9911796707
TMI Blog2000 (1) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2-2-1993 at London, India, Pakistan and Sri Lanka were selected, on the basis of competitive bids, to have the privilege of jointly hosting the 1996 World Cup Cricket Tournament. These three host countries were required to pay varying amounts to the Cricket Control Boards/Associations of different countries as well as to ICC in connection with conducting the preliminary phases of the tournament and also for the purpose of promotion of the game in their respective countries. For the purpose of conducting the final phase of the tournament in India, Pakistan and Sri Lanka, a Committee was formed by the three host members under the Name PILCOM. Two Bank accounts were opened by PILCOM in London to be operated jointly by the representatives of Indian and Pakistan Cricket Boards, in which the receipts from sponsorship, T.V. rights, etc. were deposited and from which the expenses were met. The surplus amount remaining in the said Bank account was decided to be divided equally between the Cricket Boards of Pakistan and India after paying a lump-sum amount to Sri Lanka Board as per mutual agreements amongst the three Boards. For the purpose of hosting the World Cup matches in India, the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,18,29,300.00. 3. The PILCOM appealed against the said order passed by the ITO and the CIT(A) disposed of the appeal by his order dated 17-11-1997. In further appeal preferred by PILCOM before the ITAT, the ITAT, by its order dated 25-6-1990 in ITA No. 62 /Cal./ 1998, set aside the order passed by the CIT(A) and restored the matter back to his file for redeciding the issue after affording opportunity of being heard to PILCOM. Accordingly, the appeal was re-heard by the CIT(A), in which both the sides were allowed ample opportunity to represent their respective cases and the CIT(A) finally passed his appellate order on 28-12-1998, which is being challenged before us by both the sides. 4. After discussing the basic facts of the case, the ld. CIT(A) detailed out the actual payments made by PILCOM (in sterling pound) and classified the same into seven distinct categories, as listed below, on the basis of the purposes for payments as well as the differences between categories of recipients of the payments. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 7,10,000 --------- 43,50,000 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only 17/37th portion ie., 45.94 percentage of the other six types of payments could be considered to be attracted by the provisions of section 201(1)/194E. He thus directed that so far as other six categories of payments are concerned, 45.94 per cent of the payments covered by those categories should alone be taken into consideration for the purpose of considering PILCOM as defaulter under section 201(1)/ 194E. The Department challenges the order of the CIT(A) by arguing that firstly CIT(A) has been wrong in considering the amount of pound 1,20,000 as not coming within the purview of section 194E, and secondly that instead of applying the percentage of 45.94 per cent, the CIT(A) should have held that the PILCOM was defaulter in respect of the entire amounts of payments made by it. On the other hand, it is the contention of the assessee that PILCOM was not at all liable to deduct any tax at source under section 194E from the payments made by it from its London Bank accounts and hence, the question of treating it as defaulter under section 201(1) cannot arise. 6. Before proceeding with the main issues in these appeals, as discussed above, it will be necessary for us to dispose of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quire production of new materials or evidences. The judgment of the Supreme Court as tried to be relied upon by the assessee's side does not exactly militate against the power of the Deptt. to raise the additional ground on legal issue, as has been held by the Supreme Court in the case of National Thermal Power Co. Ltd. Hence, we admit this additional ground and proceed to decide the same on merits. 9. However, this particular appeal before us is against the order of the CIT(A) which arises, not exactly out of the order passed by the Assessing Officer, but out of the order passed by the ITAT restoring the earlier appeal filed before the CIT(A) back to the file of the CIT(A) for fresh adjudication. It is worthwhile to note that the Department did not take any objection to admission of the appeal by the CIT(A) during the course of the original appellate proceedings before him, nor before the ITAT at the stage of the appellate proceeding against the original order of the CIT(A). Now that the present appeal before us is directly the result of the earlier order of the ITAT without any challenge being taken at that stage on the issue relating to admissibility of the appeal before the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the ambit of this Notification, the CIT(A) was perfectly entitled to hear the appeal filed by the assessee against an order under Sec. 201(1), although the assessee was not a company. Sec. 246 was substituted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989. It is contended by the assessee that there was no material change in the amended provisions, in so far as the same are relevant for the purposes of the present appeal. It has also been pointed out that the power