TaxTMI 
TaxTMI 
2011 (5) TMI 307
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the proceedings initiated under Section 201 read with 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, Paki....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f such committee giving him a free hand to nominate the other members. All the members of the said committee 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 separat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nses paid to foreign teams and fees paid to foreign Umpires and Referees for matches officiated in and outside India save and except for the modification 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 f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould be no question of any tax liability or tax deduction in India in respect of the said payments." q) The Tribunal, however, by order dated November 5, 2003 reiterated the findings of the Commissioner of Income-tax (Appeals) and rejected 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 av....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or arise to him in India during such year. Explanation 1.-Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance-sheet prepared in India. Explanation 2.-For the removal of doubts, it is hereby declared that income which 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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 of this Act in computing the income referred to in clause (a) or clause (b). (2) It shall not be necessary for the assessee to furnish under subsection (1) of Section 139 a return of his income if- (a) 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essional 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, whether called "Suspense account" or by any other name, in the books 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 ot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on, 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 "assessee" and the payer is not 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 ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. 12. 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 the Act. 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 s....