ACIT (IT)-4(2), MUMBAI v. NEO SPORTS BROADCAST P. LTD, MUMBAI

ITA 99/MUM/2009 | 2008-2009
Pronouncement Date: 09-11-2011 | Result: Dismissed

Appeal Details

RSA Number 9919914 RSA 2009
Assessee PAN AACCN2854Q
Bench Mumbai
Appeal Number ITA 99/MUM/2009
Duration Of Justice 2 year(s) 10 month(s) 2 day(s)
Appellant ACIT (IT)-4(2), MUMBAI
Respondent NEO SPORTS BROADCAST P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted L
Tribunal Order Date 09-11-2011
Date Of Final Hearing 02-05-2011
Next Hearing Date 02-05-2011
Assessment Year 2008-2009
Appeal Filed On 06-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES L MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI N.V.VASUDEVAN JM ITA NO.99/MUM/2009 : ASST.YEAR 2008-2009 THE ASSTT.DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) 4(2) MUMBAI. M/S.NEO SPORTS BROADCAST PRIVATE LIMITED NIMBUS CENTRE OBEROI COMPLEX ANDHERI (WEST) MUMBAI 400 053. PAN : AACCN2854Q. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : S/SHRI K.SHIVARAM & AJAY R.SINGH DATE OF HEARING : 31.10.2011 DATE OF PRONOUNCEMENT : 09.11.2011 O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 29.09.2008 IN RELATION TO THE ASSESSMENT YEAR 2008-2009. 2. THE ONLY EFFECTIVE GROUND IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN HOLDING THAT PAYMENT MADE BY THE ASSESSEE TO NIMBUS SPORTS INTERNATIONAL PTE. LTD. (SINGAPORE) ( NSI) TOWARDS LIVE FEED FOR BROADCASTING CRICKET MATCHE S IN INDIA IS DIFFERENT FROM THAT MADE FOR THE PURPOSE OF BROADCA ST OF RECORDED FEED AND HENCE IS NOT IN THE NATURE OF ROYALTY PA YMENT AND THEREFORE THERE WAS NO REQUIREMENT OF DEDUCTION OF TAX UNDER SECTION 195 OF THE INCOME-TAX ACT 1961. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED AN APPLICATION U/S 195(2) OF THE ACT SEEKING PERMISSION FOR LOWER / NIL DEDUCTION OF INCOME TAX ON THE FOLLOWING PAYMENTS TO BE MADE TO M/S.NIMBUS SPO RTS INTERNATIONAL PTE. LTD. (HEREINAFTER CALLED THE NIMBUS) IN PURSUANCE TO T HE AGREEMENT DATED 20.02.2008:- ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 2 (A) GRANT OF LICENSE FOR LIVE BROADCAST AMOUNTING TO US $ 56 24 920. (B) GRANT OF LICENSE FOR RECORDED BROADCAST AMOUNTING T O US$ 2 52 000. 4. THIS APPLICATION WAS FILED REQUESTING FOR NIL DE DUCTION CERTIFICATE ON ACCOUNT OF PAYMENT TO BE MADE UNDER (A) ABOVE; AND A CERTI FICATE FOR RATE AS APPLICABLE TO ROYALTY PAYMENT UNDER (B) ABOVE. THE DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) [HEREINAFTER CALLED THE `DDIT] NOTED THA T THE ASSESSEE ENTERED INTO AN AGREEMENT WITH NIMBUS A COMMERCIAL AGENT OF BANGLA DESH CRICKET BOARD (HEREINAFTER CALLED THE `BCB) FOR RECEIVING AND B ROADCASTING MATCHES THAT WERE TO BE PLAYED IN BANGLADESH. IT WAS FURTHER OBSERVED TH AT THE SIGNALS TO BE BROADCASTED BY THE ASSESSEE WERE TO BE BOTH ON ACCOUNT OF LIVE MATCHES AND ON ACCOUNT OF RECORDED MATCHES. THE ASSESSEE CONTENDED THAT THE P AYMENT TO BE MADE ON ACCOUNT OF RECORDED MATCHES WAS IN THE NATURE OF ROYALTY BU T THAT TOWARDS LIVE MATCHES WAS NOT COVERED WITHIN THE DEFINITION OF ROYALTY AND HE NCE NOT TAXABLE. THE DDIT NOTICED THAT THE MATCHES WERE TO BE BROADCASTED IN INDIAN TERRITORY AND THE INCOME BY WAY OF ADVERTISEMENT REVENUE AND SUBSCRIPTION RE VENUE WAS TO BE RECEIVED BY THE ASSESSEE. IT WAS OBSERVED THAT WITHOUT THE RECE IPT OF SIGNAL ON ACCOUNT OF THE MATCHES TO BE PLAYED NO INCOME WOULD ACCRUE TO THE ASSESSEE ON THIS ACCOUNT. HE THEREFORE HELD THAT THERE WAS A BUSINESS CONNECTIO N BETWEEN NIMBUS AND RECEIPTS IN INDIA. HE FURTHER DID NOT FIND ANY DISTINCTION B ETWEEN PAYMENT MADE TOWARDS BROADCASTING OF LIVE MATCHES AND PRE-RECORDED MATCH ES AS IN HIS OPINION BOTH WERE COVERED WITHIN EXPLANATION 2 TO SECTION 9(1)(VI) OF THE INCOME-TAX ACT BEING I N THE NATURE OF ROYALTY. THE CONTENTION OF THE ASSESS EE THAT INDIA BANGLADESH DTAA BE APPLIED AS NIMBUS WAS ONLY A MARKETING AGENT OF BCB ALSO DID NOT FIND FAVOUR WITH THE DDIT BECAUSE IN HIS VIEW NIMBUS WA S INCORPORATED IN SINGAPORE AND IT WAS NIMBUS WHO WAS GOING TO HAVE DEALINGS WI TH THE ASSESSEE IN INDIA. IT WAS ALSO NOTICED THAT AS PER CLAUSE 3.3 OF THE AGRE EMENT BETWEEN THE ASSESSEE AND NIMBUS THE PAYMENT WAS TO BE MADE IN A BANK ACCOUN T MAINTAINED IN LONDON. ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 3 THE DDIT THEREFORE HELD THAT THIS TRANSACTION WOU LD BE COVERED BY ARTICLE 24 OF THE INDIA-SINGAPORE DTAA AND HENCE NO BENEFIT EVEN UNDER INDO-SINGAPORE DTAA WOULD BE AVAILABLE. IN THE FINAL ANALYSIS THE DDIT HELD THAT THE REQUEST FOR GRANT OF NIL DEDUCTION CERTIFICATE IN RESPECT OF PA YMENT FOR LIVE BROADCASTING WAS NOT ACCEPTABLE. 5. IN THE FIRST APPEAL THE LEARNED CIT(A) UP HELD THE DDITS CONTENTION AS REGARDS BUSINESS CONNECTION OF NIMBUS IN INDIA. HE HELD THAT WITHOUT THE RECEIPT OF SIGNAL ON ACCOUNT OF MATCHES TO BE PLAYED NONE OF T HIS INCOME WOULD ACCRUE TO THE ASSESSEE. HOWEVER HE DID NOT ACCEPT THE DDITS ORDE R THAT PAYMENT TO NIMBUS TOWARDS LIVE TELECAST WAS COVERED WITHIN THE MEANIN G OF ROYALTY AS PER EXPLANATION 2 TO SECTION 9(1)(VI). IT WAS HELD THAT SINCE PAYMEN T TOWARDS LIVE TELECAST OF EVENTS WAS NOT A ROYALTY PAYMENT THERE WAS NO REQUIREMENT OF DEDUCTION OF TAX U/S 195. THE REVENUE IS AGGRIEVED AGAINST THIS FINDING GIVEN BY THE LEARNED CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS PER SECTION 195(2) WHERE THE PERSON RESP ONSIBLE FOR PAYING ANY SPECIFIED SUM CHARGEABLE UNDER THIS ACT TO A NON-R ESIDENT CONSIDERS THAT THE WHOLE OF SUCH SUM WOULD NOT BE INCOME CHARGEABLE IN THE C ASE OF RECIPIENT HE MAY MAKE AN APPLICATION TO THE ASSESSING OFFICER TO DETERMIN E THE APPROPRIATE PROPORTION OF SUCH SUM SO CHARGEABLE AND UPON SUCH DETERMINATION TAX SHALL BE DEDUCTED U/S 195(1) ONLY ON THAT PROPORTION OF THE SUM WHICH IS SO CHARGEABLE. IT IS NOTICED THAT THE ASSESSEE FILED APPLICATION U/S 195(2) IN RESPEC T OF PAYMENTS TO BE MADE TO NIMBUS SPLIT INTO TWO PARTS. INSOFAR AS THE PAYMENT TOWARDS GRANT OF LICENSE FOR RECORDED BROADCAST IS CONCERNED THE ASSESSEE ACCEP TED THAT IT WAS COVERED WITHIN THE MEANING OF ROYALTY WHICH HAS NOT BEEN DENIED B Y THE DDIT. THE DISPUTE CENTERS ROUND THE PAYMENT FOR LIVE BROADCASTING. WH EREAS THE ASSESSEE CONTENDED THAT SUCH AMOUNT IS NOT CHARGEABLE TO TAX IN THE HA NDS OF NIMBUS AND HENCE NO DEDUCTION OF TAX AT SOURCE WAS REQUIRED THE DDIT HELD THAT THE ASSESSEE IS LIABLE ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 4 TO DEDUCT TAX AT SOURCE ON THE AMOUNT TO BE PAID FO R THE LIVE COVERAGE OF THE EVENTS FOR THE REASON THAT SUCH CONSIDERATION IS CHARGEABL E TO TAX IN THE HANDS OF NIMBUS AS ROYALTY U/S 9(1)(VI). HE ALSO HELD THAT NIMBUS HAS BUSINESS CONNECTION IN INDIA [IMPLIEDLY REFERRING TO SECTION 9(1)(I)] BY REASON OF THE ASSESSEE EARNING REVENUES FROM INDIA ON THE BROADCASTING OF SUCH LIVE COVERAG E. 7. AS THE GROUND OF THE APPEAL ASSAILS THE F INDING GIVEN BY THE LD. CIT(A) TO THE EFFECT THAT THAT THE PAYMENT TO NIMBUS FOR LIVE FEED WAS NOT IN THE NATURE OF ROYALTY PAYMENT WE SHALL EMBARK UPON TO EXAMINE AN D EVALUATE THIS FINDING. IN ORDER TO DETERMINE AS TO WHETHER SUCH PAYMENT FOR L IVE BROADCASTING FALLS WITHIN THE MEANING OF ROYALTY IT IS RELEVANT TO CONSIDE R SECTION 9(1)(VI). THIS PROVISION PROVIDES THAT INCOME BY WAY OF ROYALTY SHALL BE DEE MED TO ACCRUE OR ARISE IN INDIA WHERE IT IS PAYABLE INTER ALIA BY (B) A PERSON WHO IS RESIDENT EXCEPT WHERE THE ROYALTY IS PAYABLE IN RESPECT OF ANY RIGHT PROPERT Y OR INFORMATION USED OR SERVICES UTILISED FOR THE PURPOSES OF A BUSINESS OR PROFESSI ON CARRIED ON BY SUCH PERSON OUTSIDE INDIA OR FOR THE PURPOSES OF MAKING OR EARN ING ANY INCOME FROM ANY SOURCE OUTSIDE INDIA. THE CONTENTION OF THE REVENUE IS THA T THE PRESENT CASE FALLS U/S 9(1)(VI)(B). EXPLANATION 2 GIVES MEANING OF ROYALTY FOR THE PURPOSES OF SEC TION 9(1)(VI) TO MEAN CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION BUT EXCLUDING ANY CONSIDERATION WHICH WOULD BE THE INCO ME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD CAPITAL GAINS) FOR --- (I) TO (IVA). (V) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING THE GRANTING OF A LICENCE) IN RESPECT OF ANY COPYRIGHT LITERARY ARTISTIC OR SCIENTIFIC WORK INCLUDING FILMS OR VIDEO TAPES