of the Board, which was earlier contained in clause (i) of Sub-sec. (2) of Sec. 246 found place in clause (h) of new Sub-Sec. (2) of the same Section. In this connection, the ld. counsel for the assessee refers to Sec. 24 of the General Clauses Act, 1897, which provides as below : "24. Continuation of orders, etc., issued under enactments repealed and re-enacted. - Where any Central Act or Regulation is, after the commencement of this Act, repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided, any appointment, notification, order, scheme, rule, form or bye-law made or issued under the repealed Act or Regulation, shall so far as it is not inconsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Department cannot be allowed to misdirect the assessee to file the appeal before a wrong authority, if that be the case at all, and thereafter to take up a plea that at the present moment, there is no course left open to the assessee for challenging the highly damaging order of the ITO, inasmuch as, the institution of DC(A) itself stands abolished now. Such a stand taken up by the Department would tantamount to inviting travesty of justice and such an approach on the part of the Deptt. is highly condemnable. Taking into consideration all these aspects, jurisdictional, jurisprudential as well as on the basis of the merits of the case, we have got no hesitation in rejecting the additional ground raised by the Department. 12. It will, therefore, be necessary for us, now, to take into consideration both the orders passed by the CIT(A) on 28-12-1998 as well as the order by the I.T.O. under Sec. 201(1)/194E dated 6-5-1997. In accordance with the provisions of Sec. 201(1), "if any such person and in the cases referred to in See, 194E, the Principal Officer and the Company of which he is the Principal Officer does not deduct or after deducting fails to pay the tax as required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on starts with the statement "where the total income of an assessee" (meaning presumably thereby the non-resident sports associations, as in the instant case) includes any amount guaranteed to be paid or payable ...... etc. By "total income", we must mean here the "total income", which will ultimately be subjected to tax in India, inasmuch as, the Indian Income Tax Act does not have any jurisdiction over the other income of a non-resident person which can in no way be subjected to tax in this country. The second important element in this Section is that the amount guaranteed to be paid or payable to the non-resident associations or institutions must be in relation to any game or sports played in India. We are inclined to agree with the ld. CIT(A) that the expression "in relation to" is having a wide connotation and hence, if the amount guaranteed to be paid or payable bears any relation to any game or sports played in India, the same should come within the purview of Sec. 115BBA. In that way, the CIT(A) may be correct in saying that, inasmuch as, the guarantee money was paid to all the sports associations in relation to the cricket matches played in India, to that extent, the guara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness connection in India or any property or asset in India or that there was also no transfer of a capital asset belonging to them, situated in India. The only limb of this particular clause, which may be taken into consideration in this connection is whether any income arose to the non-resident concerns through any source of income in India or not. The CIT(A), in unequivocal terms, has held that the source of income in this case should be considered to be the matches played in India. We are, however, afraid that in coming to a decision in that regard, he has rather been guided by the provisions of Sec. 115BBA, which refers to a much broader perspective of the guarantee money payable to the non-resident concerns, having a direct or indirect relation to matches played in India. We have already discussed above that before applying Sec. 115BBA, it will be first of all required to ascertain that the foreign concerns had a taxable income in India, which actually includes the guarantee money payable to them. In that way, Section 115BBA is merely subservient to Sec. 9(1)(i). 16. So far as the countries are concerned which either did not take part in the World Cup tournament at all or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y those associations, but certainly the same cannot be considered to be the source of the guarantee money in their hands. On the other hand, the source of money should be traced back to the Resolution passed in the meeting of the ICC, in which the responsibility towards conducting the tournament was allotted in favour of the three countries, which later on constituted PILCOM and also the contractual obligations entered all the parties under the said Resolution. It may be noted in this connection that once PILCOM took the burden of conducting the tournament in the three countries, it was obliged to make payment of the guarantee amounts to be different country associations irrespective of whether any match would ultimately at all be played in India or elsewhere. We, therefore, hold that so far as the guarantee moneys paid by PILCOM to the 17 countries, which did not,participate in World Cup matches [clause (i) of the detailed chart of payment as shown at page 4 above], or to South Africa and