Dy. Director of IT v. Nimbus Communications Ltd.

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The Tax Publishers2013 TaxPub(DT) 0253 (Mum-Trib) : (2013) 057 SOT 0092 : (2012) 020 ITR (Trib) 0754 INCOME TAX ACT, 1961 --Income deemed to acre or arise in India under section 9(1)(vi)--Royalty and business connection Payment for live terrestrial television right to non-resident company--Assessee-company entered into agreement with Nimbus sports International Pvt. Ltd. (NSI), a company incorporated in Singapore for live terrestrial television right of the cricket series to be telecasted on Doordarshan. It filed application under section 195(2) seeking nil deduction certificate in respect of payment made to NSI. On disputing, assessing officer observed that three was business connection of all receipts in India, payment was in the nature of royalty and liable to deduct tax under section 195A. Commissioner inter alia viewed that payment towards live telecast was not in nature of royalty and no requirement to deduct tax at source, however NI had business connection in India and, therefore, income was deemed to accrue or arise in India. *Held:* Tribunal following the decision in case of Neo Sports Broadcasts (P) Ltd. (2011) 133 ITD 468 (Mum-Trib) hold that amount paid was not taxable in hands of NSI and assessee was not required to deduct tax at source from said amount and also there was no business connection of NSI in India as merely sale of goods on principal to principal basis does not establish any business connection under section 9(1)(i). Income Tax Act, 1961 Section 9(1)(vi) Income Tax Act, 1961 Section 195 IN THE ITAT, Mumbai 'L' Bench P. M. Jagtap, A.M. & Vijay Pal Rao, J.M. Dy. DIT v. Nimbus Communications Ltd. I. T. A. Nos. 1598 & 2270/Mum/2011 A.Y. 2009-10 23 November, 2012 Department by : Narendra Kumar Assessee by : K. Shivaram & Ajay R. Singh. ORDER *P. M. Jagtap, A.M.* These two appeals, one filed by the assessee being I. T. A. No. 1598/Mum/2011 and the, other filed by the Revenue being I. T. A. No. 2270/Mum/2011 are the cross-appeals which are directed against the order of the learned Commissioner (Appeals)-ll, Mumbai dated 4-1-2011. 2. The assessee in the present case is a company which is engaged in the business of sports marketing and airtime marketing available on television programme. It is also engaged in the business of production, telecasting and marketing of television serials. It entered into an agreement with Nimbus Sports International Pvt. Ltd. (NSl), a company incorporated in Singapore, which had acquired all media rights throughout the world from Sri Lankan cricket of the cricket series between Sri Lanka and India to be played in Sri Lanka. As per the said agreement dated 21-1-2009, the assessee-company was granted by NSI a licence for live terrestrial television rights of the cricket series between Sri Lanka and India to be played in Sri Lanka to be telecasted on Doordarshan (Prasar Bharti) for a fee of Rs. 4 crores. The assessee-company filed an application under section 195(2) of the Act seeking a nil deduction certificate in respect of the payment to be made to NSI as per the agreement dated 21-1-2009 on the ground that the payment to be made on account of the broadcast of live match was not covered within the definition of royalty and the same, therefore, was not taxable in India in the hands of NSI. The stand of the assessee was that the broadcast of live signal does not entail the copyright to the broadcaster and the same is not in the nature of royalty. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0253 (Mum-Trib) : (2013) 057 SOT 0092 : (2012) 020 ITR (Trib) 0754

INCOME TAX ACT, 1961

--Income deemed to acre or arise in India under section 9(1)(vi)--Royalty and business connection Payment for live terrestrial television right to non-resident company--Assessee-company entered into agreement with Nimbus sports International Pvt. Ltd. (NSI), a company incorporated in Singapore for live terrestrial television right of the cricket series to be telecasted on Doordarshan. It filed application under section 195(2) seeking nil deduction certificate in respect of payment made to NSI. On disputing, assessing officer observed that three was business connection of all receipts in India, payment was in the nature of royalty and liable to deduct tax under section 195A. Commissioner inter alia viewed that payment towards live telecast was not in nature of royalty and no requirement to deduct tax at source, however NI had business connection in India and, therefore, income was deemed to accrue or arise in India. Held: Tribunal following the decision in case of Neo Sports Broadcasts (P) Ltd. (2011) 133 ITD 468 (Mum-Trib) hold that amount paid was not taxable in hands of NSI and assessee was not required to deduct tax at source from said amount and also there was no business connection of NSI in India as merely sale of goods on principal to principal basis does not establish any business connection under section 9(1)(i).

Income Tax Act, 1961 Section 9(1)(vi)

Income Tax Act, 1961 Section 195

IN THE ITAT, Mumbai 'L' Bench

P. M. Jagtap, A.M. & Vijay Pal Rao, J.M.

Dy. DIT v. Nimbus Communications Ltd.

I. T. A. Nos. 1598 & 2270/Mum/2011

A.Y. 2009-10

23 November, 2012

Department by : Narendra Kumar

Assessee by : K. Shivaram & Ajay R. Singh.

ORDER

P. M. Jagtap, A.M.

These two appeals, one filed by the assessee being I. T. A. No. 1598/Mum/2011 and the, other filed by the Revenue being I. T. A. No. 2270/Mum/2011 are the cross-appeals which are directed against the order of the learned Commissioner (Appeals)-ll, Mumbai dated 4-1-2011.

2. The assessee in the present case is a company which is engaged in the business of sports marketing and airtime marketing available on television programme. It is also engaged in the business of production, telecasting and marketing of television serials. It entered into an agreement with Nimbus Sports International Pvt. Ltd. (NSl), a company incorporated in Singapore, which had acquired all media rights throughout the world from Sri Lankan cricket of the cricket series between Sri Lanka and India to be played in Sri Lanka. As per the said agreement dated 21-1-2009, the assessee-company was granted by NSI a licence for live terrestrial television rights of the cricket series between Sri Lanka and India to be played in Sri Lanka to be telecasted on Doordarshan (Prasar Bharti) for a fee of Rs. 4 crores. The assessee-company filed an application under section 195(2) of the Act seeking a nil deduction certificate in respect of the payment to be made to NSI as per the agreement dated 21-1-2009 on the ground that the payment to be made on account of the broadcast of live match was not covered within the definition of royalty and the same, therefore, was not taxable in India in the hands of NSI. The stand of the assessee was that the broadcast of live signal does not entail the copyright to the broadcaster and the same is not in the nature of royalty.