‟ble Delhi High Court had an occasion to examine an identical issue in the case of CIT Vs. Delhi Race Club (2015)(273 CTR 503) in the context of the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BCCI becomes the owner of the program content produced by the assessee. The job of the assessee ends upon the production of the program content and the broadcasting is carried out by some other entity to which license was given by the BCCI. Hence, in our view, the question of transfer of all or any right does not arise in the facts and circumstances of the instant case. Hence, we are of the view that the payment received by the assessee cannot be considered as „royalty‟ in terms of the India-UK DTAA. Though, it is not necessary to examine about the applicability of provisions of sec. sec. 9(1)(vi) of the Act, yet the facts discussed above would show that the payment received by the assessee cannot fall within the purview of sec. 9(1)(vi) of the Act also. 16. The foregoing discussions dispose the Ground no.4 and 5 of the Grounds of Appeal. The ground no.1 and 2 are general in nature. The Ground no.3 relates to the question of existence of "permanent establishment" and the Ground no.6 relates to the taxability of „reimbursement of expenses‟. Both these grounds were not considered by the Ld DRP/AO, since they proceeded to assess the receipts as "fee for techni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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