Tuesday, 2 December 2014

HC ruling on royalty, Tribunal ruling on copyrights and GOI notification on Advance rulings

Delhi HC rules payment towards live telecast is not “royalty

This tax alert 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.





Hyderabad Tribunal reaffirms the distinction between use of copyright right and copyrighted article

This Tax Alert summarizes a recent ruling of the Hyderabad Income Tax Appellate Tribunal (Tribunal) in the case of M/s Bartronics India Ltd. (Taxpayer) on the issue of taxability of payment for right to use smart card source code operating system for transport applications. This is examined under the provisions of the India-Singapore Double Taxation Avoidance Agreement (DTAA).

Government of India notifies class of resident taxpayers eligible to seek Advance Ruling

This Tax Alert explains Notification No. 73/2014 dated 28 November 2014, issued by the Government of India (GOI) notifying class of resident taxpayers who can seek ruling from Authority for Advance Rulings.


Prior to amendment by Finance (No.2) Act 2014 (FA 2014), the facility of seeking advance ruling was available to (a) nonresidents (NRs); (b) residents undertaking transaction with NRs in relation to NRs’ tax liabilities and (c) residents being Public Sector Undertakings in respect of an issue relating to the computation of total income pending before any Tax Authority or Appellate Tribunal.

With a view to reduce litigation, FA 2014 extended1 facility of advance ruling to all resident taxpayers falling within such class or category as GOI may notify. Accordingly, the GOI has specified a category of residents, who in relation to their tax liability arising out of one or more transactions valuing INR1000M (approx. US$16.13M ) or more in total, which has been undertaken or proposed to be undertaken, can seek advance ruling.

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