Income Tax Act, 1961 – s.115BBA and s.194E – AssessePILCOM, a committee formed by the Cricket Control Boards/Associations of three countries viz. Pakistan, India and Sri Lanka for purpose of conducting the World Cup tournament, 1996 – I.T.O found that PILCOM had made payments to ICC as well as to the Cricket Control Boards/Associations of the different member countries of ICC from its two London Bank Accounts, consequent to which a show cause notice was issued u/s.194E – The principal issue is whether any income accrued or arose or was deemed to have accrued or arisen to said Non-resident Sports Associations in India – If the answer is in the affirmative, the next question would be about the liability on part of the PILCOM to deduct Tax at Source and make appropriate deposit in accordance with s.194E of the Act – Held: The Non-Resident Sports Associations had participated in the event, where cricket teams of these Associations had played various matches in the country – The payments were intricately connected with the event where various cricket teams were scheduled to play – The source of income was in the playing of the matches in India – The mandate u/s.115 BBA(1)(b) is also clear – The payments made to the Non-Resident Sports Associations in the present case represented their income which accrued or arose or was deemed to have accrued or arisen in India – Consequently, the PILCOM was liable to deduct Tax at Source in terms of s.194E of the Act. Dismissing the appeal and special leave petitions, the Court
HELD: 1. 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. [Para 13][635-A-B]
2. The mandate under Section 115 BBA (1)(b) of Income Tax Act, 1961 is also clear in that if the total income of a Nonresident 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 Section shall become payable. The expression ‘in relation to’ emphasises the connection between the game or sport played in India on one hand and the Guarantee Money paid or payable to the Nonresident Sports Association on the other. Once the connection is established, the liability under the provision must arise. [Para 14][635-F-G]
3. The obligation to deduct Tax at Source under Section 194E of the Act is not affected by the DTAA and in case the exigibility to tax is disputed by the assesse on whose account the deduction is made, the benefit of DTAA can be pleaded and if the case is made out, the amount in question will always be refunded with interest. But, that by itself, cannot absolve the liability under Section 194E of the Act. [Para 18][640-H; 641-A-B]
4. In the premises, it must be held that the payments made to the Non-Resident Sports Associations in the present case represented their income which accrued or arose or was deemed to have accrued or arisen in India. Consequently, the Appellant was liable to deduct Tax at Source in terms of Section 194E of the Act. [Para 19][641-B-C]
G.E. India Technology Centre Pvt. Ltd. v. Commissioner of Income Tax and Another (2010) 10 SCC 29 : [2010]
10 SCR 1142; Metallurgical and Engineering
Consultant (India) Ltd. v. Commissioner of Income Tax (1999) 238 ITR 208 (Pat); Commissioner of Income Tax v. Manjoo and Co. (2011) 335 ITR 527 (Ker) – inapplicable.
Performing Right Society Ltd. v. CIT (1976) 4 SCC 37 : [1977] 1 SCR 171; CIT v. Eli Lilly and Co. (India) Pvt. Ltd. (2009) 15 SCC 1 : [2009] 5 SCR 20 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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