TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 57
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....ns of three countries viz. Pakistan, India and Sri Lanka, for the purpose of conducting the World Cup Cricket tournament for the year 1996 in these three countries. Actually, International Cricket Council (ICC) is a non-profit making organization having its Headquarters at London, which controls and conducts the game of cricket in the different countries of the world. ICC has got nine full members and twenty associate members in a special meeting of ICC held 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 repre....
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....passed an order under Sec. 20(I)/194E dated 6.5.1997, in which he held that the PILCOM was liable to pay under Sec.201(I) the amount it had failed to deduct from the payments under consideration arid furthermore held that the PILCOM was also liable to pay interest on the said amount under Sec. 291(1A) from the date of tax was deductible upto the date of actual payment. The ITO computed the total short deduction u/s. 194E to be Rs. 2,18,293,00.00 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 herd to PILCOM. Accordingly, the appeal was re-heard by the CIT(A), in which both the sides were allowed an 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 sides. 4. After discussing the basic facts of the case, the Ld.CIT(A) detailed out th....
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....e time that out of 37 matches played in all in the aforesaid World Cup Tournament, only 17 had been played in India. He argued that since the payments made by PILCOM related to all the matches played in the tournament, only such proportion of the guarantee money, etc. received by the non-resident parties could be considered to be deemed income in India in the hands of those non-resident parties, which corresponds to the ratio of the number of matches played in India to the total number of matches. Thus, the CIT(A) held that only 17/37th portion i.e. 45.94 percent of the other six types of payments could be considered to be attracted by the provisions of Sec.291(I)/194. He thus directed that so far as other six categories of payments are concerned. 45.94 percent of the payments covered by those categories should alone be taken into consideration for the purpose of considering PILCOM as defaulter under Sec.201(I)/194B. ..." 3. As stated above, out of the payments classified in seven distinct categories, the payment at serial no. (ii) amounting to GBP.1,20,000/- was found by the CIT(A) to be beyond the scope of Section 115BBA of the Act-The Income Tax Act, 1961 , whereas, the other ....
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....ting ICC as in the cases of the cricket associations of other countries, at the same time again, these associations did some activities in India and can be considered to have earned the guarantee money through such activity alone. We are, therefore, of the opinion that so far as these countries (covered by clauses (vi) & (vii) of the chart as above) are concerned, the payments received by then from PILCOM have arisen directly as a result of their taking part in the cricket matches. However, the cricket associations of all these countries played not only in India but in Pakistan and Sri Lanka also. Hence, only that proportion of the total receipt made by each such country from PILCOM, which bears the same ratio as the number of matches played by each such country in India to the total number of matches played by each such country in the tournament, should be considered to be income arising or accruing to the cricket association of that particular country. We are, therefore, of the opinion that PILCOM should have deducted tax at source in respect of this portion of the payment made by it to that particular association and the order under Sec. 201 would be considered to be valid in re....
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....bligation to deduction under Section 194E is not affected by the DTAA since such a deduction is not the final payment of tax nor can be said to be an assessment of tax. The deduction has to be made and after it is done the assesse concerned gets the credit of the same and once it is found later on that income from which the deduction is made is not eligible to tax then on application being made refund with interest is always allowed. Fundamental distinction between the deduction at source by the payer is one thing and obligation to pay tax is another thing. Advantage of the DTAA can be pleaded and taken by the real assessee on whose account the deduction is made not by the payer. We are of the view irrespective of the existence of DTAA the obligation under Section 195E has to be discharged once the income accrues under Section 115BBA." 6. The Appellant is in appeal against the dismissal of ITA No.196 of 2000. The Revenue has not appealed against the dismissal of ITA No.200 of 2000 and as such the deletion as regards amounts at serial nos. (i) to (v) has attained finality and even as regards amounts at serial nos. (vi) and (vii) the liability could at best be in the proporti....
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....eived 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 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 ....
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....lated on income referred to in clause (a) or clause (b) or clause (c) 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 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 sub-section (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 pe....
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....dcasting were payable to the Society. The Society, a non-resident company, contended that the agreement was executed in England, payments were made in England and the "source of income" was the agreement that was entered into in England. The contention was rejected by the High Court. The conclusion that "the income derived from broadcast of copyright music from the stations of All India Radio arose in India" was affirmed by this Court. 13. In the present case, the Non-resident Sports Associations had participated in the event, where cricket teams of these Associations had played various matches in the country. Though the payments were described as Guarantee Money, they were intricately connected with the event where various cricket teams were scheduled to play and did participate in the event. The source of income, as rightly contended by the Revenue, was in the playing of the matches in India. 14. The mandate under Section 115 BBA (1)(b) is also clear in that if the total income of a Non-resident Sports Association includes the amount guaranteed to be paid or payable to it in relation to any game or sports played in India, the amount of income tax calculated in terms of said Sec....
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....of the Tribunal and held that unless the payer had obtained appropriate permission under Section 195(2) of the Act, the payer was obliged to deduct Tax at Source. In this context the matter was considered by this Court. While dealing with scope of Section 195(1) of the Act, it was stated:- "8. The most important expression in Section 195(1) consists of the words chargeable under the provisions of the Act. A person paying interest or any other sum to a non-resident is not liable to deduct tax if such sum is not chargeable to tax under the IT Act. For instance, where there is no obligation on the part of the payer and no right to receive the sum by the recipient and that the payment does not arise out of any contract or obligation between the payer and the recipient but is made voluntarily, such payments cannot be regarded as income under the IT Act. 9. It may be noted that Section 195 contemplates not merely amounts, the whole of which are pure income payments, it also covers composite payments which have an element of income embedded or incorporated in them. Thus, where an amount is payable to a nonresident, the payer is under an obligation to deduct TAS in respect of such com....
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....gation on the payer to deduct TAS when he pays any income "chargeable under the head 'Salaries'". Similarly, Section 195 imposes a statutory obligation on any person responsible for paying to a non-resident any sum "chargeable under the provisions of the Act", which expression, as stated above, does not find place in other sections of Chapter XVII. It is in this sense that we hold that the IT Act constitutes one single integral inseparable code. Hence, the provisions relating to TDS applies only to those sums which are chargeable to tax under the IT Act." 16.1 The submission that unless permission was obtained under Section 195(2) of the Act, the liability to deduct Tax at Source must be with respect to the entire payment, was not accepted. Relying on the expression "chargeable under the provisions of the Act" occurring in Section 195(1) of the Act, it was held "the obligation to deduct TAS, is however, limited to the appropriate proportion of the income chargeable under the Act forming part of the gross sum of money payable to the non-resident". 16.2 This decision, in our view, has no application insofar as payments at serial nos. (vi) and (vii) are concerned. To the extent the....
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.... arose in India. I am unable to see how the decision in Performing Right Society Ltd.'s case [1977] 106 ITR 11 (SC), can be of any help to the Revenue in this case. To my mind the facts of the two cases are not quite similar; the acquisition of technical know-how and the use of the acquired know-how in the design of machines and accessories and their manufacture in India does not seem to me to be comparable to the playing and broadcasting of copyright musical compositions in India on the basis of the licence granted under an agreement. To my mind the facts of the case in hand would be comparable to a situation where some people went to England to learn western music from the members of the society, on payment of some specified fee and on coming back used the acquired skill to write musical compositions that were played and broadcast in this country. The decision in Performing Right Society Ltd.'s case [1977] 106 ITR 11 (SC), would surely not apply to such a case." It was thus held that the income mentioned in article III (a) of the agreement did not accrue or arise in India. No connection was found as regards the payment for on the job placement in a foreign country to....