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TMI Blog2020 (2) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 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 fails and hence the amount received by the assessee cannot be considered as Fee for technical services in terms of Article 13(4)(c) of the DTAA entered between India and UK. DRP observation that the live coverage of cricket matches involve i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the Act and the DTAA. 3.4. On the facts and in the circumstances of the case in law. The Ld. DRP / Ld. AO erred in alleging that the appellant received consideration for allowing it to use copyright in its scientific work, being the feed, which would qualify as Royalty both under the provisions of the Act and the India- UK DTAA. 4. A plain reading of the order passed by the Dispute Resolution Panel shows that the issue in appeal is squarely covered by a decision of the coordinate bench, in assessee s own case for the assessment year 2010-11, in favour of the assessee. The only reason, on account of which the DRP has declined relief to the assessee, is to keep the matter alive for the SLP, if any, before the Hon ble Supreme Court. This aspect of the matter is evident from the following observations made in the DRP s impugned order:- 5.27 During the course of the proceedings before DRP, it has been brought to the knowledge of the DRP that in the case of the assessee company, the Bombay High Court has refused to admit the appeal of the Department against the order of the ITAT for AY 2010-11 with respect to the issue of Royalty holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et matches. The equipments required for the said purpose may be brought by the assessee itself or it may be provided by the BCCI. Under commercial terms, if the assessee was required to bring the equipments, then the consideration payable for the production of live coverage of cricket matches should go up. Thus, in our view, it was a simple case of commercial agreement entered between the parties with regard to the modalities to be followed and the same is not a determinative factor to decide about the nature of payment received by the assessee. 14. The Ld D.R.P. has further observed that the assessee has developed commercial and scientific experience in the field of commercial and scientific experience. The term royalty is defined as under in the IndiaUK DTAA:- 3. For the purposes of this Article, the term royalties means: (a) Payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dcast or the live coverage does not have a copyright . The aforesaid would meet the submission of Mr. Sawney that the word Copyright would encompass all categories of work including musical, dramatic, etc. and also his submission that the Copyright acknowledges the broadcast right as a right as a right similar to copyright . In view of the conclusion of this Court in ESPN Star Sports case (supra), such a submission needs to be rejected. Though the above said decision was rendered in the context of provisions of sec. 194J of the Act, yet section imports the definition of the term royalty from Explanation 2 to sec. 9(1)(vi) of the Act. Under the definition given in the above said provision also royalty means consideration for the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property. 15. In the instant case, we have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue. 6 Having heard the learned Counsel for the parties on this issue and having perused the documents on record, the Tribunal referred to royalty as defined under IndiaUK Double Taxation Avoidance Agreement (DTAA) and held that the payment received by the Assessee, cannot be termed as 'royalty'. This definition reads as under:- (a) Payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, 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. 7 The Tribunal interpreted this definition to hold that to include in the expression royalty, the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of programmes and falls under the definition of work provided under Explanation (iv) to Section 194C of the Act and hence the same would not qualify as service ' and consequently will not be taxable as 1(TS under Section 9(i)(vii) of the Act. 4.4. In the facts and in circumstances of the case and in law, the Ld. DRP/ Ld. AO has grossly erred in concluding that the services rendered by the appellant do not make available any technical knowledge, experience, skill, know-how etc. and in doing so, has clearly ignored the true nature of activities carried out by the appellant. 10. This issue, as learned representatives, fairly agree, is also covered, in favour of the assessee, by a co-ordinate bench decision (Supra) in assessee s own case for the assessment year 2010-11, wherein the co-ordinate bench was, inter alia, observed as follows:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure that the program content is broadcast at the same quality in which it was produced. The same was sought to be achieved by synchronizing the quality of technical equipments between the assessee and the broadcasters (licensees). Such kind of synchronization of technology would ensure seamless function and complete coordination 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 bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her view of the matter than the view taken by the co-ordinate benches. Respectfully following the co-ordinate benches, we uphold the grievances of the assessee. The assessee succeeds as this issue as well. 14. In ground no 5, the assessee has raised the following grievances:- 5. On the facts and circumstances of the case in the alternative 5.1. The Ld. DRP/ Ld. AO grossly erred in making ad-hoc attribution of total profit of appellant between PE and head office in ratio of 75:25 ignoring the transfer pricing methodology followed by the appellant after due FAR analysis. 5.2. The Ld. DRP/ AO has grossly erred in attributing the additional profit of INR 6,76,308 to the appellant's PK without appreciating the fact that the appellant has followed the same transfer pricing methodology for attributing the income to its PE in the relevant year as followed in earlier years, which was duly accepted by the TPO/Ld. AO in earlier years. 15. Learned representatives fairly agree that the issue may be remitted to the file of the Assessing Officer, as was done, in the same issue, by the co-ordinate bench, vide order dated 12.06.2019, for the assessment year 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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