FOR USE IN CONNECTIO N WITH TELEVISION OR TAPES FOR USE IN CONNECTION WITH RADIO BROADCASTING BUT NOT INCLUDING CONSIDERATION FOR THE SALE DISTRIBUTION OR EXHIBIT ION OF CINEMATOGRAPHIC FILMS; (EMPHASIS SUPPLIED BY US) ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 5 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE PAYMENT UNDER CONSIDERATION WAS IN THE NATURE OF ROYALTY FOR THE TRANSFER OF ANY COPYRIGHT. THIS HAS REMAINED THE CONTENTION OF THE ASSESSING OFFICE R AS WELL. NOW WE NEED TO EXAMINE AS TO WHETHER THE PAYMENT SOUGHT TO BE MADE BY THE ASSESSEE FOR LIVE BROADCASTING FALLS WITHIN THE MEANING OF CONSIDERAT ION FOR TRANSFER OF ANY COPYRIGHT. 9. THE WORD COPYRIGHT HAS NOT BEEN DEFINED IN THE INCOME-TAX ACT 1961. IN ORDER TO FIND THE MEANING OF THIS WORD WHICH IS CR UCIAL FOR OUR DECISION WE NEED TO REVERT TO THE COPYRIGHT ACT 1957. SECTION 14(1) (A) GIVES THE MEANING OF COPYRIGHT AS UNDER:- 14. MEANING OF COPYRIGHT. (1) FOR THE PURPOSES O F THIS ACT COPYRIGHT MEANS THE EXCLUSIVE RIGHT SUBJECT TO THE PROVISIONS OF THIS ACT TO DO OR AUTHORIZE THE DOING OF ANY OF THE FOLLOWING ACTS IN RESPECT OF A WORK OR ANY SUBSTANTIAL PART THEREOF NAMELY:- (A) IN THE CASE OF A LITERARY DRAMATIC OR MUSICAL WORK NOT BEING A COMPUTER PROGRAMME - (I) TO REPRODUCE THE WORK IN ANY MATERIAL FORM INCLUDIN G THE STORING OF IT IN ANY MEDIUM BY ELECTRONIC MEANS; (II) TO ISSUE COPIES OF THE WORK TO THE PUBLIC NOT BEING COPIES ALREADY IN CIRCULATION; (III) TO PERFORM THE WORK IN PUBLIC OR COMMUNICATE IT TO THE PUBLIC; (IV) TO MAKE ANY CINEMATOGRAPH FILM OR SOUND RECORDING I N RESPECT OF THE WORK (V) TO MAKE ANY TRANSLATION OF THE WORK; (VI) TO MAKE ANY ADAPTATION OF THE WORK; (VII) TO DO IN RELATION TO A TRANSLATION OR AN ADAPTATIO N OF THE WORK ANY OF THE ACTS SPECIFIED IN RELATION TO THE WORK I N SUB-CLAUSES (I) TO (VI); (B) (C). (D) IN THE CASE OF CINEMATOGRAPH FILM - ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 6 (I) TO MAKE A COPY OF THE FILM INCLUDING A PHOTOGR APH OF ANY IMAGE FORMING PART THEREOF; (II) TO SELL OR GIVE ON HIRE OR OFFER FOR SALE OR HIRE ANY COPY OF THE FILM REGARDLESS OF WHETHER SUCH COPY HAS BEEN SOLD OR GIVEN ON HIRE ON EARLIER OCCASIONS; (III) TO COMMUNICATE THE FILM TO THE PUBLIC; 10. A BARE PERUSAL OF THE MEANING OF COPYRIGHT AS D EFINED ABOVE TRANSPIRES THAT IT REFERS TO EXCLUSIVE RIGHT TO DO OR AUTHORIZE THE DOING OF THE SPECIFIED ACTS IN RESPECT OF A WORK OR ANY SUBSTANTIAL PART THEREOF . THE CASE OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS THAT THE CONSIDERATI ON FOR LIVE BROADCASTING FALLS WITHIN THE SUB-CLAUSE (III) OF SECTION 14(A) OF THE COPYRIGHT ACT 1957 BEING `TO PERFORM THE WORK IN PUBLIC OR COMMUNICATE IT TO TH E PUBLIC. THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE PLAY ING OF CRICKET MATCH IS AKIN TO PERFORMING THE WORK IN PUBLIC AND HENCE THE CONSIDE RATION FOR LIVE BROADCASTING WOULD AMOUNT TO CONSIDERATION FOR TRANSFER OF COPYR IGHT OF A WORK WHICH IS IN THE NATURE OF PERFORMING THE SAME IN PUBLIC. WE ARE UNA BLE TO ACCEPT THIS CONTENTION. THE OBVIOUS REASON IS THAT THE ABOVE SUB-CLAUSES (I ) TO (VII) OF CLAUSE (A) NEED TO BE SEEN IN CONJUNCTION WITH THE SECTION 14(1) WHICH MEANS THAT FALLING UNDER ANY OF THE SUB-CLAUSES WILL MAKE IT COPYRIGHT ONLY IF THE PRESCRIPTION OF THE MAIN PROVISION OF SECTION 14(1) IS SATISFIED. LOOKING AT VARIOUS S UB-CLAUSES SANS THE SUB-SECTION (1) OF SECTION 14 ITSELF IS MEANINGLESS. IT IS ONLY WHE N THE MAIN MANDATE OF SECTION 14(1) IS SATISFIED QUA ANY OF THE SUB-CLAUSES (I) TO (VII) THAT IT ASSUME S THE CHARACTER OF COPYRIGHT. WHEN WE READ SECTION 14 IN ENTIRETY IT EMERGES THAT DOING OF THE ACTS SPECIFIED IN SUB-CLAUSES IN RESPECT OF A `WORK AMOUNTS TO COPYRIGHT. THE WORD WORK HAS BEEN DEFINED IN SECTION 2(Y) OF THE COPYRIGHT ACT 1957 AS UNDER:- WORK MEANS ANY OF THE FOLLOWING WORDS NAMELY:- (I) A LITERARY DRAMATIC MUSICAL OR ARTISTIC WORK; (II) A CINEMATOGRAPH FILM; (III) A SOUND RECORDING; ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 7 11. FROM THE ABOVE DEFINITION OF `WORK IT IS CLEAR THAT THE