United Arab Emirates, which did not play any match in India[clause (v) of the chart as above], are concerned, it cannot be held that the cricket association of these countries earned the guarante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO treating PILCOM to be an assessee in default, from three different angles. Firstly, the assessee refers to letter F. No. 484/l/96-FTD dated 17-5-1996 addressed by the CBDT to the Chief Commissioner of Income Tax, Calcutta on the matter of taxability of BCCI and PILCOM and other tax related matters with regard to World Cup, 1996. The Department contends that the said letter was later on withdrawn by a subsequent letter of CBDT dated 8-11-1996 in F. No. 484/1/96-FTD. It is the assessee's contention that on the same date ie. 17-5-1996, CBDT also addressed a letter to the Director of Income Tax (Exemption), Mumbai, in which a different version was taken by the CBDT. In this connection, we have got to state that firstly the abovementioned letter is not of the nature of a Circular have any sanctity, secondly that the said letter was actually withdrawn by the CBDT later on and lastly that even the letter under consideration does not at all say that there would be no need to deduct tax at source from the payments made by PILCOM. On the other hand, it was stated in the said letter that PILCOM would be subjected to the provisions of Section 194C relating to payments of money to contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he foreign country, there would be a strong case for deduction of tax at source from the payment,, inasmuch as, Indian Tax Laws would be attracted to such payments. We, therefore, feel that the crux of the issue as to whether payments made outside India would attract the provisions of deduction of tax at source or not, depends solely on the factor as to whether the payment generates taxable income in India in the hands of the non-resident person. In our considered opinion if by virtue of the receipt of the amount from the resident-assessee, income accrues or arises to the non-resident person or is even deemed to accrue or arise to the non-resident person, in India, then the provisions of deduction of tax at source would certainly be applicable. So far as the instant case is concerned, we have already held that in case of non-resident cricket associations participating in cricket matches in India, some income accrued, or arose to them. We are of the opinion that tax should have been deducted at source from the payments made by PILCOM to such non-resident cricket associations of foreign countries. 21.The third objection is being raised by the assessee in a limited manner. It is cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent countries participating in matches in India, the income in India has got to be considered as accruing or arising solely from such participation in the matches in India. As such, the provisions of Article 17, as mentioned above, can be considered to cover this type of income. Sub-Article (1) of this Article clearly states that the income derived by residents of foreign countries as entertainers from their personal activities as such exercised in India, may be taxed in India. In the instant case, the players of the cricket associations of the participating countries took part in games played in India and hence, they should be considered as entertainers and the income also arises from the personal activities of such players (as representatives of the respective cricket associations) exercised in India. Therefore, we feel that the issue under consideration should be guided by Article 17 of the DTAA and not by Article 22 as tried to be relied upon by the assessee. Therefore, the objection raised by the assessee with regard to the existence of DTAA with some of the countries will not hold good. 23. So far as Clause (it) of the chart detailing out the payments made by PILCOM amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the generalised discussions made by us above, we delete this amount also from the order of the ITO considered under Section 201 (1). 26. Lastly, our findings with regard to the seven items of payments as enumerated by us at page 4 of our order, are being summarised as below : ---------------------------------------------------------------------------------------------- Item No. Description Amount in Tribunal's Pounds finding ---------------------------------------------------------------------------------------------- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; order under section 201(1). 4. Payment for ICC Trophy for qualifying 2,00,000 To be deleted from the matches between ICC Associate order under section 201(1). Members held outside India. 5. Guarantee money paid to South 3,60,000 To be deleted from the Africa and United Arab Emirates &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; of number of matches played by that country in india to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; purpose of section 201(1). 7. Guarantee money paid to Pakistan 7,10,000 Payment to the Cricket West Indies, Zimbabwe and Holland Association of each (with which countries no DTAA exist) country is to be considered &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; the total number of matches played by that country in the entire &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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