TRANS WORLD INTERNATIONAL LLC,DELAWARE, USA vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), INTERNATIONAL TAXATION, NEW DELHI

आदेश /O R D E R

PER SANJAY AWASTHI, ACCOUNTANT MEMBER:

IT(IT)A No. 51/Del/2025 TRANS WORLD INTERNATIONAL LLC 1.1 The assessee carries on the business of licensing of broadcasting rights to both resident and non-resident entities. The assessee entered into three categories of agreements for the purposes of providing the licenses of broadcasting rights. The three categories are as under: -

i. Live contracts for live full or live content of sports events; ii. Recorded contracts for recorded content/highlights/films/video tapes; iii. Bundled contracts, where the assessee granted broadcasting rights for live feed as well as recorded feed of the sports events.

Regarding contracts mentioned in (ii) above the income has been offered to tax on gross basis as royalty income. For contracts mentioned in (i) the assessee claimed them to be exempt from tax following the case of Delhi Race Club Limited reported in 51 taxmann.com 550 (Del). Regarding the contracts mentioned in (iii) the assessee offered 5% of the total receipts as royalty income and claimed the remaining to be exempt as in (i) above.

1.2 Aggrieved with the action of Ld. AO the assessee has approached the ITAT with the following grounds of appeal: -

“1. That in the facts and circumstances of the case & in law, the final reassessment order passed by the Ld. Deputy Commissioner of Income-tax, Circle 3(1)(1), International Taxation, New Delhi (Ld. ‘AO') under section 147 read with section 144C(13) of the Income Tax Act, 1961 (the ‘Act'), in pursuance to the directions of the Learned Dispute Resolution Panel 2, New Delhi ('Ld. DRP"), assessing the income of the Appellant at INR 13,83,98,512/- is bad-in-law and invalid. 2. That in the facts and circumstances of the case & in law, the Ld. AO as well as the Ld. DRP has erred in holding that license fees received by the Appellant from resident and non-residents with respect to live content for 2

IT(IT)A No. 51/Del/2025 TRANS WORLD INTERNATIONAL LLC granting broadcasting rights of various events is taxable as 'royalty' income under section 9(1)(vi) of the Act. 2.1. The Ld. AO as well as the Ld. DRP has erred in facts and in law holding that receipts for live content from granting broadcasting rights involve transfer of rights in respect of 'process' as per Explanation 6 to section 9(1)(vi) of the Act. 3. That in the facts and circumstances of the case & in law, the Ld. AO as well as the Ld. DRP has not accepted the bifurcation in ease of bundled contracts [wherein broadcasting rights are granted for both live content (constituting 95%) and recorded content (constituting 5%)] and have incorrectly taxed the entire consideration as royalty income under section 9(1)(vi) of the Act, without appreciating the value of the live broadcasting component embedded in such bundled contracts. 4. That in the facts and circumstances of the case & in law, the Ld. AO as well as the Ld. DRP has failed to appreciate that in case of bundled contracts, the Appellant, in view of the past assessments and judicial precedents, has allocated 5% of the total consideration under such bundled contracts towards recorded content and offered the same to tax as royalty income under section 9(1)(vi) of the Act. 5. That in the facts and circumstances of the case & in law, the Ld. AO has erred in not allowing credit of tax deducted at source (TDS') amounting to INR 34,41,861/-whilst computing the tax liability of the Appellant for the year under consideration. 6. That in the facts and circumstances of the case & in law, the Lat. AO has erred in in initiating penalty proceedings under section 274 rend with 271F of the Act and section 271(1)(c) of the Act for the subject year as the same is bad in law. 7. That in the facts and circumstances of the case & in law, the Ld. AO erred in levying interest under section 234A and 234B of the Act. The above grounds of appeal are mutually exclusive and without prejudice to each other. The Appellant craves leave to add, alter, amend and/or modify any of the grounds of appeal at or before the hearing of the appeal.” 2. Before us the Ld. AR argued on ground nos. 2 & 2.1 regarding the action of Ld. AO in taxing the entire quantum received as live contracts, as royalty. The Ld. AR read from written submissions and gave a background of the issue which for the sake of brevity we are not mentioning in detail in here. It was the submission that this issue has been decided by the ITAT for AYs 2013-14 and 2014-15 through

