Assessee-company, along with LG group entities, had entered into a Global Partnership Agreement with Global Cricket Corporation (GCC), a Singapore company, appointing LG as Global Partner for ICC events. Under the agreement, assessee acquired advertising and promotional rights (including display of LG Marks at specified sites at venues) and a right to use ICC/Event Marks in or on advertising material throughout the licensed territory defined as the world. Assessee filed an application under Section 195 seeking a certificate to remit consideration for the same without deduction of tax. Deputy Director of Income Tax rejected application, holding that consideration was in the nature of royalty for acquisition of rights to exploit the commercial potential of ICC events and tax withholding at 10% on the gross amount for the entire contract was ordered. On revision under Section 264, Director of Income Tax, recorded that assessee conceded to an element of use of ICC trademark, found that agreement comprised of two elements, booking of advertising space and right to use ICC/Event Marks, and apportioned 2/3rd of said consideration towards advertisement and 1/3rd towards right to use marks as royalty within Section 9(1)(vi) read with Article 12, and withholding at 15% on royalty portion was directed. On writ, the Court held that since payments made by the assessee were for acquiring rights as per the agreement between the assessee and GCC in India to pursue the commercial interest of the assessee to boost its brand image in India, such transactions were taxable in India. Since the definition of royalty includes consideration of right to use mark and a substantive right to use marks was created by virtue of agreement, consideration paid by assessee to GCC was liable to be characterised and taxed in India as ‘royalty’. Further, apportionment of 1/3rd of payment as royalty (with balance 2/3rd treated as advertisement) was justified under the Act. The writ petition was dismissed.