Live Cricket Broadcasting Fees Not Royalty Under India-UK DTAA: Delhi ITAT

The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that fees received by the England and Wales Cricket Board (ECB) for granting live broadcasting rights of cricket matches cannot be treated as royalty taxable in India under the India-UK Double Taxation Avoidance Agreement (DTAA).

The bench comprising Judicial Member Vikas Awasthy and Accountant Member Krinwant Sahay also held that a ₹6.26 crore release fee received by ECB from IPL franchises for allowing English players to participate in the tournament was not taxable in India under Article 18 of the DTAA. The appeal concerned Assessment Year 2023-24.

On the broadcasting issue, the tribunal observed, “Broadcasting of a Live match is a one time event. Live transmission does not bring enduring benefit to the broadcaster.”

It noted that repeat broadcasts and match highlights fall under non-live broadcasting. ECB had already offered that income to tax.

ECB had received ₹244.78 crore towards live broadcasting rights, ₹14.61 crore towards non-live broadcasting rights and ₹4.96 crore as rights fees. It had offered the non-live broadcasting and rights fee income to tax. The Assessing Officer, however, treated the live broadcasting receipts as royalty.

The dispute concerned Article 13 of the India-UK DTAA, which contains the treaty provisions on royalty. It covers payments for the use of, or the right to use, specified intellectual property, including copyright, patents and trademarks.

The tribunal relied on earlier Delhi high court rulings on live broadcasts. Those rulings held that a live broadcast does not have copyright and, in the circumstances considered, payments for live transmission cannot be treated as royalty.

The Revenue also challenged the 95:5 allocation of rights fees between live and non-live broadcasting. It sought a 75:25 allocation instead.

The tribunal rejected the request. It noted that the 95:5 allocation had been mutually agreed between ECB and Sony Pictures Network India. The Revenue had also accepted the same allocation in earlier cases involving Fox Network Singapore and Sri Lanka Cricket.

The second dispute concerned the ₹6.26 crore release fee received by ECB from IPL franchises. Under the arrangement, ECB was entitled to 10% of the League Fee actually paid by a franchise to an English player. The amount was over and above the League Fee paid to the player.

The Revenue argued that the payment was connected to the players' participation and performance in the IPL. It therefore claimed that the amount was taxable under Article 18, which deals with income earned by artists and athletes from their personal activities.

The tribunal rejected this argument. It observed that Article 18 refers to income received or accrued to the athlete or player and held that the provision did not apply to the amount received by ECB. It relied on the Bombay high court's ruling in Wizcraft International Entertainment.

The tribunal, however, dismissed ECB's challenge to interest under Sections 234A and 234B of the Income Tax Act. It held that the levy was mandatory and consequential.

The appeal was partly allowed.