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Wednesday, April 17, 2013

Consideration for live telecast of an event is not royalty as no copyright in live events

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Deputy Director of Income-tax, (International Taxation)
Nimbus Communications Ltd.
IT Appeal Nos. 1598 & 2270 (Mum.) of 2011
NOVEMBER 23, 2012
Tribunal referred to a book titled Law of Copyright and Industrial Designs by P. Narayanan wherein it was stated in paragraph No. 17.02 that a cinematograph film depicting live events like sporting events, horse race, etc. cannot infringe any copyright because there is no copyright in live events. The Tribunal held that there is thus no copyrights in the live events and depicting the same cannot infringe any copyright. The Tribunal also referred to the proposed Direct Tax Code Bill wherein “live coverage of any event” is proposed to be included in the definition of “royalty’ and held that if “live coverage” had been a part of copyright of any work as was sought to be contended on behalf of the Revenue, then there was no need to classify live coverage as a separate item. It was held by the Tribunal that the definition of royalty under the Income-tax Act, 1961 thus does not include any consideration for live coverage of any event which is now sought to be included in the definition of royalty by the Direct Tax Code, 2010. The Tribunal, therefore, held that any consideration for live broadcasting cannot be considered as royalty for the transfer of copyright so as to fall within the domine of Explanation 2 to section 9(1)(vi). Respectfully following the said decision of the coordinate bench of this Tribunal rendered in the case of Neo Sports Broadcast (P.) Ltd (supra), we uphold the impugned order of the learned CIT (Appeals) holding that the amount paid by the assessee for live coverage of cricket matches to NSI is not taxable in the hands of NSI and the assessee was not required to deduct tax at source from the said amount. The appeal of the Revenue is accordingly dismissed.

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