TMI Blog2020 (3) TMI 1428X X X X Extracts X X X X X X X X Extracts X X X X ..... cquired is purely in respect of live feeds (in so far as 95% of the consideration of the receipt is concerned). Further, live feed is ephemeral in nature that it does not have any lasting time as it is not a film which can constitute a work in which a copyright can be given. A live feed cannot constitute a work in which copyright can subsist. There cannot be copyright on broadcast covering live events of sports. Here the 95% fee is for live transmission which is ephemeral and not for any recording of any event, visual or sound. Live broadcasting of sporting events does not emanate from any pre-recording of images or sound, so there cannot be any work which comes into existence in a live feed or event and hence no right to use can be transferred. Recording for re-telecast or replays is not part of this live transmission fees nor any such event of commentary, etc., as assessee has not granted any such licence to conduct such activity, atleast nothing is borne out that live transmission fees consist of such activity also. So such an argument of the revenue cannot be accepted. As decided in the case of CIT vs. Delhi Race Club [ 2014 (12) TMI 265 - DELHI HIGH COURT] clinches t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o live transmissions of sporting events amounting to Rs 11,15,91,18,375 as Royalty under the Act as well as under the India-Singapore Tax Treaty; Ground number 3 the learned AO erred in holding that receipts from sub-licensing of Designated Rights pertaining to live transmissions of sporting event involves transfer of rights in respect of a Process as per Explanation 6 to Section 9(l)(vi) of the Act as well as under Article 12 of India-Singapore Tax Treaty; Ground number 4 the learned AO erred in holding that a unilateral amendment of the term process under the Act would get imported into the definition of royalty given under Article 12 of India-Singapore tax treaty; Ground number 5 the learned AO erred in holding that Designated Rights sub-licensed by the Appellant is a bouquet of rights and does not comprise of broadcasting rights alone without appreciating the fact that the Designated Rights sub-licensed by the Appellant under the Master Right Agreement ( MRA ) are, in substance, the broadcasting rights in relation to Live sporting events and broadcasting and other rights in relation to non-live sporting events; Ground Number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was asked to provide complete details of receipt from sub-licensing of broadcasting right to SIPL under the Master Rights Agreement (MRA). From the details provided by the assessee, the Assessing Officer observed that assessee had received license fee during the year at Rs.11,81,35,85,574/- from SIPL under the MRA. The Assessing Officer inquired the assessee as to why out of total license fee, only Rs. 65,44,67,199/- has been offered to tax as royalty . In response, the assessee submitted that it has received gross consideration amounting to Rs.1181.63 crore on account of sub-licensing of sports broadcasting rights in relation to Live as well as Non Live Feeds from SIPL for the period between 1st January, 2015 to 31st March, 2015. It was further submitted that, only income arising from sub-licensing of Non Live feeds is taxable as royalty under the provisions of the Act as well as under Article 12 of the India-Singapore DTAA. With respect to the remaining amount of Rs.1115.91 crore, it was in relation to Live feeds for which the assessee s explanation was that the consideration received on account of Live feeds is not liable for tax in India, because it neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights are also not covered under the scope of copyright as provided in the Copyright Act. 1957: 3. Live transmission rights are not covered under the definition of royalty as per the India Singapore DTAA also; and 4. There are judicial decisions such as in the case of Delhi Race Club (ITA Nos. 6 241 of 2014, Del. HC) and Neo Sports broadcast Pvt. Ltd. 133 ITD 468 (ITAT, Mumbai). 5. The proposed Direct Tax Code in its definition of royalty had expressly covered 'Live coverage of any event' within the definition of royalty, therefore, it is presumed that the definition in the existing Act excludes live transmission. 4. The Assessing Officer did not agree with the contentions raised by the assessee and observed that, in terms of Master Rights Agreement under which the said license fees have been received, through MRA there are integrated bundle of rights licensed by third party including, several national and international governing bodies for various sporting events. He has quoted the following clauses from the said agreement. Pursuant to the contracts executed by ESS with third parties including, without limitation, several national and international gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts Contracts; Archive Rights means ESS' right, pursuant to the relevant Designated Rights Contracts, to exploit in the Designated Territory certain Media Rights with respect to archival content relating to Sporting Events that occurred before the Effective Date and those which will occur on or after the Effective Date 5.3 The term Media Rights used in the definition of Sports Media Rights and Cricket Hockey Media Rights is defined as below in the MRA. Media Rights shall mean any or all of the following rights of exploitation with respect to Sporting Events,: Including but not limited to, broadcasting rights (whether terrestrial, cable, satellite, DSL, broadband, Internet, wireless or wireline, or any other technology which may be known now or may come into existence in the future), theatrical and public screening rights, home video rights, exhibition rights, reproduction rights, interactive gaming rights, licensing and sublicensing rights, syndication rights, sponsorship rights, right to sell advertisement time, distribution