“Live Rights” not “Copyright”, any Payment made not Taxable as Royalty: ITAT [Read Order]

The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that “Live Rights” are not “copyright”, any payments made are not taxable as royalty.

The question before the Tribunal is as to, whether the right to broadcast “Live events” is not “copyright” and payment made there to is “Royalty” under section 9(1)(vi) or not?

The assessee has deducted tax at source under Section 195 of the Income Tax Act, 1961 on the payment remitted in lieu of acquisition of “Non-Live Rights” considering the same to be “Royalty” under Section 9(1)(vi) of the Income Tax Act chargeable to tax in the hands of the non-resident overseas rights holder in India. The assessee has not deducted any tax at source under Section 195 on the payment made for “Live Rights”.

The CIT(A) passed the order under Section 201 of the Income Tax Act by observing that the payment for “Live Rights” is chargeable to tax as “Royalty” in the hands of the non-resident overseas rights holder warranting withholding of tax under Section 195 of the Income Tax Act. Aggrieved, the assessee filed appeal before the Tribunal.

A Two-Member Bench comprising Saktijit Dey, Vice President and Dr. B. R. R. Kumar, Accountant Member observed that “We hold that broadcasting “Live events” does not amount to a work in which copyright subsists, meaning thereby right to broadcast live events i.e ., “Live Rights” , is not “copyright” and therefore any payment made thereto can’t be said to be chargeable to tax as royalty under Section 9(1)(vi).”

“We find that the payments in dispute are made to overseas rights holder. The said payments are neither made to any satellite operators nor for use of any satellite. Thus, the payments in dispute are not made for use of any “process” as defined under Section 9(1)(vi) of the Act and can’t be charged to tax as “Royalty” in the hands of the overseas rights holders. Accordingly, we hold that the AO while passing the order under Section 201 of the Ac t has erred in law by treating the remittances to have been made for use of a “Process”.

To Read the full text of the Order CLICK HERE

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