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TMI Blog2011 (5) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... ially named as Pak-Indo and Lanka Joint 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 PI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax (Appeals). The Tribunal did not decide the matter 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) IN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axability. Kenya 16 Amounting to or exceeding 183 days. New Zealand 14 Amounting to or exceeding 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividual foreign players was consideration paid for participation in any game or was income or fell within the purview of Sections 2(24)(ix)/5(2)/9(1)(i)/115BBA/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 sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue or arise in India to such individual, firm or company through or from operations which are confined to the shooting of any cinematograph film in India; 115-BBA. Tax on non-resident sportsmen or sports associations.--(1) Where the total income 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nty thousand rupees, in the case of fees for technical services referred to in clause (b): [Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (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 decoratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bajoria, the learned Senior Advocate appearing on behalf of the appellant, in this connection, tried to impress upon us that the money paid to the manager of a foreign team for meeting the administrative expenses, such as, stationery items, typing expenses, telephone calls, xerox-expenses, etc. required to be incurred while on tour for World Cup matches, would 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 Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But there is no scope of deducting any amount under Section 194E of the Act for such payment. At this stage, it will be profitable to refer to the provisions contained in Section 194 J of the Act which casts a duty upon the payer to deduct at the rate of 5% where payment is made to a resident towards any professional or technical service rendered. It appears from the Notification 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. 15. We, therefore, find that double taxation avoidance agreements mentioned above did not absolve the appellant of its duties to deduct at source in terms of Section 194E of the Act. 16. Consequently, the order impugned is modified only to the extent by declaring that the appellant had no duty to deduct in terms of Section 194E of the Act in respect of payments made to the Umpires and Match Referees and thus, we direct the Assessing Officer to modify the order of penalty by excluding the amount paid to the Umpires and the Match Referees. 17. The appeal is, thus, allowed in part by modifying the order of the Tribunal to the extent indicated above by answering the first, second, fifth and sixth questions in the affirmative and in favour of the Revenue and the third question in the negative and against the Revenue. In view of our answer to the third question, the fourth question becomes redundant. 18. In the facts and circumstances, there will be, however, no order as to costs. 19. After this judgment is passed, the learned counsel appearing on behalf of the appellant prays for stay of operation of our aforesaid order. 20. In view of what have been stated above, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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