INSTANT CASE DOES NOT FALL EITHER UNDER CLAUSE (I) OR IN CLAUSE (III) AS THE CRICKET MATCH CANNOT BE EQUATED WITH EITHER LITERARY DRAMATIC MUSICAL OR ARTISTIC WORK ON ONE HAND OR A SOUND RECORDING ON THE OTHER. NOW WE ARE LEFT WITH CLAUSE (II) OF SECTION 2(Y) ACCORDING TO WHICH `WORK MEANS A CINEMATOGRAPH FILM. THE E XPRESSION `CINEMATOGRAPH FILM HAS BEEN DEFINED IN SECTION 2(F) TO MEAN `ANY WORK OF VISUAL RECORDING ON ANY MEDIUM PRODUCED THROUGH A PROCESS FROM WHICH A MOVI NG IMAGE MAY BE PRODUCED BY ANY MEANS AND INCLUDES A SOUND RECORDING ACCOMPA NYING SUCH VISUAL RECORDING AND CINEMATOGRAPH SHALL BE CONSTRUED AS INCLUDING ANY WORK PRODUCED BY ANY PROCESS ANALOGOUS TO CINEMATOGRAPHY INCLUDING VIDEO FILMS. WHEN WE READ SECTION 14 IN JUXTAPOSITION TO SECTION 2(Y) READ WI TH SECTION 2(F) OF THE COPYRIGHT ACT IT BECOMES ABUNDANTLY CLEAR THAT THE `COPYRIGH T MEANS EXCLUSIVE RIGHT TO USE THE `WORK IN THE NATURE OF CINEMATOGRAPHY. THE QU ESTION OF GRANTING EXCLUSIVE RIGHT TO DO ANY WORK CAN ARISE ONLY WHEN SUCH `WORK HAS COME INTO EXISTENCE. IN OTHER WORDS THE EXISTENCE OF WORK IS A PRE-CONDIT ION AND MUST PRECEDE THE GRANTING OF EXCLUSIVE RIGHT FOR DOING OF SUCH WORK. IT CANNOT BE IN THE REVERSE DIRECTION. UNLESS THE WORK ITSELF HAS BEEN CREATED THERE CANNOT BE ANY QUESTION OF GRANTING COPYRIGHT OF SUCH WORK. TO PUT IS SIMPLY THE SEQUENCE IS THAT FIRSTLY THE WORK ITSELF COMES INTO EXISTENCE AND ONLY THEN THE SECOND STAGE OF ITS COPYRIGHT COMES INTO BEING. THE PROCESS OF DOING OR CREATING THE WORK ITSELF CANNOT BE SIMULTANEOUS WITH THE USE OF SUCH WORK. IT IS ONLY WHEN THE WORK HAS BEEN CREATED THAT ITS COPYRIGHT CAN BE CONCEIVED. 12. THE PROPOSITION BECOMES VERY CLEAR WHEN WE GLAN CE AT THE DEFINITION OF COPYRIGHT IN CASE OF A CINEMATOGRAPH FILM WHICH INTER ALIA REFERS `TO MAKE A COPY OF THE FILM INCLUDING A PHOTOGRAPH OF ANY IMAGE FOR MING PART THEREOF. FROM THIS DEFINITION IT IS ABUNDANTLY CLEAR THAT IT REFERS TO MAKING `A COPY OF THE FILM INCLUDING ANY IMAGE THEREOF. IT IS QUITE MANIFEST T HAT ONE CAN `MAKE A COPY ONLY WHEN THE THING IS THERE IN EXISTENCE. TO MAKE A COP Y OF ANY WORK IT NEEDS TO BE ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 8 FIRST CAPTURED IN ONE FORM OR THE OTHER. ONCE IT IS CAPTURED THE QUESTION OF MAKING ITS COPY ARISES. CAPTURING IN THE CONTEXT OF FILMS CAN BE RECORDING OF THE SHOOTING AND IN CASE OF ANY EVENT INCLUDING MATCHES IT CA N BE ONLY WHEN THAT EVENT IS TAKING PLACE. ONCE AN EVENT IS CAPTURED ONLY THEN THE QUESTION OF MAKING ITS COPY ARISES. AS THE MEANING OF COPYRIGHT U/S 14 IN THE C ONTEXT OF CINEMATOGRAPH FILM CLEARLY REFERS TO THE MAKING A COPY OF A FILM AND NOT ITS ORIGINAL RECORDING OBVIOUSLY THE BROADCAST OF LIVE TELECAST CAN NOT BE EQUATED WITH THE COPYRIGHT OF SUCH FILM. 13. ADVERTING TO THE FACTS OF THE INSTANT CA SE IT IS NOTICED THAT THE DISPUTE HAS ARISEN ON THE CONSIDERATION FOR LIVE BROADCASTING O F MATCHES WHICH HAS BEEN CATEGORIZED BY THE DDIT AS SYNONYMOUS WITH THE GRAN TING OF COPYRIGHT IN SUCH WORK. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS A CCENTUATED ON THE POINT THAT THE LIVE TELECASTING ITSELF INVOLVES THE TRANSFER O F COPYRIGHT. IN SUPPORT OF THIS CONTENTION HE REFERRED TO PARA 16.4 OF THE IMPUGNED ORDER AS PER WHICH THE ASSESSEE ITSELF SUBMITTED THAT FOR LIVE TELECASTING IMAGES OF THE MATCHES HAVE TO BE CAPTURED WHICH ARE TRANSFERRED TO CONTROL ROOM BY DIFFERENT CAMERAS. THE DIRECTOR THEN CHOOSES THE BEST IMAGE OUT OF THOSE RECEIVED FROM D IFFERENT ANGLES TO BE TELECASTED SO THAT VIEWERS CAN ENJOY THE SAME FROM THE BEST PO SSIBLE ANGLES. WE ARE UNABLE TO APPRECIATE AS TO HOW THIS PROCEDURE OF LIVE TELECAS TING RESULTS INTO TRANSFER OF COPYRIGHT OF CRICKET MATCH. THE RELEVANT CRITERIA IS NOT CAPTURING OF DIFFERENT IMAGES AND SENDING THEM TO THE CONTROL ROOM BUT TE LECASTING THE FINAL IMAGE. IT IS ONLY WHEN A PARTICULAR IMAGE IS FINALLY CHOSEN OUT OF DIFFERENT OPTIONS AVAILABLE BEFORE THE DIRECTOR WHICH IS TELECASTED THAT GIVES BIRTH TO A `WORK AS PER SECTION 2(Y) OF THE COPYRIGHT ACT 1957 CAPABLE OF COPYRIGH T. IN OUR CONSIDERED