Facts of the Case

The Revenue filed an appeal under Section 260A of the Income-tax Act, 1961 challenging orders of the Income Tax Appellate Tribunal dated 20.03.2020 and 21.02.2023, which held that fees received by Sri Lanka Cricket for granting rights limited to live telecast/live feed of cricket matches could not be classified as royalty under Section 9(1)(vi) of the Act.

The payments were made for live transmission of cricket matches in a series within a defined period, without any right to record, preserve, rebroadcast or exploit the feed beyond the live event. The Revenue contended that the receipts constituted royalty either as consideration for copyright or as a “process” under the statutory explanation.

Issues Involved

Whether consideration received for live telecast/live feed of cricket matches constitutes royalty under Section 9(1)(vi) of the Income-tax Act, whether live broadcast amounts to transfer of rights in a “work” or “process”, and whether any substantial question of law arose from the ITAT’s findings.

Appellant’s Arguments (Revenue)

The Revenue argued that the services from which income was generated fell within Explanation 2 to Section 9(1)(vi), contending that live telecast involved transfer of rights akin to copyright or constituted use of a “process” (including satellite transmission) as clarified by Explanation 6. It was urged that the ITAT erred in excluding such receipts from royalty taxation.

Respondent’s Arguments (Assessee)

Sri Lanka Cricket submitted that the issue was squarely covered by binding precedents of the Delhi High Court, notably CIT v. Delhi Race Club (1940) Ltd. and CIT (International Taxation) v. Fox Network Group Singapore Pte. Ltd. It was contended that a live telecast is not a “work” under the Copyright Act, carries no copyright, and that rights granted were confined strictly to live transmission without enduring benefit. It was also pointed out that the Department had withdrawn an SLP on an identical issue.

Court Order / Findings

The Delhi High Court held that the issue stood conclusively covered by its earlier judgments. The Court reaffirmed that a live telecast/live feed does not qualify as a “work” under the Copyright Act and therefore consideration for such live transmission cannot be treated as royalty under clause (v) of Explanation 2 to Section 9(1)(vi).

The Court rejected the alternative argument based on “process” under Explanation 6, noting the primacy of DTAA provisions and reiterating that live transmission confined to the event, without rights to record or exploit thereafter, does not generate royalty income. The Court further observed that royalty presupposes enduring benefit, which was absent since the rights were limited to live telecast of specified matches within a limited period.

Finding no substantial question of law, the Court upheld the ITAT’s conclusions.

Important Clarification

The High Court clarified that payments for live telecast/live feed are distinguishable from situations where the licensee acquires rights to record, preserve, rebroadcast, or commercially exploit content beyond the live event. Only in such cases, depending on facts, could royalty characterization arise.

Final Outcome

The appeal filed by the Revenue was dismissed. The Delhi High Court affirmed the ITAT’s orders holding that fees received by Sri Lanka Cricket for live transmission of cricket matches do not constitute royalty under Section 9(1)(vi) of the Income-tax Act. No substantial question of law was found to arise.

 

Link to download order https://www.mytaxexpert.co.in/uploads/1769504164_THECOMMISSIONEROFINCOMETAXINTERNATIONALTAXATION3VsSRILANKACRICKET.pdf

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