ESPN Star Sports gets tax relief, ITAT will not add Rs.752 crore to its Income for Assessment Year 15

Relief for ESPN Star Sports, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) reversed the income tax authorities’ addition of 752 crore to its revenue for the assessment year (AY) 2014-15.

For assessment year 2014-15, the company reported a profit of Rs 90 crore. Its income-tax return was scrutinised, and the assessing officer wanted to add 752 crore to the company’s income, which it remitted to its parent.

The tax authorities argued that this payment was royalty, which ESPN Start Sports opposed by filing an objection before the dispute resolution panel, claiming that the income cannot be classified as royalty.

Nonetheless, the panel maintained the finding of evaluating officer noting the live telecast of an event was a product of “scientific effort” and payment thereof would be covered under the concept of ‘royalty‘.

ESPN Star Sports filed an appeal against the verdict with the ITAT’s Delhi court.

“We hold that the amount received for live transmission cannot be taxed as ‘royalty’…. we decide this matter in favour of the assessee,” the ITAT division bench said in its judgement, citing previous rulings.

The panel granted the assessee’s appeal and asked the assessing officer to remove the addition. The corporation refused to comment on the situation.