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2020 (3) TMI 1428 - AT - Income TaxRoyalty receipt - assessee- company had received gross consideration under MRA on account of sub-licensing of sport broadcast right of ‘live’ and ‘non-live’ feed to SIPL - 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 - 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 - whether the payment received for the grant of live broadcast rights are taxable in India, i.e., whether it falls under the definition of ‘royalty’ in terms of Section 9(1)(vi) and also as per Article 12 of India-Singapore Treaty? - HELD THAT:- 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 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 the issue in favour of the assessee, wherein it has been categorically held that there is a clear distinction between a copyright and a broadcasting right, broadcast or live coverage which does not have a copyright, and therefore, payment for live telecast is neither payment for transfer of any copyright nor any scientific work so as to fall under the ambit of royalty under Explanation 2 to Section 9(1)(vi). Reference of phrase ‘process’ in Explanation 6, the same will not be applicable in the case of the assessee, because admittedly it is SIPL which is doing the transmission and makes the payment to Asia Satellite and it is not a case of transfer of process. On similar set of issues on live broadcast of sporting and cricket events, ITAT Mumbai Bench in the case of Neo Sports Broadcast Pvt. Ltd. [2011 (11) TMI 23 - ITAT MUMBAI] and Nimbus Communication Ltd. [2013 (9) TMI 795 - ITAT MUMBAI] have held that there is no copyright on live events, and therefore, it is not taxable as ‘royalty’. Thus, we hold that the fee received towards live transmission cannot be taxed as ‘royalty’ in terms of Section 9(1)(vi) as held by the Hon’ble Jurisdictional High Court and also by the Co-ordinate Bench of ITAT. Accordingly, we decide this issue in favour of the assessee.
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