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Sum received by NR sport association for granting advertising rights in ICC cricket events in India taxable u/s 115BBA

February 22, 2021[2021] 124 426 (AAR - New Delhi)

INTERNATIONAL TAXATION : Where applicant acquired rights of advertisement and publicity of its brand in ICC cricket matches played in India, income of non-resident Sports Association had accrued in India under provision of section 115BBA(1)(b); applicant is liable to withholding tax under section 194E

• ICC is international governing body for cricket - UAE company IDI is formed by ICC which owns and controls commercial rights in relation to ICC Events - IDI-UAE has licensed commercial rights for India in relation to ICC events to Mauritius company IML - IML, Mauritius and applicant LG-India has entered into 'Marketing and Advertising Agreement' (MAA) wherein IML has agreed to grant LG-India certain promotional, advertising, marketing and other commercial rights in capacity of being a Global Partner (GP) in connection with ICC events.

Ruled that:-

-   Payment made by applicant under MAA was purely for advertisement and publicity of brand name of applicant and for promotion of its product during Cricketing events of ICC and it was not 'royalty'.
-   Source of income was game of cricket played in India. Though payments were described as rights money, in essence they were in nature of guarantee money and were intricately connected with cricketing event and matches played in India. Close connection between amount paid by applicant and cricket matches played in India has never been denied. Thus, income of non-resident Sports Association had accrued in India under provision of section 115BBA(1)(b).
-   All conditions as stipulated in section 115BBA are found fulfilled in this case. Obligation of applicant to deduct tax under section 194E was absolute.
-   Payment made by applicant to IDI-Mauritius for grant of commercial rights under 'Marketing and Advertising Agreement' is not taxable in India in hands of IML as per provisions of DTAA between India and Mauritius.
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