ICC Trademark Usage in Cricket World Cup Sponsorship Attracts Royalty Tax Under Income Tax Act: Delhi HC

The Delhi High Court has upheld the Income Tax Department’s decision to treat a portion of payments made for global sponsorship and advertising rights in an ICC cricket event as royalty, by attracting withholding tax under the Income Tax Act and the India–Singapore Double Taxation Avoidance Agreement (DTAA). The Bench of Justice V. Kameswar Rao and Justice Vinod Kumar dismissed a writ petition challenging an order passed under Section 264 of the Income Tax Act, 1961, which had directed tax deduction at source (TDS) on one-third of the sponsorship fee paid to a Singapore-based entity holding commercial rights to ICC events. The bench stated that the agreement clearly conferred two distinct sets of rights—advertising space and trademark usage. Use of ICC trademarks could not be treated as negligible or incidental, given the global reach, brand association, and commercial advantage derived, particularly in cricket-centric markets like India. The apportionment of consideration adopted by the tax authorities was reasonable and based on material on record. The case arose from a Global Partnership Agreement executed in June 2002 under which an Indian electronics manufacturer, along with its group entities, acquired extensive advertising and promotional rights for ICC cricket events, including the Cricket World Cup. The agreement permitted brand visibility at stadiums, on electronic screens, official websites, tickets, and other event-related platforms. For these rights, a total consideration of USD 27.5 million was agreed upon, of which USD 11 million was paid by the Indian entity. Prior to remittance, the company sought a certificate under Section 195 of the Income Tax Act to allow payment without deduction of tax. The department rejected the request, holding that the payment constituted royalty since the agreement also granted rights to use ICC trademarks, event marks, and official partner status, which enhanced the brand’s commercial value and global visibility. On revision, the Director of Income Tax partially accepted the taxpayer’s contention that a substantial portion of the payment related to pure advertising space. However, the authority concluded that the right to use ICC trademarks was not merely incidental, and accordingly two-thirds of the payment was treated as consideration for advertisement space (non-taxable as royalty), and one-third was classified as royalty for use of trademarks, taxable at 15% under Article 12 of the India–Singapore DTAA. The petitioner argued that the dominant purpose of the agreement was advertising and brand promotion, not trademark licensing. Use of ICC logos was incidental and inseparable from sponsorship. No independent or commercial exploitation of the ICC trademark on products was permitted. Reliance was placed on earlier rulings, including Formula One World Championship Ltd. and Sheraton International Inc., where incidental use of trademarks in promotional arrangements was held not to constitute royalty. The department countered that the agreement allowed worldwide use of ICC and Event Marks on advertising materials, packaging, and even websites. The right to use such trademarks had independent commercial value, distinct from physical advertising at stadiums. The taxpayer had itself conceded, during revision proceedings, that trademark use was involved. The Court further observed that proceedings under Section 195 are preliminary in nature, meant to ensure tax compliance at the stage of remittance, and do not finally determine tax liability. The Court emphasized that it was not sitting as an appellate authority over the tax department’s factual findings. Since the decision-making process was lawful and reasoned, no violation of natural justice was found. Case Details Case Title: M/S LG Electronics India P.Ltd & Anr Versus Director Of Income Tax(International Taxation) & Anr Case No.: W.P.(C) 15181/2004 Date: 24.12.2025 Counsel For Petitioner: Deepak Chopra Counsel For Respondent: Indruj Singh Rai Click Here To Read Order Read More: PMLA | No “Necessity of Arrest” After 9 Years in Money Laundering Probe: Delhi HC

ICC Trademark Usage in Cricket World Cup Sponsorship Attracts Royalty Tax Under Income Tax Act: Delhi HC

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ICC Trademark Usage in Cricket World Cup Sponsorship Attracts Royalty Tax Under Income Tax Act: Delhi HC

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