IT(IT)A No. 51/Del/2025 TRANS WORLD INTERNATIONAL LLC consolidated orders reported as Trans World International LLC [175 taxamnn.com 703 (Delhi – Trib.), order dated 18.06.2025]. The Ld. AR read out extensively from paragraphs 9 & 10 of this ITAT’s order and relied on the same for the finding that live telecast would not qualify as royalty income in terms of Article 12 of the DTAA. Regarding the issue of bundled contracts agitated through grounds 3 & 4, it was the submission that on this issue also the ITAT (supra) has already given a finding that 10% of such contractual receipts would be taxable only as against the assessee’s contention that 5% of the gross receipts would be taxable. The Ld. AR read out extensively from para 23 of the ITAT’s order (supra). Regarding the non-allowability of full credit of tax retained, the Ld. AR requested for suitable directions to the Ld. AO.

2.1 The Ld. DR relied on the order of the Ld. AO and read out extensively from the directions contained in the DRP’s order. It was the submission that the Ld. AO had rightly treated the impugned receipts as royalty under the DTAA and the same deserve to be taxed as such.

IT(IT)A No. 51/Del/2025 TRANS WORLD INTERNATIONAL LLC the ITAT’s order on the two issues. However, for the sake of record the relevant portions pertaining to the two issues contained in paragraphs 9, 10 & 23 deserve to be extracted:

“9. We have heard both the parties and perused the materials available on record. In this appeal, the main issue is as to whether there is any copyright in a live coverage of a sporting event and whether it amounts to Royalty. In the final assessment order, the Assessing Officer held that the receipts from the Live Contracts as well as from the bundled contracts are liable to tax under Section 9(1)(vi) of the Act being the consideration received by the assessee for the use of, or the right to use, any copyright, trademark or other like property or right. The aforesaid view of the Assessing Officer was upheld by the Lid. DRP on similar finding that of the Assessing Officer i.e. licensing of the transmission rights is chargeable to tax under section 9(1)(vi) of the Act as the same being the use or right to use of any process and the process includes transmission by satellite, therefore the same was chargeable to tax under section 9(1)(vi) read with Explanation 2 and 6 of the said section. In addition to the above, though the entire receipts of the live and bundled contracts were brought to tax on gross basis, the Assessing Officer/DRP further held that apportionment by the appellant in bundled contracts between the live and non-live contracts is also not correct. Therefore, the Assessing Officer has considered the live coverage being royalty on account of being it a copyright The Hon’ble Delhi High Court in the case of Commissioner of Income-tax v. Delhi Race Club (1940) Ltd. [2014] 51 taxmann.com 550/228 Taxman 185 (Delhi)/ITA No.6/2014 (where the issue before the Hon'ble Court was as to whether payment for live telecast of horse race is a payment for transfer of any copyright and as such royalty or in the alternative whether the live telecast of the horse race would be termed as a scientific work and payment thereof would be royalty) considered the clause (v) to Explanation 2 to clause (vi) of sub section (1) of Section 9 to explain the scope of copyright in the said section. The Hon'ble Court referred to section 2(y) of the Copyright Act defining the term 'work' to mean (i) A literary, dramatic or artistic work; (ii) A cinematographic film: (iii) A record. Further, in the same para the Hon'ble Court also dealt with section 2(dd) of the copyright Act defining the word "broadcast and the section 2(ff) of the Copyright Act defining communication to the public. Further, the Hon'ble Court also dealt with the provisions of section 13 of the Copyright Act stipulating the work in which the copyright subsists. The Court also referred to section 14 of the Copyright Art defining the meaning of Copyright. Thereafter analysing the above sections, the Hon'ble Court observed in para no 16 about ‘live TV coverage’ of any event and the relevant observation of the Hon'ble Court in Para no 16 is reproduced as under: 16. A live TV coverage of any event is a communication of visual images to the public and would fall within the definition of the word "broadcast” in Section 2(dd). That apart we note that Section 13 does not contemplate broadcast as a work in which "copyright" subsists as the said Section contemplates "copyright to subsist in

