TMI Blog2011 (5) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, although the payments made to them were income which had accrued in India, yet, those were not taxable under the aforesaid provision and thus, the liability to deduct under Section 194E of the Act never accrued. Further, it appears from the Notification No. S.O. 2085(E) dated August 21, 2008 issued under Section 194J, Explanation (a), that the sports persons and Umpires and Referees are included within the meaning of Section 194J with effect from the date of publication of such notification - Decided in the favour of assessee. Regarding DTAA - there is no provision which excludes the operation of the provisions contained in Sections 115BBA or 194E of the Act and thus, existence of those agreements did not do away with the liability of the appellant to deduct tax at the source in respect of payments of the alleged Prize Money or the Administrative expenses to the foreign teams playing on the soil of India - Appeal is partly allowed. - HON'BLE BHASKAR BHATTACHARYA AND SAMBUDDHA CHAKRABARTI, JJ. For the Appellant : R.N. Bajoria, J.P. Khaitan, Rajkumar Basu and Agnibesh Sengupta, Advs. For the Respondent : Md. Nizamuddin and P. Dhudoria, Advs. JUDGMENT Bhaskar Bhattacharya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Management Committee and subsequently referred to as Pak-Indo-Lanka Committee abbreviated to Pilcom. f) Each country was required to bear and pay the expenses incurred for matches played in that country and was entitled to the receipts flowing from such matches. However, there were certain common expenses, viz. for bringing the teams to the sub-continent, payments for bid money to ICC and non-participating and participating countries, expenses and fees of Umpires and Referees, Administrative expenses of teams, prize money, cost of cricket balls, etc. ( common pool expenses ). Similarly, there were certain receipts such as for International T.V. rights and title sponsorship etc. ( common pool receipts ) which were paid by the persons concerned in lump sum for all the world cup matches wherever played. It was in order to facilitate the collection of such receipts and payment for expenses that the Committee PILCOM opened bank accounts including at London. The Committee PILCOM was to maintain an account of such common pool receipts and expenses only for the sake of convenience. g) Whatever amount passed through the hands of the Committee PILCOM did not belong to it and was not on it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter on merits and directed that the appeals should be re-decided after affording an opportunity of hearing to the appellants in respect of the submissions/arguments made by the Income-tax Officer. m) Thereafter, the Commission of Income-tax (Appeals) took up both the appeals of INDCOM and PILCOM. The appellants were provided with copies of the para-wise comments dated July 30, 1997 of the Income-tax Officer and by an order dated December 28, 1998, the Commissioner of Income-tax (Appeals) decided the PILCOM s appeal. n) On an appeal by the appellant, the Tribunal by order dated January 4, 2000 decided the appeals of the department as well as PILCOM against the said order dated December 28, 1998 of the Commissioner of Income-tax (Appeals). The Tribunal, inter alia, held that only the payment made to the cricket associations of different countries referable to the matches played by those countries in India could be considered for the purpose of tax deduction/taxation. The said order dated January 4, 2000 of the Tribunal is the subject-matter of appeal under Section 260A of the Act filed by PILCOM before this Court. o) INDCOM s appeal was decided by the Commissioner of Income-tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 183 days. United Arab Emirates 14 Amounting to or exceeding 183 days. Sri Lanka 14 Exceeding 120 days. England 15 Amounting to 90 days. According to all these articles, the amounts paid to the Umpires and Referees for matches officiated in India could be taxed in India only if they had a fixed base regularly available to them in India for the purpose of performing their activities or their stay in India amounted to or exceeded the specified number of days during the previous year. None of the non-resident Umpires and Referees had any fixed base available to him in India for the purpose of performing his activities. The stay in India of none of the umpires and referees amounted to or exceeded the specified number of days during the previous year. The entire duration of the World Cup matches played in 3(three) Countries namely, India, Pakistan and Sri Lanka was just about one month. In the circumstances, there was no question of any taxation/tax-deduction in India in respect of the said payments of 27450. (c)(i) Prize money paid to foreign teams and individual foreign players was not consideration paid for participation in any game and did not fall within the purview of Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 194E. vi) Whether and in any event the Tribunal was justified in law in holding