The Supreme Court has held that the payment made to the Non-Resident Sports Association is deemed to accrued or arisen in India so was liable to deduct Tax at Source in terms of Section 194E of the Income Tax Act, 1961.
The assessee, Pak-Indo-Lanka, Joint Management Committee (PILCOM) which is a Committee formed by the Cricket Control Boards/Associations of three countries viz. Pakistan, India and Sri Lanka, for the purpose of conducting the World Cup Cricket tournament for the year 1996 in these three countries. Actually, the International Cricket Council (ICC) is a non-profit making organization having its Headquarters in London, which controls and conducts the game of cricket in the different countries of the world.
During the course of the inquiry, it came to the knowledge of Income Tax Officer (TDS), 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. The ITO issued a notice to the Office of PILCOM asking it to show-cause why actions under Section 20(I)/194E of the Income Tax Act, 1961 would not be taken against PILCOM for its failure to deduct taxes from the payments made by it and as referred to above in accordance with the provisions of Section 194E.
The PILCOM contended that the provisions of Section 194E would not be attracted to the payments for various reasons to which shall advertise later on. It was furthermore stated that, inasmuch as, the books accounts of PILCOM had not been completed by its Pakistani Treasurer, the said books could not be produced before the I.T.O. The I.T.O. did not agree with the contentions of PILCOM.
The principal issue to be considered is whether any income accrued or arose or was deemed to have accrued or arisen to said Non-resident Sports Association in India. If the answer is in the affirmative, the next question would be about the liability on part of the Appellant to deduct Tax at Source and make an appropriate deposit in accordance with Section 194E of the Act.
The division bench consisting of Justice Uday Umesh Lalit and Justice Vineet Saran 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.
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