The Mumbai bench of the Income Tax Appellate Tribunal in the case The Board of Control for Cricket in India Versus Dy. Commissioner of Income Tax observed and has held that the payment of compensation to Cricket South Africa, CSA is not taxable under the Termination Agreement as stated under the provisions of the India-South Africa DTAA.
The bench comprising of President, G.S. Pannu and the Judicial Member, Sandeep Singh Karhail in the case observed and has stated that since the payment is not chargeable to tax in India in the hands of CSA, there being no such obligation on the part of the assessee to deduct tax at source under Section 195.
In the present case, the assessee or applicant, BCCI being the national body for cricket in India and is a society registered under the Tamil Nadu Societies Registration Act and the assessee in the year 1929 founded it with the object of promoting and in order to develop cricket in India and fostering the spirit of sportsmanship. Therefore, the court observed that assessee being the member of the International Cricket Council, ICC, the international regulatory body for cricket. The court observed that the assessee derives substantial income from the conduct of cricket tournaments and matches and is regularly assessed tax in India. Therefore, the assessee in the year 2008 commenced the conduct of a cricket tournament, namely, the Champions League T20, CLT20, wherein participant in the CLT20 Tournament included the winners’ runners-up of the domestic 20-over leagues in South-Africa India, Australia, etc.
The court in the case observed that the entire CLT20 Tournament was being conducted by the assessee and all the agreement which includes the media or broadcasting rights agreement, in this regard were also being entered into by the assessee.
The Tribunal in the case observed and has held that the assessee cannot be said to be a Dependent Agent Permanent Establishment, DAPE of CSA in India as stated under Article 5(5) of the India-South Africa DTAA and thus, the payment of compensation to CSA which is made under the Termination Agreement is also not being taxable as stated under the provisions of the India-South Africa DTAA.
Accordingly, the tribunal held that the payment of compensation to Cricket South Africa, CSA is for the termination of the arrangement, which being a profit-making apparatus and being in the nature of a capital receipt and hence the same is not taxable.
The counsel, P.J. Pardiwala appeared for the Appellant. The Counsel, Surabhi Sharma represented the Respondent.