Supreme Court Interesting Judgment on Section 115BBA which deals with taxation of Non-Resident sportsmen or sports associations
Sec.115BBA deals with taxation of non-resident sportsmen or sports associations, whereby any amount guaranteed to be paid or payable to such association or institution in relation to any game (other than a game the winnings wherefrom are taxable under section 115BB) or sport played in India, shall be liable to withholding of tax u/s 194E @ 20% by the person responsible for making such a payment.
SC upholds HC order, rules that payments made by PILCOM (assessee) to Non-Resident Sports Association of various countries taking part in the tournament [i.e. World Cup 1996], represented income which accrued/arose or was deemed to have accrued /arisen in India, holds that assessee was liable to deduct TDS u/s 194E on such payments;
Pursuant to ICC choosing Pakistan, India and Sri Lanka to co-host the World Cup 1996, a joint management committee of these three countries (assessee) was formed which paid guarantee money to cricket associations of various countries and other sums from bank account in London, against which AO had issued show cause notice to the assessee on its failure to deduct TDS u/s 194E; States that the expression ‘in relation to a game’ in Sec.115BBA emphasises the connection between the game or sport played in India and the Guarantee Money paid or payable to the Non-resident Sports Association, opines that “Once the connection is established, the liability under the provision must arise.”; As regards applicability of DTAA, SC clarifies that “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.”:SC
The ruling was delivered by SC division bench of Justice Uday Umesh Lalit and Justice Vineet Saran.
Senior Advocate J.P.Khaitan along with Advocate Satish Kumar argued on behalf of the assessee, while Revenue was represented by Additional Solicitor General Vikramjit Banerjee along with Advocate Zoheb Hossain.
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