- (1.) Both these appeals preferred by the aforesaid respective Appellants are directed against the judgment and order dt. 4th Jan., 2000 of the Income Tax Appellate Tribunal, Kolkata (hereinafter referred to as learned Tribunal') [reported as PILCOM v. ITO,2001 71 TTJ 729-- Ed.]. The PILCOM's appeal was admitted on the following substantial questions of law: (i) Whether in view of the fact and as also found by the Tribunal that the entire bid money was paid pursuant to the resolution of ICC for grant of the privilege to host the World Cup, the Tribunal erred in holding that any part of such bid money accrued or arose to the Foreign Cricket Associations in respect of which the Appellant should have deducted tax at source under Section 194E r/w Section 115BBA ? (ii) Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that the Appellant was required to deduct tax at source notwithstanding the DTAAs with Australia, England, New Zealand, Sri Lanka, Kenya and Holland ? (iii) Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that the clarifications issued by the CBDT on 17th May, 1996 did not have any sanctity or did not deal with the question of tax deduction from payments made to Foreign Cricket Associations or were withdrawn ? (iv) Whether and in any event if two views were possible in the matter whether the Appellant could be proceeded against under Section 201 of the IT Act, 1961 having bona fide taken a particular view of the matter which was also the view taken by the CBDT at one stage ? (v) Whether on a correct interpretation of the relevant provisions of the IT Act, 1961 the Tribunal was justified in law in holding that the provisions relating to TDS would have extraterritorial operation and that Indian Income Tax would have to be deducted at source if the income was liable for tax in India even though the payment may be made outside India to a non-resident person ? (vi) Whether the finding of the Tribunal that major amount of the money was placed by ITC Ltd. in the London bank account of PILCOM is based on any material and/or has been arrived at by ignoring the relevant materials and/or by taking into consideration irrelevant materials and/or is otherwise arbitrary, erroneous and perverse ? The Revenue's appeal as above was admitted on the following substantial questions of law as follows: 1. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the provisions of Section 194E r/w Section 115BBA, were subject to the provisions of Section 9(1)(i) of the IT Act, 1961 ?
(2.) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the provisions of Sections 194E and 115BBA of the IT Act, 1961, were applicable in respect of guarantee money paid to only nine countries participating in the cricket matches hosted by PILCOM in the Wills World Cup, 1996 ? 2. The International Cricket Council (in short 'ICC') is a London based non-profit making organization. This body controls and conduct the game of cricket in the different countries of the world. ICC has got 9 full members and 20 associate members. In its special meeting of ICC held on 2nd Feb., 1993 at London, India, Pakistan and Sri Lanka were selected for hosting 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 promoting of the game in their respective countries. For the purpose of conducting final phase of the tournament in India, Pakistan, Sri Lanka, a Committee was formed by the three host members under the name of PILCOM. Two bank accounts were opened by PILCOM in London to be operated jointly by the representatives of Indian and Pakistan Cricket Boards, in which the receipts from sponsorship, T.V. rights etc. were deposited and from which expenses were met. For the purpose of hosting World Cup matches in India, the Board of Cricket Control of India (BCCI) appointed its own Committee for discharge of its responsibilities and functions. This Committee was to be known as Indcom. From the said bank accounts in London, certain amounts were transferred to the three co-host countries for disbursement of fees payable to the umpires and referees and also defraying administrative expenses and prize money. During the course of enquiry, it came to the knowledge of the ITO (TDS), Ward-21 (4), Calcutta the PILCOM had made payments to ICC as well as to the cricket control boards/associations of different member countries of ICC from its two London bank accounts. The ITO issued a notice to the office of PILCOM located at Dr. B.C. Roy Club House, Eden Gardens, Calcutta--700021 asking it to show cause as to why actions under Section 201(1)/194E of the IT Act, 1961 would not be taken against PILCOM for its failure to deduct taxes from payments made by it and as referred to above in accordance with the provisions of Section 194E. The PILCOM replied to the said notice to show cause pleading that provisions of Section 194E would not be attracted to the payments for various reasons pleading amongst others. The ITO did not accept the explanation of PILCOM and held that PILCOM was responsible for deducting tax at source from the payments made by it in accordance with the provisions of Section 194E. It was further held that PILCOM was also liable to pay interest on the ground as calculated by him under Section 201(1A) of the said Act from the date of tax being deductible upto the date of actual payment. The ITO computed the total short deduction under Section 194E to be Rs. 2,18,29,300. Hence, PILCOM appealed against the said order passed by the ITO and the CIT(A) disposed of the appeal by order dt. 17th Nov., 1997. The PILCOM naturally preferred appeal to the Tribunal and the learned Tribunal by its order dt. 25th June, 1990 set aside the order passed by the CIT(A) and remanded the matter back for fresh decision on the issues involved therein after affording opportunity of being heard to PILCOM. Accordingly, the appeal was reheard by the CIT(A) and passed a final order on 28th Dec, 1998. Both the PILCOM and the Department filed two separate appeals being ITA No. 11/Cal/1999 and ITA No. 402/Cal/1999. By the impugned judgment and order the aforesaid two appeals were disposed of.
(3.) Learned Tribunal after rehearing and considering the contention of both the parties came to conclusion that the payment made to ICC by PILCOM as per resolution dt. 2nd Feb., 1993 amounting to ? 3,75,000: (a) Payment made to ICC as per resolution is exigible to tax hence 10 per cent thereof should have been deducted, (b) A portion of guarantee money corresponding to the ratio of principal of matches played, to Australia, New Zealand, Sri Lanka and Kenya out of ? 8,85,000, notwithstanding existence of DTAA. (c) A portion of the guarantee money corresponding to the ratio of the principal of matches played in India by countries namely Pakistan, West Indies, Zimbabwe, Holland out of ? 7 lakh. However, the other payments made by way of transfer from London to Pakistan and Sri Lanka amounting to ? 1,22,000, payment made for ICC Trophy for qualifying matches between ICC associate members held outside India amounting to ? 2 lakh; guarantee money paid to South Africa and United Arab Emirates amounting to ? 3,60,000 were deleted from the taxability modifying the order of the ITO. It is appropriate to record that CIT(A) held that the payment of ? 1.20 lakh representing transfer from London to Pakistan and Sri Lanka for disbursement of prize money for matches played thereat should not be brought within the purview of Section 115BBA. But the other payments namely the portion of amount of ? 42,30,000, equivalent to 45.94 per cent thereof i.e., ? 19,43,263 would become assessable in India in terms of Section 115BBA. As such the PILCOM Appellant was liable to deduct any tax at source @ 10 per cent from the said amount of ? 19,43,262 in accordance with Section 194E.;