OPINION THE LIVE TELECAST OF A MATCH OR ANY OTHER EVENT CAN NOT BE CONSIDERED AS TRANSFER OF COPYRIGHT IN SUCH MATCH. IT IS ONLY WHEN THE LIVE T ELECAST OF A MATCH IS DONE THAT THE QUESTION OF CREATION OF COPYRIGHT IN SUCH MATCH ARI SES. THE SECOND OR LATER TELECASTING OF THE SUCH EVENT SHALL BE CONSIDERED A S USE OF THE WORK AND ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 9 CONSIDERATION FOR THE BROADCASTING OF SUCH RECORDED MATCHES SHALL BE CONSIDERED AS PAYMENT FOR THE USE OF COPYRIGHT IN SUCH EVENT. IT IS FOR THIS REASON AND RIGHTLY SO THAT THE ASSESSEE VOLUNTEERED TO INCLUDE THE CONSID ERATION FOR THE LICENSE OF THE RECORDED BROADCAST AS ROYALTY WHILE MAKING APPLICA TION U/S 195(2) OF THE ACT. 14. AT THIS JUNCTURE IT WILL BE USEFUL TO MAKE REFE RENCE TO A BOOK TITLED LAW OF COPYRIGHT AND INDUSTRIAL DESIGNS BY P.NARAYANAN. C HAPTER 17 OF IT DEALS WITH THE `INFRINGEMENT OF CINEMATOGRAPH FILMS. IT HAS BEEN ELABORATED IN IT THAT IF THE USE OF THE COPYRIGHT WORK IN THE FILM IS ONLY FOR FAIR DEALING FOR THE PURPOSE OF RESEARCH OR PRIVATE STUDY OR CRITICISM OR REVIEW OR FOR REP ORTING CURRENT EVENTS IT WILL NOT CONSTITUTE INFRINGEMENT. IT FURTHER STATES THAT TH ERE IS NO COPYRIGHT IN THE LIVE EVENTS. PARA 17.02 CLEARLY PROVIDES AS UNDER:- LIVE EVENTS : A CINEMATOGRAPH FILM DEPICTING LIVE EVENTS LIKE SPORTING EVENTS HORSE RACE CANNOT INFRINGE ANY COPYRIGHT B ECAUSE THERE IS NO COPYRIGHT IN LIVE EVENTS. 15. FROM THE ABOVE IT IS CLEAR THAT THERE IS NO COP YRIGHT IN THE LIVE EVENTS AND DEPICTING THE SAME CANNOT INFRINGE ANY COPYRIGHT. IN OUR CONSIDERED OPINION THERE IS NO FLAW IN THIS UNDERSTANDING OF LIVE EVENTS AS A STEP BEFORE THE CREATION OF COPYRIGHT IN ANY WORK. WE HAVE SEEN ABOVE THAT THE COPYRIGHT ALWAYS SUCCEEDS THE WORK AND IN THE CONTEXT OF A CINEMATOGRAPH FILM IT CAN BE ONLY CREATED WHEN THE LIVE EVENT HAS TAKEN PLACE. 16. OUR VIEW IS FURTHER FORTIFIED BY THE DIRECT TAX CODE BILL 2010. THE PROPOSED SECTION 314 IS INTERPRETATION CLAUSE AND `ROYALTY HAS BEEN DEFINED IN SUB-SECTION 220 AS UNDER : - ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 10 314. IN THIS CODE UNLESS THE CONTEXT OTHERWISE REQ UIRES . (220) ROYALTY MEANS CONSIDERATION (INCLUDING ANY LUMP-SUM CONSIDERATION BUT EXCLUDING ANY CONSIDERATION WHICH WOULD BE THE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD CAPITAL GAINS) FOR (A) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING TH E GRANTING OF A LICENCE) IN RESPECT OF A PATENT INVENTION MODEL DESIGN TRADE MARK SECRET FORMULA PROCESS OR SIMILAR PROPERTY; (B) THE IMPARTING OF ANY INFORMATION CONCERNING THE WORKING OF OR THE USE OF A PATENT INVENTION MODEL DESIGN SECRET FORMULA PROCESS TRADE MARK OR SIMILAR PROPERTY; (C) THE USE OF ANY PATENT INVENTION MODEL DESIGN SECRET FORMULA PROCESS TRADE MARK OR SIMILAR PROPERTY; (D) THE IMPARTING OF ANY INFORMATION CONCERNING TEC HNICAL INDUSTRIAL COMMERCIAL OR SCIENTIFIC KNOWLEDGE EXPERIENCE OR S KILL; (E) THE USE OR RIGHT TO USE OF ANY INDUSTRIAL COMM ERCIAL OR SCIENTIFIC EQUIPMENT INCLUDING SHIP OR AIRCRAFT BUT EXCLUDING THE AMOUNT REFERRED TO IN ITEM NUMBERS 17 AND 18 OF THE TABLE IN THE FOURTEENTH SCHEDULE WHICH IS SUBJECTED TO TAX IN ACCORDANCE W ITH THE PROVISIONS OF THAT SCHEDULE; (F) THE USE OR RIGHT TO USE OF TRANSMISSION BY SATE LLITE CABLE OPTIC FIBER OR SIMILAR TECHNOLOGY; (G) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING THE GRANTING OF A LICENCE) IN RESPECT OF (I) ANY COPYRIGHT OF LITERARY ARTISTIC OR SCIENTIFIC WORK; (II) CINEMATOGRAPHIC FILMS OR WORK ON FILMS TAPES OR ANY OTHER MEANS OF REPRODUCTION; OR (III) LIVE COVERAGE OF ANY EVENT ; (H) THE RENDERING OF ANY SERVICES IN CONNECTION WIT H THE ACTIVITIES REFERRED TO IN SUB-CLAUSES (A) TO (G); (EMPHASIS SUPPLIED BY US) ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 11 17. FROM THE ABOVE DEFINITION OF `ROYALTY IT CAN BE SEEN THAT CLAUSE (G) REFERS TO ROYALTY AS CONSIDERATION FOR TRANSFER OF (I) ANY C OPYRIGHT OF A LITERARY ARTISTIC OR SCIENTIFIC WORK; AND (III) LIVE COVERAGE OF ANY EVENT. CATEGORIZING COPYRIGHT AND LIVE COVERAGE IN DISTINCT SUB-CLAUSES FAIRLY INDICA TES THAT THESE HAVE BEEN RIGHTLY UNDERSTOOD AS INDEPENDENT OF EACH OTHER. IF `LIVE C OVERAGE HAD BEEN A PART OF COPYRIGHT OF ANY WORK AS HAS BEEN CONTENDED ON BEH ALF OF THE REVENUE THEN THERE WAS NO NEED TO CLASSIFY LIVE COVERAGE AS A SEPARATE ITEM. IT THEREFORE CLEARLY EMERGES THAT THE DEFINITION OF `ROYALTY UNDER THE INCOME-TAX ACT 1961 DOES NOT INCLUDE ANY CONSIDERATION FOR LIVE COVERAGE OF ANY EVENT WHICH IS NOW SOUGHT TO BE BROADENED BY THE DIRECT TAX CODE 2010 BY BRING IT DISTINCTLY WITHIN THE PURVIEW OF ROYALTY. 