New Delhi : Global broadcasters making big money from live telecast of cricket matches in India will have to pay taxes here, ruled the Commissioner of Income Tax (CIT) while dismissing the plea of sports channel Nimbus, which said that it was not liable to be taxed.
Although the Singapore-based World Sports Nimbus (WSN) has decided to file an appeal against the CIT (Appeals) order with the Income Tax Appellate Tribunal (ITAT), the tax case will have wide implications for foreign companies telecasting live cricket matches.
In the present case, assessing officer (AO) imposed a tax liability of Rs6 crore on Nimbus on the income it had earned by telecasting live cricket matches during 2002 to 2005.
Nimbus, however, did not agree with the AO’s assessment and took up the matter with the CIT but failed to get any relief.
“The CIT has issued an order against the company against which we will be filing an appeal,” company’s Chief Financial Officer Umeet Shah told PTI.
The decision of the Income tax Appellate tribunal in this case will have a bearing on the broadcasters of the high profile Indian Premier League (IPL), Sony-WSG combine.
Nimbus had entered into an agreement with Prasar Bharti in the year 2002 for production and generation of live television signals of cricketing events, both domestic and international in India from February 2002 to October 2004.
The CIT in its order said, ”the character of income by way of consideration received by the appellant (Nimbus) for rendering services of production and generation of live television signal was in nature of fees for technical services and was taxable under the Income Tax Act”
Nimbus had contended that addition of over Rs20 crore to the company’s income in India and the subsequent tax liability was not justified as the company was foreign company and did not have a permanent establishment in India.
Besides, the company’s income from giant advertisers like Pepsi, LG and Coca Cola during the live matches will also be taxable, the order said.
“Since the live cricketing event was telecast in India, Indian advertisers had made payments to Nimbus for advertising their products in India through live telecast”, it said.
The order added that the essence of the activity was to make available the live television signal to the Indian customers and in turn to earn advertisement revenue from companies here, which clearly indicates that the source of income of the company is in India.