S. RAVINDRA BHAT

1. This judgment would dispose of three writ petitions: WP 9509/2016 (preferred by the Commissioner of Income Tax, hereafter "the revenue's petition"; WP 10145/2016 (preferred by Jaypee Sports International Limited, hereafter called "Jaypee") and WP 10307/2016 (Formula One World Championship Limited (FOWC) hereafter called "the F1 Championship Ltd" petition). Both Jaypee and FOWC had filed applications before the Authority for Advance Ruling ("AAR"). The AAR held one question in favour of the revenue and the other question in favour of the said two companies. All three parties have, thus approached this court, under Article 226 of the Constitution.

2. A brief background of the facts is necessary. FOWC is a UK tax resident company incorporated on 7 March 2001. Consequent to agreements entered into between the Federation International de I’ Automobile ("FIA" an international motor sports events regulating association), Formula One Asset Management Limited (‘FOAM’) and FOWC, FOAM licensed all commercial rights in the FIA Formula One World Championship (Championship) to FOWC for 100-year term effective from 1 January 2011. FOWC entered into a "Race Promotion Contract" (RPC) dated 13 September 2011, by which it granted to Jaypee Sports the right (Right) to host, stage and promote the Formula One Grand Prix of India event for a consideration of USD 40 millions. An Artworks License Agreement (ALA) contemplated in RPC was also entered into between FOWC and Jaypee the same day, i.e. 13.09.2011, permitting the use of certain marks and intellectual property belonging to FOWC for a consideration of USD 1. The RPC of 2011 was preceded by another RPC of 25-10-2007; FOWC and Jaypee signed it.

3. FIA is a regulatory body; it regulates the FIA Formula One World Championship which has been the premier form of motor racing since its inception in 1950. The formula, so called is with reference to a set of rules that all participants' cars must conform to. F1 seasons consist of a series of races, known as Grand Prix (from French, meaning grand prizes), held across the world on specially designed and built F1 circuits across 26 different locales.

4. F1 Grand Prix events are held under the aegis of the FIA F1World championship's competition -in which F1 racing cars, assembled and manufactured strictly in terms of the F1 Technical regulations, compete against each other, under F1 Sporting Regulations and the F1 International Sporting Code framed and made effective by the FIA. F1 drivers across the world have the ability, competence and skill to drive an F1 car and participate in F1 racing events. About 12 to 15 teams typically compete in these championships in any one annual racing season. Some celebrated and well-known participants are the Ferrari, McLain, Red Bull teams etc. The teams assemble and construct their vehicles, which comply with defined technical specifications and engage drivers who can successfully maneuver the F1 cars in the racing events. All teams known as “Constructors” enter into a contract, known as the “Concorde Agreement” with FOWC and the FIA. In these agreements they undertake to participate to the best of their ability, in every F1 event included in the official annual F1 racing calendar. They also bind themselves to an unequivocal negative covenant with FOWC that they would not participate in any other similar motor racing event whatsoever nor would they promote in any manner any other rival event. The F1 racing teams exclusively participate in about 19 to 21 listed F1 annual racing events on the official racing calendar, set by the FIA. This is, in effect, a closed circuit event since no team other than those bound by contract with FOWC are permitted participation.

5. Every F1 racing event is hosted, promoted and staged by a promoter with whom FOWC as the right holder, enters into contract and whose event is nominated by the CRH (i.e Contract Right Holder, which is in effect, FOWC), to the FIA for inc