18. WE THEREFORE SUM UP THE POSITION THA T A `COPYRIGHT CAN BE CREATED ONLY AFTER THE `WORK HAS BEEN PERFORMED FOR THE FIRST TIME. USE OF SUCH WORK AT A LATER POINT OF TIME SHALL LEAD TO EXPLOITING THE COPYRIG HT IN SUCH WORK. EX CONSEQUENTI ANY CONSIDERATION FOR LIVE BROADCASTING CANNOT BE C ONSIDERED AS ROYALTY FOR THE TRANSFER OF COPYRIGHT SO AS TO FALL WITHIN THE DO MAIN OF EXPLANATION 2 TO SECTION 9(1)(VI). THUS IT IS HELD THAT THE LD. CIT(A) HAS CANVASSED UNIMPEACHABLE VIEW ON THIS ASPECT OF THE MATTER. THE IMPUGNED ORDER IS T HEREFORE UPHOLD TO THIS EXTENT. 19. THE NEXT QUESTION FOR OUR DETERMINATION IS THAT IF THE PAYMENT FOR LIVE BROADCASTING MADE BY THE ASSESSEE TO NIMBUS IS NOT COVERED WITHIN THE FRAME WORK OF SECTION 9(1)(VI) WOULD IT AUTOMATICALLY BECOME NON-TAXABLE IN THE HANDS OF THE NON-RESIDENT NOT REQUIRING ANY DEDUCTION OF TAX A T SOURCE BY THE ASSESSEE ? IN OUR CONSIDERED OPINION THE ANSWER TO THIS QUESTION HAS TO BE IN NEGATIVE FOR THE REASON THAT A NON-RESIDENT IS NOT CHARGEABLE TO TAX IN IND IA IN RESPECT OF ROYALTY INCOME ALONE. ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 12 20. IN ORDER TO AVOID ANY OBLIGATION TO DED UCT TAX AT SOURCE ON THE PAYMENTS TO NON-RESIDENTS IT IS SINE QUA NON THAT THE SUM PAID OR PAYABLE SHOULD NOT BE CHARGEABLE UNDER THE PROVISIONS OF THIS ACT IN THE HANDS OF NON-RESIDENT RECIPIENT ETC. TO FIND OUT WHETHER A PARTICULAR SUM IS CHARG EABLE TO TAX IN INDIA OR NOT WE NEED TO VISIT SECTION 4 WHICH PROVIDES THAT WHERE ANY CENTRAL ACT ENACTS THAT INCOME-TAX SHALL BE CHARGED FOR ANY ASSESSMENT YEAR AT ANY RATE OR RATES INCOME TAX AT THAT RATE OR THOSE RATES SHALL BE CHARGED FO R THAT YEAR IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS ACT IN RESPECT O F THE TOTAL INCOME OF THE PREVIOUS YEAR OF EVERY PERSON. SCOPE OF TOTAL INCOME HAS BE EN ENSHRINED IN SECTION 5. SUB- SECTION (2) OF SECTION 5 PROVIDES THAT THE TOTAL IN COME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A NON-RESIDENT SUBJECT TO THE PROVIS IONS OF THIS ACT INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED WHICH (A) IS R ECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA IN SUCH YEAR BY OR ON BEHALF OF S UCH PERSON; OR (B) ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE TO HIM IN IN DIA DURING SUCH YEAR. SCOPE OF INCOME DEEMED TO BE RECEIVED IN INDIA HAS BEEN SET OUT UNDER SECTION 7. RANGE OF INCOME DEEMED TO ACCRUE OR ARISE IN INDIA HAS BE EN GIVEN IN SECTION 9. IT IS NOT THE CASE OF THE DDIT THAT THE AMOUNT IN QUESTION W AS RECEIVED OR DEEMED TO HAVE BEEN RECEIVED BY NIMBUS. FURTHER IT IS NOT THE CAS E OF THE DDIT THAT ANY INCOME ACCRUED OR AROSE TO NIMBUS ON THIS ACCOUNT. THE DD IT HAS RESTRICTED HIS FINDING ONLY TO SECTION 9 DEALING WITH INCOME WHICH SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA. AGAIN THE AMBIT HAS BEEN NARROWED DOWN BY TH E DDIT TO THE ROYALTY INCOME U/S 9(1)(VI) AND ALSO REFERENCE HAS BEEN MA DE TO THE BUSINESS CONNECTION OF NIMBUS IN INDIA IMPLIEDLY REFERRING TO SEC. 9(1)(I ). 21. IN THE PRECEDING PARAS WE HAVE HELD THAT THE RECEIPT BY NIMBUS DOES NOT FALL WITHIN THE REALM OF SECTION 9(1)(VI). MERELY BECAUSE IT DOES NOT FALL UNDER THIS PROVISION DOES NOT MEAN THAT THE INCOME PER SE CEASES TO BE TAXABLE IN INDIA. IF THE INCOME IS FOUND TAXABLE IN THE HANDS OF THE NON-RES IDENT UNDER ANY OTHER CLAUSE OF ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 13 SECTION 9(1) THE REQUIREMENT OF DEDUCTION OF TAX A T SOURCE BY THE ASSESSEE SHALL VERY MUCH REMAIN. 