rights, publishing rights, promotional and merchandising rights, right to attend venues, and other subsidiary, incidental and ancil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty. 8. The Ld. DRP has by and large has endorsed the view taken by the Assessing Officer and in so far as assessee s contention and strong objection that the agreement itself provided that 95% of the payment would be for live events, and therefore, any fee for live events will not constitute royalty, the DRP observed that when assessee had received the fees/money for live and repeat telecast, is nothing but part of bundle of license given for sports events, therefore, entire right has to be seen as they are arising in a similar manner from similar set of users in India, and therefore, to be taxed in the similar manner, that is, both live and non-live has to be seen in same way. The assessee cannot bifurcate the whole bundle of rights into live or non live transmissions. 9. Before us, ld. Senior Counsel, Mr. Porus Kaka after explaining the entire facts and background of the case submitted that, one very important fact permeating from the records which has to be borne in mind here in this case is that the assessee has not done any transmission albeit it is Star India Pvt. Ltd. doing the transmission and broadcasting. Thereafter, he drew our attention to various agreements with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y relied upon the direction and observation of the DRP and the order of the Assessing Officer. Apart from that after referring to Section 13 and Section 14 of the Copyright Act, he submitted that as per this definition in case of cinematograph film, right to communicate to the public, constitutes a copyright if the appellant receives any consideration for exploiting this right, i.e., for communicating the cinematograph film to the public, the same shall be the use of the copyright and the consideration received for this shall be taxed as royalty as per the Income Tax Act as defined in Section 9(l)(vi), Explanation 2 (v) and Article 12(3) of the DTAA. 11. He further referred to definition of Cinematograph film as been defined in section 2(f) of the Copyright Act, which reads as under: 2(f) cinematograph film means any work of visual recording on any medium produced through a process from which a moving image may be produced by any means and includes a sound recording accompanying such visual recording and cinematograph shall be construed as including any work produced by any process analogous to cinematography including video films; 11. He submitted that, the term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understood with the example of a cinematograph film which has its own copyright even though the constituent works like music, story, script etc have their own copyrights. Similarly in the appellant's case, in the case of a live telecast, the broadcast by the appellant consists of not only the feed obtained from the event manager but also the replays of views taken from different angles, comments of the experts hired by the appellant, advertisements inserted in the telecast at regular intervals, editing etc. This value addition constitutes 'work' as per Copyright Act. Thus, final product (work) gets ready for telecast and it is in the nature of a cinematograph film which is composed of several components each of which enjoys copyright but final product which is telecasted by the appellant has its own copyright. Thus the appellant's broadcast of all live events or repeat telecasts is a cinematograph film in which it has a copyright. Communication to the public of the cinematograph film through appellant and cable operators means use of the copyright. It is only because the appellant grants rights and then the ultimate viewers in India get to view the appellant' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival submissions, perused the relevant findings given in the impugned orders as well as material referred to before us. The assessee- company had received gross consideration amounting to Rs.1181.36 under MRA on account of sub-licensing of sport broadcast right of live and non-live feed to SIPL. It is not in dispute that income arising from sub-licensing of non-live feed has been offered to tax in India as royalty ; and it is only with regard to the consideration received in relation to live feeds, the assessee s contention is that it does not constitute royalty either under the Income Tax Act or under the India-Singapore Treaty. The entire case of the Revenue hinges upon the reason that, the agreement consists of integrated bundle of rights licensed by the third parties like various international governing bodies for various sports events and there cannot be any distinction between the live transmission rights and non live transmission rights and there is no distinction as such in the agreement as part of designated right. 15. We have perused the various agreements placed in the paper book with various sporting and governing bodies of sports and in all the agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films ; or (vi) the rendering of any services in connection with the activities referred to in sub-clauses (i) to (iv), (iva) and (v). 17. Since, the Ld. DRP has observed that assessee s case is also covered by Explanation 6 as the receipt are for the transfer of all or any rights given to SIPL by the assessee and also the phrase process is defined in Explanation 6, which reads as under: Explanation 6.-For the removal of doubts, it is hereby clarified that the expression process includes and shall be deemed to have always included transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret;] 18. Any payment falling within the scope of royalty , there has to be some kind of transfer of right as defined in Explanation 2. It is not a case where any patent, invention, model, design, secre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) The copyright in a cinematograph film or a sound recording shall not affect the separate copyright in any work in respect of which or a substantial part of which, the film, or, as the case may be, the sound recording is made. (5) In the case of work of architecture, copyright shall subsist only in the artistic character and design and shall not extend to processes or methods of construction. 