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2023 (3) TMI 1241 - AT - Income TaxIncome deemed to accrue or arise in India - invocation of Article 28 of India-Malaysia DTAA - West Indies Cricket Board Inc has confirmed that they intend to contract with the TSA Cayman Island for sponsorship rights to West Indies Men’s National Cricket Team in respect of the ICC Champions Trophy 2013 tournament and ICC T20 World Cup 2014 tournament - HELD THAT:- All the parties including West Indies Cricket Board Inc and the sponsor honoured all the agreements. No evidence contrary to the above has been brought on record. Thus, in our considered view, the aforesaid reason cannot be the basis to invoke Article 28 of the India-Malaysia DTAA. It is also pertinent to note that the AO-TDS in order to invoke the provisions of Article 28 of India-Malaysia DTAA has not placed sole reliance on this anomaly and rather also alleged that Malaysian entity was a mere conduit in the entire transaction. Thus, when TSA Malaysia has been found to be existing much prior to TSA Cayman Island and the assessee, and its revenue and setup have not been disputed by the Revenue, we are of the considered opinion that it would be wrong to allege that TSA Malaysia to be mere conduit and paper company existing merely to avail the benefit of India-Malaysia DTAA. The conclusion could have been different if the entire setup would have been in Cayman Island and the Malaysian entity would have been a mere name lender in this set of transactions with no role to play. However, such being not the facts, therefore, we find no infirmity in the order of the learned CIT(A) in quashing the invocation of Article 28 of India-Malaysia DTAA in the present case. Whether the payment made by the assessee to TSA Malaysia in respect of the advertising package/rights, which includes (a) Logo Rights, (b) Advertising Privileges, (c) Promotion Activities Rights, and (d) Rights to Complimentary Tickets constitutes Royalty for being taxed in India? - Rights of similar nature are involved and the definition of the term “Royalty” in India-Malaysia DTAA is worded similarly to the provisions of India-Canada DTAA, therefore, respectfully following the aforesaid decision of the Hon’ble Delhi High Court, we are of the considered opinion that payment in respect of aforesaid rights does not fall in the category of royalty as defined under Article 12(3) of the India-Malaysia DTAA. Once the taxability fails in terms of the treaty provisions, there is no occasion to refer to the provisions of the Act, as in terms of section 90(2) the provisions of the Act or the DTAA, whichever is more beneficial to the assessee shall be applicable. Since the payment was only alleged to be Royalty by the Revenue, therefore, there is no need to examine its taxability under any other provision of the India-Malaysia DTAA, in the present case. Assessing Officer is directed to delete the addition on account of the advertising package/rights in respect of Sri Lanka Cricket and West Indies Cricket Board Inc.Grounds raised by the Revenue are dismissed.
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