Live Cricket Broadcast Fees Not Royalty: Delhi High Court Dismisses Revenue Appeal Against Sri Lanka Cricket

The Delhi High Court has reiterated that payments received for granting the right to live telecast international cricket matches in a specific series do not constitute “royalty” under the Income Tax Act, 1961.

A Division Bench of Justices Dinesh Mehta and Vinod Kumar thus upheld the orders of the Income Tax Appellate Tribunal (ITAT) in favour of Sri Lanka Cricket, ruling that consideration received for providing live broadcast feeds of cricket matches cannot be taxed as royalty under Section 9(1)(vi) of the Act.

The court noted that Sri Lanka Cricket had granted broadcasters the right to telecast matches live only while they were being played, limited to the matches forming part of the concerned series, which were held within a 12-month period. The agreements did not confer any right to record, store, preserve, rebroadcast, or commercially exploit the matches after the live event.

The Court noted that the issue was squarely covered by its earlier decisions, including CIT v. Delhi Race Club (1940) Ltd. and CIT (International Taxation) v. Fox Network Group Singapore Pte. Ltd., where it was consistently held that a live telecast of an event does not amount to a “copyrighted work”. As a result, payments for such live feeds cannot be treated as royalty.

Rejecting the Revenue's argument that live transmission involved the use of a “process” under Explanation 6 to Section 9(1)(vi), the Court observed that royalty presupposes the grant of enduring rights.

In the present case, the rights granted were limited strictly to live telecasts of matches during the series and did not include any right to record, store, or rebroadcast the feed in the future. It observed,

“Since the right to show cricket matches was confined to live telecast and the payment made was only for the match(es) held in the series (within 12 months) and not subsequent matches, such amount paid to the respondent cannot be considered as a royalty. 'Because, royalty presupposes enduring benefits'. In case the licensee has a right to record or preserve the feed and he continues to derive benefit of that recording and has right to re-telecast or show those matches in future, beyond the period or event(s) other than such event, then only, the payment made to the licensee in appropriate case, can be treated as royalty. However, it is not the case in the present agreement or transaction, hence the amount in question cannot be considered as royalty.”

The Court also took note of the fact that the Income Tax Department had withdrawn a SLP before the Supreme Court in another case involving an identical issue, reinforcing the settled legal position.

Accordingly, it dismissed tax department's appeal,

For Appellant: Advocates Ruhir Bhatia, Anant Mann and Lopamudra Mahapatra.

For Respondent: Senior Advocate Ajay Vohra with Advocates Saksham Singhal and Samkth Chaudhari.