14. Meaning of Copyright.- For the purposes of this Act, copyright means the exclusive right subject to the provisions of this Act, to do or authorise the doing of any of the following acts in respect of a work or any substantial part thereof, namely:- (a) in the case of a literary, dramatic or musical work, not being a computer programme,- (i) to reproduce the work in any material form including the storing of it in any medium by electronic means; (ii) to issue copies of the work to the public not being copies already in circulation; (iii) to perform the work in public, or communicate it to the public; (iv) to make any cinematograph film or sound recording in respect of the work; (v) to make any translation of the work; (vi) to make any adaptation of the work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork would enjoy copyright protection. Here, in this case, the right has been granted by the assessee to SIPL which is mere a transfer of live feed through satellite, the entire transmission otherwise is done by SIPL. There is neither a recording by way of cinematography nor by way of sound recording is involved in live broadcast. Further, there is no artistic work which is being created when the events are captured on cameras for the live transmission, because the right granted by the assessee is only to broadcast the event. Further, no film or tape/CDs/ or any right therein has been given by the assessee to SIPL for live broadcast or events. The nature of right acquired is purely in respect of live feeds (in so far as 95% of the consideration of the receipt is concerned). Further, live feed is ephemeral in nature that it does not have any lasting time as it is not a film which can constitute a work in which a copyright can be given. A live feed cannot constitute a work in which copyright can subsist. There cannot be copyright on broadcast covering live events of sports. Here the 95% fee is for live transmission which is ephemeral and not for any recording of any event, visual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent assessee to other clubs/centres on account of live telecast of races. The payment of 'royalty' is covered under section 194J which was inserted with effect from 13-7-2006. The said section, contemplates that in the eventuality a payment is made towards 'royalty', an amount equal to 10 per cent of such sum needs to be deducted as income- tax on income comprised therein. Explanation (ba) to the section stipulates 'royalty' shall have the same meaning as in Explanation 2 to clause (vi) of subsection (1) of section 9. [Para 7] ■ A perusal of clause (v) would reveal that consideration for transfer of all or any rights in respect of any 'copyright' and the word 'copyright' is followed by the words 'literary', 'artistic' or 'scientific work'. It also exists in other works like dramatic, musical etc. It is not in dispute that 'copyright' exists in literary and artistic work. It also exists in other works like dramatic, musical etc. If the intention of the legislature was to include other works like dramatic, musical etc. the legislature would have said so or would , not have qualified the word 'copyrig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l images to the public and would fall within the definition of the word 'broadcast' in section 2(dd). That apart it was noted that section 13 does not contemplate broadcast as a work in which 'copyright' subsists as the said section contemplates 'copyright' to subsist in literary, dramatic, musical and artistic work, cinematograph films and sound recording. Similar is the provision of section 14 of the Copyright Act which stipulates the exclusive right to do certain acts. A reading of section 14 would reveal that 'copyright' means exclusive right to reproduce, issue copies, translate, adapt etc. of a work which is already existing. [Para 16] ■ Adverting to the facts of the instant case, it was noted that the assessee was engaged in the business of : inducting horse races and derived income from betting, commission, entry fee etc. and had made payment to other centres whose races were displayed in Delhi. It is not known whether such races had my commentary or analysis of the event simultaneously. It is not the case of the revenue that the live broadcast recorded for rebroadcast purposes. Having held that the broadcast/live telecast is not a w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen whether consideration for transfer of all or any rights of 'scientific work' including films or video tapes would include a live telecast. The clause is an inclusive provision for films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting. It was noted that such a case was not set up by the revenue before the authorities below. It was held by the Assessing Officer that when any person pays any amount for getting rights/licence to telecast any event (which is a copyright of particular person i.e. no one can copy it for direct telecast or deferred telecast) then amount so paid is to be treated as 'royalty' and very much covered under section 9(l)(vi). In other words, the ground of the revenue was limited to the aspect of copyright. That apart we find, no such ground has been taken by the revenue even in this appeal. The 'scientific work' has not been defined in the Act nor in the Copyright Act. It is not necessary that because the live telecast of an event is being done at a distant place, the same would be a 'scientific work'. Even otherwise, even by stretching this meaning, it is difficult t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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