Sum Received by “Cricket Australia” from Granting Sponsorship/Advt. Rights for “BBL” Isn’t Royalty | ITAT

Case Details: Cricket Australia vs. ACIT (International Taxation) [2024] 164 taxmann.com 664 (Delhi-Trib.)

Judiciary and Counsel Details

• G.S. Pannu, Vice President & Anubhav Sharma, Judicial Member
• Nitesh Joshi, Adv. for the Appellant.
• Vizay B. Vasanta, CIT-DR for the Respondent.

Facts of the Case

Assessee, Cricket Australia, is a national government body for the game of cricket in Australia. During the year under consideration, the assessee received sponsorship and advertisement benefits from an Indian entity in Australia.

The Assessing Officer (AO) contended that the receipt of sponsorship and advertisement benefits is in the nature of royalty under the India-Australia DTAA as consideration received for the use of, or the right to use, any copyright, patent, design or model, plan, secret formula of process, trademark, or other like property or right. Accordingly, AO made additions to the income of the assessee.

On appeal, the Dispute Resolution Panel (DRP) confirmed the addition made by the AO and the matter reached before the Delhi Tribunal.

ITAT Held

The Tribunal held that the assessee entered a Commercial Partnership Agreement with an Indian entity regarding the Big Bash League (BBL), and the sponsor had the right to use Cricket Australia’s intellectual property rights merely to indicate the sponsor’s association with the BBL.

The terms and conditions of the agreement made it crystal clear that the sponsor did not have any exclusive rights in the use of the assessee’s logo or the event of BBL. The logo was to be used in restricted spaces and on limited goods and services of the sponsor. Then, as a sponsor, the responsibility was to use the logo and other rights in the assessee’s intellectual property to increase the event’s viewership. The rights were merely for advertising, communications, and sales and marketing campaigns showcasing the Sponsor’s association with the BBL.

The use of intellectual property rights, like the logo of the assessee or BBL, was incidental to the objective of promoting BBL and the sponsor’s products. The rights given were not of the nature of ‘copyright’ but simplistic rights to represent in the advertising, communications, sales, and marketing campaign showcasing the Sponsor’s association with BBL.

Any payment falling within the scope of royalty must be some rights transfer. The ‘right to use’ the intellectual property should be independent of any act of the intellectual property owner. It should not be restrictive in purpose or mode of use. The commercial partnership agreements nowhere indicate that the sponsor had any claim in the assessee’s logo or other intellectual property beyond the event of BBL

Accordingly, it was concluded that the right was not in the logo or other intellectual property of the assessee, but the right to be part of BBL, organised by the assessee, as a sponsor and represent it to the viewers of this event, to market its own product or brand.

Thus, the impugned addition was deleted.

List of Cases Reviewed

• ITA No. 1179/Del/2022, dated 24-8-2023 (para 4) followed.

List of Cases Referred to

• Fox Network Group Singapore Pte. Ltd. v. Asstt. CIT (International Taxation) Circle 1(3)(1) [2020] 121 taxmann.com 330 (Delhi – Trib.) (para 4)
• CIT v. Fox Network Group Singapore Pte. Ltd. [2024] 158 taxmann.com 434 (Delhi) (para 4)
• DIT v. Sahara India Financial Corporation Ltd. [2010] 189 Taxman 102/321 ITR 459 (Delhi) (para 7.1)
• DIT v. Sheraton International Inc. [2009] 178 Taxman 84/313 ITR 267 (Delhi) (para 7.2)
• Indian Oil Corporation Ltd. v. Deputy DIT (International Taxation) [2023] 157 taxmann.com 676 (Mumbai – Trib.) (para 7.2).