IT(IT)A No. 51/Del/2025 TRANS WORLD INTERNATIONAL LLC literary, dramatic, musical and artistic work, cinematograph films and sound recording. Similar is the provision of Section 14 of the Copyright Act which stipulates the exclusive right to do certain acts. A reading of Section 14 would reveal that "copyright" means exclusive right to reproduce, issue copies, translate, adapt etc. of a work which is already existing. 10. Thereafter, the Hon'ble Court referring to the facts of the cited case held that "broadcast live telecast is not work within the definition of section 2y) of the Copyright Act and also that broadcast/live telecast does not come within the ambit of section 13 of the Copyright Act and it would be suffice to state that the live telecast/broadcast would not have any copyright. Further, the Hon'ble Court also observed referring to provisions of the Copyright Act, 1957 that it was a clear manifestation of legislative intent to treat copyright and broadcasting reproduction right as distinct and as separate rights. The Hon'ble Court by taking into account the distinction between the copyright of broadcast right held that broadcast or live coverage does not for a copyright. The Hon'ble Court also quoted the judgment of jurisdictional High Court in the case of Akuate Internet Services Pvt. Ltd. v. Star India Pvt. Lad. (FAO(OS) No. 153 of 2013, dated 30-8-2013), wherein, the Division Bench applied the test of ‘minimum requirement of creativity’ for claiming a right under the Copyright Act, which was held to be by the Hon'ble Court to be absent in a 'live telecast of an event'. The Hon'ble Court also noted the observations of the United States Court of Appeal Second Circuit Ruling in National Basketball Association (supra) which held that a sports event is a performance and not a work and it was not copyrightable. The relevant discussion of the Hon'ble Delhi High Court in the aforesaid case is reproduced as under:- 16. A live TV coverage of any event is a communication of visual images to the public and would fall within the definition of the word "broadcast" in Section 2(dd). That apart we note that Section 13 does not contemplate broadcast as a work in which "copyright" subsists as the said Section contemplates "copyright to subsist in literary, dramatic, musical and artistic work, cinematograph films and sound recording. Similar is the provision of Section 14 of the Copyright Act which stipulates the exclusive right to do certain acts. A reading of Section 14 would reveal that "copyright means exclusive right to reproduce, issue copies, translate, adapt etc. of a work which is already existing. 17. Adverting to the facts of this case we note that the assessee was engaged in the business of conducting horse races and derived income from betting, commission, entry fee etc. and had made payment to other centres whose races were displayed in Delhi. It is not known whether such races had any commentary or analysis of the event simultaneously. It is not the case of the Revenue that the live broadcast recorded for rebroadcast purposes. Having held that the broadcast/live telecast is not a work within the definition of 2(y) of the Copyright Act and also that broadcast live telecast doesn't fall within the ambit of Section 13 of the Copyright Act, it would suffice to state that a live telecast/broadcast would have no copyright". This issue is well settled in view of the position of law as laid down by this Court in ESPN Star Sports case (supra), wherein this Court

IT(IT)A No. 51/Del/2025 TRANS WORLD INTERNATIONAL LLC after analyzing the provisions of the Copyright Act was of the view that legislature itself by terming broadcast rights as those akin to copyright clearly brought out the distinction between two rights in Copyright Act, 1957. According to the Court, it was a clear manifestation of legislative intent to treat copyright and broadcasting reproduction rights as distinct and separate rights. It also held that the amendment of the Act in 1994 not only extended such rights to all broadcasting organizations but also clearly crystallized the nature of such rights. The Court did not accept the contention of the respondent that the two rights are not mutually exclusive by holding that the two rights though akin are nevertheless separate and distinct. 18. In view of the aforesaid position of law which brought out a distinction between a copyright and broadcast right, suffice would it be to state that the broadcast or the live coverage does not have a “copyright." The aforesaid would meet the submission of Mr. Sawhney that the word “Copyright" would encompass all categories of work including musical, dramatic, etc. and also his submission that the Copyright Act acknowledges the broadcast right as a right similar to “copyright". In view of the conclusion of this Court in ESPN Star Sports case (supra), such a submission need to be rejected. In this regard we also quote for benefit the judgment of this Court in the case of Akuate Internet Services (P) Ltd. & Anr. v. Star India (P) Ltd. & Anr. FA(OS) 153/2013 as relied upon by learned counsel for the respondent assessee wherein a Division Bench of this Court has applied the test of minimum requirement of “creativity" for claiming a right under the Copyright Act, which is absent in a live telecast of an event, We note for benefit that the United States Court of Appeal Second Circuit Ruling in National Basket Ball Association and NBA Properties NIC v. Motorola INC 105 F3d 841 (1997) held that a sports event is a performance and not a work. It is not copyrightable. ………… 20. In view of our discussion above, we are of the view that no question of law arises in the present appeals. We dismiss the appeals filed by the appellant Revenue." ……. “23. On the basis of general observation of the society, we note that in any sporting event ‘live coverage' of the event is important because in each such coverage, the winner of the game of the champion of the tournament is decided and the fans of the game watch the said 'live coverage with full passion and excitement, which is decided in each such respective game/tournament. In this regard, we are also mindful of the fact that when a match is held telecast live during the odd hours or when a live event is missed for some reasons, there is a conscious effort by the viewers who watch the recorded events to not to know the result of the said game before watching the recorded event to have some trace of

