INCOME TAX ACT, 1961

Section 90

Double taxation relief - Agreement between India and USA - Royalty -

Assessee based at USA derived advertisement and distribution revenue from grant of exclusive rights to Turner International India (P) Ltd. ('TIIPL'), an Indian Company, to sell advertising on the products and to distribute the products. AO treated amount derived by assessee as royalty and thus, taxed the same. Held: Rights over the products and contents of products at all times lies with assessee. Assessee had not granted any license to use any copyright, either to the distributor or to cable operators. Assessee only granted rights for the purpose of selling advertising on the product (Channels, interactive entertainment services and entertainment mobile telecommunications) and distribution of such products (Channels, interactive entertainment services and entertainment mobile telecommunications) in India. TIIPL (Indian company) did not have any right to edit, delay, interrupt, delete or add the products distributed by it, in fact, as per clause 5 of concerned agreement, assessee retained sole right to determine content of products (Channels, interactive news services and information mobile telecommunications) and also reserved the right to change such contents from time to time. TIIPL (Indian Company) entered into contracts with various parties in its own capacity on principal-to-principal basis and not on behalf of assessee. Therefore, AO was not justified in taxing revenue derived by assessee from distribution of products as royalty. Since, assessee had already offered income as business income in terms of MAP, therefore, income as declared by assessee in accordance with MAP and accepted by Department in earlier years, was to be accepted.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10 to 2013-14

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