that the prize money paid to teams and individual players of New Zealand, Australia, Kenya and Sri Lanka were taxable in India notwithstanding the double taxation avoidance agreements between India and the said Countries and that the Article relating to entertainers athletes was applicable. In order to appreciate the points involved in this appeal, it will be appropriate to refer to the provisions contained in Sections 2(24) (ix), 5(2), 9(1)(i), 115BBA, 194E, 194J and 201(1) of the Income Tax Act, 1961 which are quoted below: 2(24) income includes ***** (ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever; 5. Scope of total income. ***** (2) subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of an assessee, (a) being a sportsman (including an athlete), who is not a citizen of India and is a non-resident, includes any income received or receivable by way of (i) participation in India in any game (other than a game the winnings where from are taxable under Section 115-BB) or sport; or (ii) advertisement; or (iii) contribution of articles relating to any game or sport in India in newspapers, magazines or journals; or (b) being a non-resident sports association or institution, includes any amount guaranteed to be paid or payable to such association or institution in relation to any game (other than a game the winnings where from are taxable under Section 115-BB) or sport played in India, the income tax payable by the assessee shall be the aggregate of (i) the amount of income tax calculated on income referred to in clause (a) or clause (b) at the rate of ten per cent; and (ii) the amount of income tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of income referred to in clause (a) or clause (b): Provided that no deduction in respect of any expenditure or allowance shall be allowed under any provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (b) of Section 44-AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income tax under this section:] [Provided also that no individual or a Hindu undivided family referred to in the second proviso shall be liable to deduct income tax on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.] (2) [* * *] (3) [* * *] Explanation. For the purposes of this section, (a) professional services mean services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of Section 44-AA or of this section; (b) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of Section 9; (c) where any sum referred to in sub-section (1) is credited to any account, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not fall within the scope of taxable income and thus, his client had no duty to deduct tax from that amount paid to the team at the source. In our opinion, such contention is not tenable for the simple reason that it was the appellant who made a lump sum amount to the team-manager and as indicated in the proviso to Section 115BBA (1) of the Act, no deduction in respect of any expenditure is permissible for calculation of the income under the said provision from the total amount received by the foreign team for such participation. Thus, in our opinion, the additional amount paid in form of the alleged administrative expenses was really part of the prize money allotted to the teams. It goes without saying that prize money is payable also to a losing team, although, at a lesser rate. 7. In the case of GE India Technology Centre P. Ltd. Vs. CIT and another reported in (2010) 327 ITR 456(SC) and relied upon by Mr. Bajoria, it was pointed out that Section 195(1) of the Act uses the expression sum chargeable under the provisions of the Act and there is no necessity to give weightage to those words. Further, it was held that Section 195 of the Act uses the word payer and not the word a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. S.O. 2085(E) dated August 21, 2008 issued under Section 194 J, Explanation (a), that the sports persons and Umpires and Referees are included within the meaning of Section 194 J with effect from the date of publication of such notification. Thus, by taking aid of such notification given effect to from August 21, 2008, there is no scope of imposing liability upon the appellant for not deducting tax under Section 194 E of the Act which is applicable to the non-resident for the period we are concerned, whereas the provision contained in Section 194 J of the Act is applicable to the cases of payments made to a resident. Thus, after August 21, 2008, the resident Umpires and Referees can come within the purview of deduction at source under the said Section 194 J. At any rate, in the case before us, we find that for the payments to Umpires and Match Referees, there was no scope of invocation of Section 195E or even Section 195J at the relevant point of time. 1 2. The next question is whether the double taxation avoidance agreements between India on one hand and the Australia, Kenya, New Zealand, Holland and Sri Lanka, on the other exempts the operation of Section 194E of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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