IT(IT)A No. 51/Del/2025 TRANS WORLD INTERNATIONAL LLC excitement as watching the live telecast as the excitement and thrill of the live match is the key essence of watching any sporting activity. Therefore, it is undoubted that thrill and excitement of watching live coverage of a game is no match in watching the said game in recorded telecast. However, there can be significance and uses for such recorded telecast for the sportspersons who watch the said games to understand the nuances and to enhance their skills and also for such persons are unable to watch the live telecast, it being at odd hours or for some other reasons. The recorded games are also seen by people who are not into very busy life depending upon the preference for such sports to spend their time. Thus, generally speaking and in view of the above observations, we are of the view that the percentage of sporting population watching live games would be approximately in the ratio as estimated by the assessee and its bifurcation of its receipts live coverage and recorded coverage in the ratio 54:95% in a bundled rights is largely acceptable. Therefore, we agree with the assessee in principle that the proportion of the license fee towards the live coverage will overwhelmingly in its favour and so will be the sponsors for such broadcast of a live feed as compared to a recorded broadcast. As regards, the reliance by the Assessing Officer and the Id. CIT-DR on the decision of the Tribunal, apportioning 25% towards recorded event of 'live feed", we note that the same was in respect of game of cricket, which is highly popular in this country, whereas, in the present case, it is for a football tournament held in Germany (the German FA Cup) and for Badminton tournament being 2012, Thomas & Uber Cup, 2013 World Championship and 2013 Sudirman Cup, which are undoubtedly not as popular as cricket in India. Moreover, in view of the above facts as discussed above attributing 25% of the license fees towards recorded feed will not be justified in the facts of the present case. However, the issue is regarding the correctness of the claim of the assessee with respect to apportionment of the receipts toward 'live coverage' and 'recorded coverage' in bundled rights, wherein, the assessee has taken a pica that 5% is only towards recorded coverage and the balance towards 'live coverage. But as noted by the Assessing Officer that the other rights are available along with recorded coverage but ultimately all these mainly relates to recorded coverage only. However, since the assessee has taken the plea of 5% towards live coverage' by way of TV broadcast only in "broadcast rights but considering the fact that the broadcast of recorded event is also available on other medium and other rights as mentioned in the said two agreements and salient features of the same as highlighted in para no.3.5 and 3.6 of this order, we consider it appropriate to allocate 10% of the receipts towards recorded, events and 90% towards ‘live coverage’ as offered as against 5% towards recorded event and 95% towards ‘live coverage’ as offered by the assessee. Ground no 6 of the appeal is partly allowed.” Considering the discussion above, grounds 2 & 2.1 are allowed while grounds 3 & 4 are partly allowed, with directions to consider 10% of total receipts under “bundled” category would be taxable, as directed in the ITAT’s order (supra), and finding in para 23 of that order.

IT(IT)A No. 51/Del/2025 TRANS WORLD INTERNATIONAL LLC 3.1 On ground 5 pertaining to inadequate credit for TDS, we direct the Ld. AO to allow the same as per law. The ground pertaining to charge of interest is consequential and is not adjudicated specifically.

Order pronounced in the open court on 06.05.2026

Sd/- Sd/- (YOGESH KUMAR US) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 06.05.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI