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TMI Blog2018 (4) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-4-2018 - Shri Rajendra, Accountant Member and Ram Lal Negi, Judicial Member Revenue by : Shri Samuel Darse-CIT-DR Assessee by : Shri Dhanesh Bafna ORDER Per Rajendra, AM Challenging the Directions, issued u/s. 144 C(5) of the Act, dated 02/12/ 2015, of the Dispute Resolution Panel(DRP)-I, Mumbai, the Assessing Officer(AO)has filed appeal for the assessment year(AY. )2011-12. The assessee has filed appeal for the AY. 2012-13, against the Directions of the DRP, dtd. 09/12/2016. As the issue in both the years is common, so, these appeals are been adjudicated together. The details of incomes, returned incomes, dates of assessments and assessed incomes for both the years can be summarised as under: AY. ROI filed on Returned income Assessment date Assessed income 2011-12 19/09/2012 ₹ 69, 42, 049/- 31/03/2015 ₹ 30. 56 crores 2012-13 08/03/2013 ₹ 2, 64, 06, 329/- 31/01/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntered 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 matches and also for the purposes of recce/ inspection activities before the commencement of the event IPL 2009 event was initially supposed to be held in India; accordingly couple of personnel of the assessee was present in February/March 2009 for the purpose of recce/ inspection activities before the commencement of matches of IPL 2009. However, the second IPL 2009 event coincided with Indian elections and therefore, the Indian Government refused to commit security by Indian paramilitary forces. As a result, BCCI decided to host the second season of the league outside India. On 24 March 2009, the BCCI officially announced that the second season of the IPL will be held in South Africa. It was also argued by the assessee that since, the cumulative period of stay of the assessee's personnel in India exceeded the threshold limit of 90 days in the 12 month period, beginning from March 22, 2008 to Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e former case, there is no question of making available of any technology/ knowhow and hence the payment given would be in the nature of payment made for production of Program content or live feed and not for supply of technology. 8. The Ld DRP has observed that the agreement entered between the assessee and BCCI prescribes the quality standards in minute details and the same results in total exchange of technical plans and designs between the assessee and the broadcasters. In our view, there is a fallacy in the view taken by Ld DRP. The object of the production of live feed is to offer quality coverage of the live cricket matches to the viewers. The assessee‟s job is restricted to production of live coverage and the job of broadcasting 12 the same is undertaken by the BCCI. The BCCI, in turn, has given license to certain companies (called licensees) and they have undertaken the job of broadcasting the live coverage of cricket matches on behalf of BCCI. Since the assessee is supplying the live coverage in the form of digitalized signals, it has to ensure that the broad casters also do have the compatible technology and equipments so that the live coverage can be broad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before us, the Ld D. R placed reliance on the decision rendered by the Delhi bench of Tribunal in the case of Nimbus Sport International Pte Ltd (2012)(18 taxmann. com 105), wherein the Tribunal had held that the services or production and generation of live television signal were in the nature of technical services. The Ld A. R contended that the Delhi Tribunal did not examine the principle of make available‟. We notice that the case of Nimbus Sport International Pte Ltd is covered by India- Singapore DTAA and it also uses the expression make available in the definition of Fee for technical services . In the case of Nimbus sports International (supra), the principle or concept of make available‟ has not been examined by the Tribunal. Accordingly, we agree with the contentions of the assessee that the said decision is distinguishable. 11. Since the amount received by the assessee is held to be not in the nature of Fee for technical services as per the definition of Article 13(4)(c) of the India-UK DTAA, in our view, there is no necessity to examine about its taxability u/s 9(1)(vii) of the Income tax Act, 1963. 12. The AO/Ld DRP have also expressed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for rendering these services. This is also because of the fact the assessee has been given this contract every year as it has a unique process for producing the live feed of matches. In this type of events the most important part that leads to generation of revenue for BCCI from IPL event is the seamless/uninterrupted production and broadcasting of the complete match. During such production process, a new work is created within a split of few macro seconds and the existing for keeps on merging with the new work being created. The activity which leads generation of revenue is the complete work being taken into consideration and therefore it would be incorrect to state that the payments received by assessee is for the live work and not for any work being in existence. Also, the production work being undertaken by the assessee is specialised in nature and the final signals being delivered by the assessee tantamount to use of process by the BCCI/its broadcasters. This is also evidenced with various clauses of the agreements. The relevant clauses are reproduced as under: xxxx 5. 5. 2 In view of the above discussions, it is held that the payments would be taxable as Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terary, artistic or scientific work, including cinematography films or work on films, tape or other means of reproduction 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 iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that the 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. 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. Respectfully, following the above order, we decide the effective ground of appeal against the AO, as the facts for the year under consideration are identical to the facts of AY. 2010-11. ITA/2123/Mum/2017/AY. 2012-13: 4. As stated earlier, the DRP, for the year under appeal did not follow the order for the earlier year and held that the revenue earned by the assessee for live coverage of event was tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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