Live events do not have “copyright” broadcast rights, and Payment cannot be taxed as “Royalty.”

The Delhi ITAT holds the assessee not in default for failing to deduct tax at source on foreign remittances made towards the acquisition of the right to broadcast “live-events,” emphasizing that the right to broadcast live events, i.e., “Live Rights,” is not “copyright,” and therefore any payment made to it is unable to be responsible to tax as rulers under section 9(1)(vi) of the Income Tax Act, 1961.

The ITAT member consisting of Vice-President Saktijit Dey and Member B.R.R. Kumar, an accountant, noted that the transmission of “live events” does not constitute a work for which copyright is applicable, suggesting that the right to transmit live events, 

The case’s brief facts state that the assessee company, which broadcasts sports events or sublicenses the right to do so, has agreements in place with several non-resident entities to obtain both the right to broadcast live sports events and the right to use the audiovisual footage of those events for later telecasting, including cutting short segments for commercials and creating highlights of the event.

The whole consideration, including the sum of money for “Live Rights” and “Non-Live Rights,” was made crystal apparent in the agreements and invoices. The assessee did not deduct any tax at source under Section 195 on payments made for “Live Rights,” although having deducted tax on royalties paid for the acquisition of “Non-Live Rights” under Section 9(1)(vi).

According to Coram, the whole consideration is split between consideration for live rights and payment for non-live rights in the agreements and invoices related to the purchase of live and non-live rights from non-resident firms.

Additionally, the Coram concluded that the Department erred in categorizing foreign remittances as being intended for a “Process,” which makes them subject to taxation in the form of royalties in the recipient’s possession.

The Bench concluded that payments for live rights aren’t made for using any mechanism as described by Section 9(1)(vi) because the assessee paid foreign rights holders instead of satellite operators or for using any satellite. For that reason, foreign rights holders are unable to tax it as a royalty.

Because Section 195 does not require the assessee to pay tax at source on such foreign transfers, the Bench decided in favor of the assessee, ruling that the assessment is not an applicant-in-default under Section 201.

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