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2024 (1) TMI 1008 - HC - Income TaxAccrual of income in India - royalty receipt - income as stated to have been earned from sublicensing of broadcasting ‘non live’ content as per the Master Rights Agreement [“MRA”] - as per assessee submission essentially appears to have been that transmission of ‘live feed’ through satellite would not fall within the ambit of Section 9(1)(vi) and the Explanations appended thereto. Insofar as the bifurcation of the royalty earned in the ratio of 95% and 5% was concerned, the respondent referring to the stipulations forming part of the Novation Agreement had contended that the latter alone was liable to be recognised as revenue generated from ‘non live’ feed. Whether income derived from transmission of ‘live feed’ would fall within the ambit of royalty? - As reliance appears to have been placed on the decision rendered by a Division Bench of our Court in Commissioner of Income Tax v. Delhi Race Club [2014 (12) TMI 265 - DELHI HIGH COURT]. The attention of the ITAT was additionally drawn to the decisions rendered by M/s Neo Sports Broadcast Private Limited [2011 (11) TMI 23 - ITAT MUMBAI] and Nimbus Communications Limited [2013 (9) TMI 795 - ITAT MUMBAI] wherein the issue had come to be decided and answered in favour of the assessee. Bifurcation of revenue - We find no merit in the contention of the appellants that the ratio adopted for the purposes of bifurcation of income was either unsubstantiated or arbitrary. Whether service from which income was generated would clearly fall within the ambit of Explanation 2 as placed in Section 9(1)(vi)? - In light of the unequivocal conclusions as expressed by the Division Bench in Delhi Race Club[2014 (12) TMI 265 - DELHI HIGH COURT] and with which we concur, we find that once the Court came to the conclusion that a live telecast would not fall within the ambit of the expression ‘work’, it would be wholly erroneous to hold that the income derived by the assessee in respect of ‘live feed’ would fall within clause (v) of Explanation 2 to S.9(1)(vi) of the Act. As in the facts of the present case, it is admitted to the appellant that the actual transmission of content was undertaken by SIPL and not by the respondent. The Explanation, therefore in our considered opinion does not detract from the correctness of the view as ultimately expressed by the ITAT. ITAT did not commit any error in passing the impugned orders dated 20 March 2020 and 21 February 2023 and that it was completely justified in arriving at the finding that the fees received by the respondents towards live transmission could not be classified as royalty income under Section 9(1)(vi) of the Act. Consequently, no substantial question of law arises in the instant appeals and the appeals stand dismissed on the aforesaid terms.
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