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TMI Blog2024 (1) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... ts decision dated 21 February 2023 essentially followed the view taken while considering the appeal pertaining to AY 2015-2016 and which forms the subject matter of its judgment dated 20 March 2020, we propose to notice the relevant facts as disclosed in ITA No. 812/2023. 2. From the recordal of facts as appearing in the order drawn by the ITAT, it would transpire that the respondent assessee entered into a tripartite agreement titled as the "Novation Agreement" dated 31 December 2014 with ESS Singapore ["ESS"] and Star India Private Limited ["SIPL"] by way of which various existing agreements including agreements regulating the distribution of channels, advertisement sales, license agreements and other aspects governing the contractual arrangement between SIPL and ESS came to be novated. 3. For the purposes of AY 2015-16, the respondent assessee had in its return of income offered an amount of Rs. 65,44,67,199/- as royalty income subject to tax in terms of the provisions contained in Section 9(1)(vi) of the Income Tax Act, 1961 ["Act"]. The aforesaid royalty income was stated to have been earned from sublicensing of broadcasting 'non live' content as per the Master Rights Agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby acknowledged and agree that value commercial right fee is attributable 95% to live transmissions and 5% to non-live transmissions. This specific clause is permeating in all the agreements between the parties that, 95% of the license fee/commercial right fee is via live transmission and only 5% is for non live transmission. Thus, if the parties to the agreement have clearly stated and agreed that there are two streams of fees, one from live transmission and other from non-live and even payments have been made separately under these distinctive heads, then to hold that both constitutes one and the same thing will not be correct specifically when the core issue involved in this appeal is, whether the fees from live transmission constitute copyright so as to fall within the ambit of 'royalty' or and whether it is taxable." 6. In view of the findings as expressed above, 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. 7. Before us, both Mr. Bhatia as well as Mr. Rai have assailed the view taken by the ITAT contending that the service from which income was genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he live coverage does not have a 'copyright'. The aforesaid would meet the submission of Mr. Sawhney that the word 'Copyright' would encompass all categories of work including musical, dramatic, etc. and also his submission that the Copyright Act acknowledges the broadcast right as a right similar to 'copyright'. In view of the conclusion of this Court in ESPN Star Sports case (supra), such a submission need to be rejected. In this regard we also quote for benefit the judgment of this Court in the case of Akuate Internet Services (P) Ltd. v. Star India (P) Ltd. (supra) as relied upon by learned counsel for the respondent assessee wherein a Division Bench of this Court has applied the test of 'minimum requirement of creativity' for claiming a right under the Copyright Act, which is absent in a 'live telecast of an event'. We note for benefit that the United States Court of Appeal Second Circuit Ruling in National Basket Ball Association & NBA Properties NIC v. Motorola Inc, 105 F.3d. 841 (1997) held that a sports event is a performance and not a work. It is not copyrightable. 18. Insofar as the submission of Mr. Sawhney that the live telecast of an event is the outcome of ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned, again neither such a case was set up before the authorities, nor in this appeal. In fact it is not known nor pleaded that the live telecast, in this case, was accompanied by commentary, analysis etc. It is an issue of fact, which cannot be gone into or raised at this stage. In view of our discussion above, we are of the view that no question of law arises in the present appeals. We dismiss the appeals filed by the appellant-Revenue." 10. In light of the unequivocal conclusions as expressed by the Division Bench in Delhi Race Club 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. 11. Notwithstanding the above, Mr. Rai, learned counsel appearing for the appellant, additionally sought to place the respondent's income in clause (i) of Explanation 2 to Section 9(1)(vi) of the Act and sought to contend that the word 'process' as occurring therein would make revenue earned from 'live feed' taxable. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are similarly worded be interpreted similarly in order to avoid incongruity between the two. This is, of course, unless law mandates that they be treated differently. The Finance Act of 2012 has now, as observed earlier, introduced Explanations 4, 5, and 6 to the section 9(1)(vi). The question is therefore, whether in an attempt to interpret the two definitions uniformly, i.e. the domestic definition and the treaty definition, the amendments will have to be read into the treaty as well. In essence, will the interpretation given to the double taxation avoidance agreement fluctuate with successive Finance Act amendments, whether retrospective or prospective? The Revenue argues that it must, while the assessees argue to the contrary. This court is inclined to uphold the contention of the latter. 41. This court is of the view that no amendment to the Act, whether retrospective or prospective can be read in a manner so as to extend in operation to the terms of an international treaty. In other words, a clarificatory or declaratory amendment, much less one which may seek to overcome an unwelcome judicial interpretation of law, cannot be allowed to have the same retroactive effect on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of circumstances. First, where there exists no definition of a word in issue within the double taxation avoidance agreements itself, regard is to be had to the laws in force in the jurisdiction of the State called upon to interpret the word. The Bombay High Court seems to accept the ambulatory approach in such a situation, thus allowing for successive amendments into the realm of "laws in force". We express no opinion in this regard since it is not in issue before this court. This court's finding is in the context of the second situation, where there does exist a definition of a term within the double taxation avoidance agreements. When that is the case, there is no need to refer to the laws in force in the Contracting States, especially to deduce the meaning of the definition under the double taxation avoidance agreements and the ultimate taxability of the income under the agreement. That is not to say that the court may be inconsistent in its interpretation of similar definitions. What that does imply however, is that just because there is a domestic definition similar to the one under the double taxation avoidance agreement, amendments to the domestic law, in an attempt to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Trib) 522 (Delhi) pointing out that even software bought off the shelf, does not constitute a 'copyrighted article' as sought to be made out by the Special Bench of the Income-tax Appellate Tribunal in the present case. However, the above argument misses the vital point namely the assessee has opted to be governed by the treaty and the language of the said treaty differs from the amended section 9 of the Act. It is categorically held in CIT v. Siemens Aktiongesellschaft (2009) 310 ITR 320 (Bom) that the amendments cannot be read into the treaty. On the wording of the treaty, we have already held in Ericsson A. B. (2012) 343 ITR 470 (Delhi) that a copyrighted article does not fall within the purview of royalty. Therefore, we decide question of law Nos. 1 and 2 in favour of the assessee and against the Revenue." 52. Thus, an interpretive exercise by Parliament cannot be taken so far as to control the meaning of a word expressly defined in a treaty. Parliament, supreme as it may be, is not equipped, with the power to amend a treaty. It is certainly true that law laid down by Parliament in our domestic context, even if it were in violation of treaty principles, is to be giv ..... 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