TaxTMI 
TaxTMI 
2011 (5) TMI 307
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....th Sections 194E and 115BBA of the Act for the Financial Year 1995- 96. b) The cricket playing countries of the world are the members of International Cricket Council ("ICC"). Some are full members and some are associate members. The World Cup is the property of ICC and ICC decides as to which cricket playing country/countries should host the World Cup competition held every four years. c) ICC held a special meeting on February 2, 1993 in London to decide the venue of 1996 World Cup Competition. At the said meeting, Pakistan, India and Sri Lanka were selected to have the privilege of co-hosting the competition and for grant of the said privilege, Pakistan, India and Sri Lanka made a financial offer and/or bid of GBP50,00,000 which was accepted at the said meeting. Payments required to be made in terms of the bid by the three host countries to ICC and to the participating and non-participating countries were decided and/or approved by ICC at London at the said meeting. d) It was decided that there should be 37 matches in the competition of which it was agreed that India would host 17, Pakistan 16 and Sri Lanka 4 matches. Each country was concerned with only the l....
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....ittee were members of BCCI and Sri K. L. Chiugh, who represented the sponsor of ITC Ltd. was a special invitee. The said committee for convenience and reference came to be referred to as INDCOM. i) For the purpose of disbursement of administrative expenses of teams, Umpires and Referees' fees and prize money in respect of the matches to be played in India, amounts were transferred from PILCOM's London Bank Account to the foreign currency account of INDCOM with Indian Overseas Bank. j) On May 6, 1997, two orders were passed by the Income-tax Officer in the names of INDCOM and PILCOM holding that they were liable to deduct the tax under Section 194E of the Act. The amount in respect of INDCOM was quantified by the Income-tax Officer at Rs.8,95,896.15 as representing the tax which should have been deducted at source in respect of payment made towards team administrative expenses, fees paid to Umpires and Referees and prize money. k) Being dissatisfied, the assessee preferred an appeal and the Commissioner of Income-tax (Appeals) by two separate orders both dated November 17, 1997 rejected the appeals of INDCOM and PILCOM against the said order dated May 6, 1997. ....
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....n that the proportionate amount referable to the matches played outside India was not to be taken into consideration. He also confirmed the demand in respect of prize money paid to foreign teams and foreign players. p) Being dissatisfied, the assessee preferred an appeal before the Tribunal and the submissions of the appellants were as follows: "(a) (i) Payments to Managers of foreign Cricket teams on account of Administrative expenses like stationery items, typing expenses, telephone calls, xerox expenses, etc. required to be incurred while a tour for the World Cup matches were not income and were also not so specified in Section 115BBA and no order for tax deduction could have been passed in respect thereof. "ii) Further and in any event and without prejudice to the aforesaid of the 7 foreign teams to whom payments were made, India had double taxation avoidance agreements with five of them namely, Australia, Kenya, New Zealand, Holland and Sri Lanka and in view thereof, payments made to the said five Countries were not liable for Taxation/Tax-deduction in India. "(b) (i) Umpires and Referees were not sportsman and fees paid to them did not tall within the pu....
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....cted the appeal. r) Being dissatisfied, the assessee has preferred the present appeal before this Court. s) At the time of admission of this appeal, a Division Bench of this Court formulated the following substantial questions of law: "i) Whether the Tribunal was justified in law in holding that payments to Managers of foreign cricket teams on account of Administrative expenses like stationery items, typing expenses, telephone calls, xerox expenses, etc. required to be incurred while on tour for World Cup matches were income or fell within the purview of Sections 5(2), 9(1)(i), 115BBA, 194E and 201(1) of the Income Tax Act, 1961. "ii) Whether and in any event the Tribunal was justified in law in holding that the payment of Administrative expenses to the teams of Australia, Kenya, New Zealand, Holland and Sri Lanka were liable to tax in India notwithstanding the double taxation avoidance agreements between India and the said Countries and that the Article relating to entertainers/athletes was applicable. "iii) Whether the Tribunal was justified in law in holding that umpires and referees were sportsmen or fees paid to them fell within the purvie....
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....ch has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India. 9. Income deemed to accrue or arise in India.-(1) The following incomes shall be deemed to accrue or arise in India- (i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India. Explanation.-For the purposes of this clause- (a) in the case of a business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India; (b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operations which are confined to the purchase of goods in India for the purpose of export; ....
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.... his total income in respect of which he is assessable under this Act during the previous year consisted only of income referred to in clause (a) or clause (b) of sub-section (1); and (b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income. 194-E. Payments to non-resident sportsmen or sports associations.-Where any income referred to in Section 115-BBA is payable to a non-resident sportsman (including an athlete) who is not a citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income tax thereon at the rate of ten per cent. 194-J. Fees for professional or technical services.-(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services, shall, at the time of credit of such sum to the account of the payee or at th....
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.... of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly. Section 201. CONSEQUENCES OF FAILURE TO DEDUCT OR PAY. (1) If any such person and in the cases referred to in section 194, 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 by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax : Provided that no penalty shall be charged under section 221 from such person, principal officer or company unless the Assessing Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax." 4. A plain reading of the aforesaid provisions of the Act makes it abundantly clear that if a foreign cricket team, by virtue of agreement among the various teams of different cricket-playing countries, participates in a cricket match played in India and....
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....ot an assessee. The payer, the Court proceeded, became an assessee-in-default only when he failed to fulfil the statutory obligation under Section 195(1). If the payment does not contain the element of income, according to the said decision, the payer cannot be made liable and be declared to be an assessee-in-default. 8. In the case before us, we have already pointed out that the amount paid to the foreign team for participation in the match in India in any shape, either as prize money or as the administrative expenses, is the income deemed to have accrued in India and is taxable under Section 115BBA and thus, Section 194E is attracted. Thus, the said decision does not help the appellant in any way. 9. We, therefore, find no substance in the aforesaid contention of Mr. Bajoria that the prize money or the purported administrative expenses are not taxable in India and consequently, his client had no liability to deduct at source under Section 194E of the Act. 10. We, however, find substance in the contention of Mr. Bajoria that the payments made to the Umpires or Match Referees do not come within the purview of Section 115BBA because the Umpires and Match Referee are neithe....
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....13. We have gone through the provisions contained in those agreements. Those agreements do not exempt the operation of the provisions contained in the Act if the tax is payable in terms of Sections 115BBA or 194E of the Act. We find that in none of those agreements, there is any provision indicating that the income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artists or a musician or as an athlete, from his personal activities as such, exercised in the other Contracting State should not be taxed in that other Contracting State; on the contrary, the provisions are just the reverse. Mr. Bajoria could not place before us any provision from those agreements which will stand in the way of application of the provisions contained in Section 115 BBA or Section 194E of the Act. 14. In the case of Union of India and another Vs. Azadi Bachao Andolon and Another reported in (2003) 327 ITR 706 (SC), while construing the Indo- Mauritius Double Taxation Avoidance Convention, 1983 it was held that in a situation where the terms of the DTAC had been made applicable by reason of Section 90 of the Income-tax Act, 1961, even if....