We are pleased to
release a tax alert which summarizes the recent ruling of the Delhi High Court
(HC) in the case of Delhi Race Club (Taxpayer) wherein the issue was
whether payment for “live” telecast of horse races is covered within the
purview of “royalty” as defined under the provisions of the Income Tax Law
(ITL). The HC, after considering the provisions of the ITL and the Indian
Copyright Law (ICL) ruled that payments for live telecast would not fall within
the ambit of “copyright” for the reason that ICL has treated “copyright” and
“broadcasting right” as distinct and separate rights, and copyright does not
subsist within the ambit of broadcast. As the royalty definition under the ITL
captures payments in the nature of “copyright” per se, and since no copyright
subsists in “live” telecast, the payment thereof should not be taxable as
royalty.
This is a welcome ruling where the Delhi HC has distinguished between “broadcasting of live matches” and copyright, after considering the provisions under the ICL and ruled that no tax is required to be withheld under the ITL on such payments. Unless the broadcasting of live matches are recorded or stored after completion of live broadcast, it will not get covered under the term “copyright” as per the ICL. This decision lays down the distinction between copyright and broadcasting right. The HC, basis the ICL, makes an attempt in making a distinction between copyright to broadcasting right. In case of live telecast, the HC has ruled that in the absence of “copyright” involved therein, the payment does not fall within the ambit of royalty, for the reason that royalty captures payment for transfer of all or any rights in the copyright.
It is pertinent to note that DTC specifically includes the live telecast of any event within the definition of royalty. However, taxpayers would be able to avail the beneficial provisions of respective tax treaties as most of them define royalty as a consideration for “use or right to use” copyright. As ruled by the HC, as the payment for live feed does not envisage any copyright, the payment should accordingly, fall outside the provision of royalty under the tax treaty.
This is a welcome ruling where the Delhi HC has distinguished between “broadcasting of live matches” and copyright, after considering the provisions under the ICL and ruled that no tax is required to be withheld under the ITL on such payments. Unless the broadcasting of live matches are recorded or stored after completion of live broadcast, it will not get covered under the term “copyright” as per the ICL. This decision lays down the distinction between copyright and broadcasting right. The HC, basis the ICL, makes an attempt in making a distinction between copyright to broadcasting right. In case of live telecast, the HC has ruled that in the absence of “copyright” involved therein, the payment does not fall within the ambit of royalty, for the reason that royalty captures payment for transfer of all or any rights in the copyright.
It is pertinent to note that DTC specifically includes the live telecast of any event within the definition of royalty. However, taxpayers would be able to avail the beneficial provisions of respective tax treaties as most of them define royalty as a consideration for “use or right to use” copyright. As ruled by the HC, as the payment for live feed does not envisage any copyright, the payment should accordingly, fall outside the provision of royalty under the tax treaty.
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