ESPN Star Sports gets tax breather, ITAT not to add ₹752 crore to its income for AY15

In a breather for ESPN Star Sports, Delhi bench of Income Tax Appellate Tribunal (ITAT) deleted an addition of ₹752 crore to its income for assessment year (AY) 2014-15 by the income tax authorities.
The company had declared income of ₹90 crore for AY 2014-15. Its income-tax return came under scrutiny and the assessing officer sought to make an addition of ₹752 crore to the company's income, which was transferred by it to its parent.

Tax authorities claimed that this payment was royalty, a contention challenged by ESPN Start Sports which filed an objection before the dispute resolution panel saying that the income cannot be treated as royalty.

However, the panel upheld the decision of assessing officer saying the live telecast of an event was an outcome of "scientific work" and payment thereof would be covered under the definition of 'royalty'.

ESPN Star Sports appealed against the order before the Delhi bench of the ITAT.

"We hold that the fee received towards live transmission cannot be taxed as 'royalty' .... we decide this issue in favour of the assessee," the division bench of ITAT said in its order, citing rulings from other cases.

The bench allowed the appeal filed by the assessee and directed the assessing officer to delete the addition. The company declined to comment on the matter.