22. IN THIS CONNECTION IT WOULD BE RELEVANT TO NOTE THAT THE DDIT IN PARA (A) ON PAGE 2 OF HIS ORDER HAS HELD THAT THE MATCHES ARE T O BE BROADCASTED IN INDIAN TERRITORY AND THE INCOME OF THE ASSESSEE IS TO BE B Y WAY OF ADVERTISEMENT AND SUBSCRIPTION REVENUE. THE ASSESSEE WOULD BE PAYING TAX ON THIS INCOME. WITHOUT THE RECEIPT OF SIGNAL ON ACCOUNT OF MATCHES TO BE P LAYED NONE OF THIS INCOME WOULD ACCRUE TO THE ASSESSEE. IN THIS WAY HE NEGATE D THE ASSESSEES CONTENTION THAT INCOME IF ANY ACCRUING TO NIMBUS CANNOT BE DEEMED T O ACCRUE OR ARISE IN INDIA DUE TO BUSINESS CONNECTION. THE LEARNED CIT(A) UPHELD THE DDITS POINT OF VIEW BY OBSERVING THAT THE INCOME HAS BEEN EARNED BY NIMBUS DUE TO ITS BUSINESS CONNECTION IN INDIA. THUS IT FOLLOWS THAT THE LD. CIT(A) DECIDED THIS ISSUE AGAINST THE ASSESSEE. 23. ALBEIT THE ASSESSEE IS NOT IN CROSS APPEAL IT HAS FILED AN APPLICATION UNDER RULE 27 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE S 1963 ASSAILING THE FINDING GIVEN BY THE LEARNED CIT(A) THAT NIMBUS HAS BUSINES S CONNECTION IN INDIA AND HENCE INCOME THEREOF IS DEEMED TO ACCRUE OR ARISE I N INDIA. IN SUPPORT OF THIS APPLICATION THE ASSESSEE RELIED ON CERTAIN CASE LAW S. 24. RULE 27 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES 1963 PROVIDES THAT THE RESPONDENT THOUGH HE MAY NOT HAVE APPEALED M AY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAI NST HIM. IT IS SEEN THAT THE LD. CIT(A) HAS HELD IN PARA 18 OF THE IMPUGNED ORDE R `THAT PAYMENTS TOWARDS LIVE TELECAST OF EVENTS ARE NOT A ROYALTY PAYMENT; HENC E THERE WAS NO REQUIREMENT OF DEDUCTION OF TAX U/S 195. DESPITE THE FACT THAT T HE POINT OF BUSINESS CONNECTION WAS DECIDED BY HIM AGAINST THE ASSESSEE HE CHOSE T O HOLD THAT THERE WAS NO REQUIREMENT OF DEDUCTION OF TAX U/S 195. AS THE DU TY TO DEDUCT TAX AT SOURCE CAST BY THE DDIT WAS RELAXED BY THE LD. CIT(A) THE ASSE SSEE DID NOT FILE ANY APPEAL. ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 14 SINCE THE REVENUE HAS FILED APPEAL THE ASSESSEE AS RESPONDENT IS ENTITLED TO FILE APPLICATION UNDER RULE 27 TO PROTECT ITS INTEREST O N THE POINT DECIDED BY THE LD. CIT(A) AGAINST HIM ON THE QUESTION OF BUSINESS CON NECTION OF NIMBUS IN INDIA. WE THEREFORE ADMIT THE APPLICATION FILED BY THE A SSESSEE UNDER RULE 27 AND TAKE UP THE QUESTION OF BUSINESS CONNECTION OF NIMBUS IN INDIA FOR DISPOSAL ON MERITS. 25. IT IS NOTICED THAT THE DDIT HAS HELD THAT INCOME CAN BE HELD AS ACCRUING OR ARISING TO NIMBUS DIRECTLY OR INDIRECTLY THROUGH OR FROM ANY BUSINESS CONNECTION IN INDIA. IN REACHING THIS CONCLUSION THE DDIT HAS NO TICED THAT THE ASSESSEE BY BROADCASTING THE MATCHES IN INDIA WILL BE EARNING I NCOME FROM ADVERTISEMENT AND SUBSCRIPTION. THIS INCOME IS TAXABLE IN THE HANDS O F THE ASSESSEE. IT IS ON THIS BASIS THAT THE DDIT HAS HELD THAT THE PAYMENT MADE BY THE ASSESSEE TO NIMBUS WILL BE HELD AS ARISING OUT OF BUSINESS CONNECTION IN INDIA WHICH FINDING HAS BEEN ECHOED IN THE FIRST APPEAL. 26. WE ARE UNABLE TO APPROVE THIS POINT OF VI EW OF THE AUTHORITIES BELOW FOR THE REASON THAT NIMBUS HAS PROVIDED LICENSE FOR THE LIV E BROADCAST OF CERTAIN MATCHES TO THE ASSESSEE FOR A DEFINITE CONSIDERATION. THE R IGHTS IN SUCH BROADCAST VEST WITH NIMBUS. AFTER THE LIVE BROADCAST BY THE ASSESSEE N IMBUS WILL CONTINUE TO HOLD RIGHT OVER SUCH BROADCAST. THE MERE ACT OF ALLOWING THE ASSESSEE BY NIMBUS TO LIVE BROADCAST THE MATCHES FOR A DEFINED CONSIDERATION IN OUR CONSIDERED OPINION WOULD NOT CONSTITUTE A BUSINESS CONNECTION IN INDIA . IN ORDER TO CONSTITUTE A BUSINESS CONNECTION OF A NON-RESIDENT IN INDIA IT IS NECESSARY THAT SOME SORT OF BUSINESS ACTIVITY MUST BE DONE BY THE NON-RESIDENT IN THE TAXABLE TERRITORY OF INDIA. CLAUSE (A) OF EXPLANATION 1 TO SECTION 9(1)(I) PROVIDES THAT IN THE CASE OF BU SINESS OF WHICH ALL THE OPERATIONS ARE NOT CARRIED OUT IN INDIA THE INCOME OF THE BUSINESS DEEMED UNDER THIS CLAUSE TO ACCRUE OR ARISE IN INDI A SHALL BE ONLY SUCH PART OF THE INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OPERATI ONS CARRIED OUT IN INDIA. FROM THE ABOVE PROVISION IT BECOMES MANIFEST THAT THE NON-RE SIDENT MUST CARRY OUT CERTAIN OPERATIONS IN INDIA SO AS TO FALL WITHIN THE AMBIT OF SECTION 9(1)(I). ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 15 27. THE RELEVANT CRITERIA IS THE CARRYING ON OF BUSINESS OPERATIONS IN INDIA BY THE NON-RESIDENT AND NOT THE EARNING OF INCOME BY A NY RESIDENT FROM THE USE OF ANY PRODUCT ACQUIRED FROM THE NON-RESIDENT. WHERE THE NON-RESIDENT ONLY ALLOWS SOME RESIDENT TO EXPLOIT CERTAIN RIGHT VESTED IN IT ON C OMMERCIAL BASIS IT CANNOT BE SAID THAT THE NON-RESIDENT HAS CARRIED OUT ANY BUSINESS ACTIVITY IN INDIA. THE ACT OF THE ASSESSEE EARNING REVENUES FROM INDIA CANNOT LEAD TO A BUSINESS CONNECTION OF NIMBUS IN INDIA AS THE TRANSACTION BETWEEN ASSESSEE AND NIMBUS IS CONFINED TO RECEIVING BROADCASTING RIGHT FOR A CONSIDERATION. W HETHER THE ASSESSEE EARNS INCOME OR SUFFERS LOSSES FROM THE EXPLOITATION OF S UCH BROADCASTING IS NOT THE CONCERN OF NIMBUS. SUCH TRANSACTION OF THE ASSESSEE WITH NIMBUS ON PRINCIPAL TO PRINCIPAL BASIS CANNOT BE CONSIDERED AS A GROUND FO R HOLDING THAT NIMBUS HAS A BUSINESS CONNECTION IN INDIA AND HENCE THE INCOME S HALL ACCRUE TO NIMBUS THROUGH THIS BUSINESS CONNECTION IN INDIA. 28. IN THE CASE OF CIT VS. R.D.AGARWAL & CO. & ANR. [(1965) 56 ITR 20 (SC)] THE HONBLE SUPREME COURT HAS HELD THAT THE EXPRESS ION BUSINESS CONNECTION UNDOUBTEDLY MEAN SOME THING MORE THAN BUSINESS. A BUSINESS CONNECTION HAS BEEN HELD TO BE INVOLVING A RELATION BETWEEN THE BU SINESS CARRIED ON BY A NON- RESIDENT YIELDING PROFITS OR GAINS AND SOME ACTIVIT Y IN THE TAXABLE TERRITORIES WHICH PROVIDES DIRECTLY OR INDIRECTLY TO THE EARNING OF T HOSE PROFITS OR GAINS. A STRAY OR ISOLATED TRANSACTION HAS BEEN HELD TO BE NOT CONSTI TUTING A BUSINESS CONNECTION. IN THIS CASE THE ASSESSEE PROCURED ORDERS IN TAXABLE T ERRITORIES FOR NON-RESIDENT FOR WHICH HE WAS NOT DULY AUTHORIZED AND CONTRACTED FOR THE SALE OF GOODS. THE ORDERS WERE ACCEPTED BY THE NON-RESIDENT. PRICE WAS RECEIV ED AND DELIVERY WAS GIVEN OUTSIDE INDIA. NO OPERATION SUCH AS PROCURING OF MA TERIAL OR MANUFACTURE OF FINISHED GOODS TOOK PLACE WITHIN INDIA. THE HONBLE SUPREME COURT HELD THAT THERE WAS NO BUSINESS CONNECTION OF THE NON-RESIDENT. 29. FROM THIS JUDGMENT IT CAN BE EASILY DED UCED THAT WHAT IS RELEVANT IS THE BUSINESS CONNECTION OF THE NON-RESIDENT BY CARRYING OUT SOME OPERATIONS IN INDIA. ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 16 MERE SALE OF GOODS BY A NON-RESIDENT IN INDIA ON PR INCIPAL TO PRINCIPAL BASIS DOES NOT ESTABLISH ANY BUSINESS CONNECTION OF NON-RESIDE NT WITH INDIA. IF WE PRESUME FOR A MOMENT WITHOUT AGREEING THAT CONTENTION ADVAN CED ON BEHALF OF THE REVENUE IN THIS REGARD MERITS ACCEPTANCE EVEN THEN NO INC OME WILL BE DEEMED TO ACCRUE OR ARISE TO THE NON-RESIDENT IN INDIA BY REASON OF APP LICATION OF EXPLANATION 1 (A) TO SECTION 9(1)(I) WHICH PROVIDES THAT ONLY SUCH PART OF THE INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA UNDER THIS CLAUSE. AS BY SELLING THE GOODS IN INDIA THE NON-RESIDENT CANNOT BE SAID TO HAVE CARRIED OUT ANY BUSINESS IN INDIA THERE CANNOT BE ANY ISSUE OF THE APPLICABILITY OF SECTION 9(1)(I). IN THE SAME MANN ER WHEN A NON-RESIDENT ALLOWS ANY RESIDENT TO COMMERCIALLY EXPLOIT ITS ASSET FOR A CONSIDERATION THE BUSINESS CONNECTION IN TERMS OF SECTION 9(1)(I) WILL BE LACK ING. THUS IT IS CLEAR THAT BOTH THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN HOLDING THA T NIMBUS HAS A BUSINESS CONNECTION IN INDIA. 30. AS THE CONSIDERATION FOR LIVE BROADCASTING DOES NOT FALL EITHER U/S 9(1)(I) OR U/S 9(1)(VI) IN OUR CONSIDERED OPINION SUCH AMOUN T IS NOT CHARGEABLE TO TAX UNDER THE PROVISIONS OF THIS ACT IN THE HANDS OF NON-RESI DENT. AS SUCH THERE IS NO QUESTION OF DEDUCTION OF TAX AT SOURCE. 31. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF NOVEMBER 2011. SD/- SD/- (N.V.VASUDEVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 09 TH NOVEMBER 2011. DEVDAS* ITA NO.99/MUM/2009 M/S.NEO SPORTS BROADCAST PRIVATE LIMITED. 17 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXXIII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.