ACIT, New Delhi v. M/s KPH Dreamd Pvt. Ltd.,, New Delhi

ITA 5173/DEL/2012 | misc
Pronouncement Date: 08-10-2013 | Result: Allowed

Appeal Details

RSA Number 517320114 RSA 2012
Assessee PAN AADCK3039P
Bench Delhi
Appeal Number ITA 5173/DEL/2012
Duration Of Justice 1 year(s) 3 day(s)
Appellant ACIT, New Delhi
Respondent M/s KPH Dreamd Pvt. Ltd.,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 08-10-2013
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 08-10-2013
Date Of Final Hearing 01-10-2013
Next Hearing Date 01-10-2013
Assessment Year misc
Appeal Filed On 05-10-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI) BEFORE SHRI U. B. S. BEDI JUDICIAL MEMBER AND SHRI B. C. MEENA ACCOUNTANT MEMBER ITA NO. 5173 & C.O.430 / DEL/ 2012 (ASSESSMENT YEAR 2010-11) KPH DREAM CRICKET (P) LTD. VS. ACIT CIRCLE 50(1 ) 4 TH FLOOR PUNJABI BHAWAN NEW DELHI 10 ROSE AVENUE NEW DELHI PAN : AADCK3039P I.T.A. NO. 4625/DEL/2012 (ASSESSMENT YEAR 2010-11) ACIT CIRCLE 50(1) VS. KPH DREAM CRICKET (P) LTD . NEW DELHI 4 TH FLOOR PUNJABI BHAWAN 10 ROSE AVENUE NEW DELHI (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI M P RASTOGI ADV. DEPARTMENT BY: SHRI D. K. MISHRA DR ORDER PER U B S BEDI JUDICIAL MEMBER: THESE CROSS APPEALS - ONE FROM THE ASSESSEE AND OT HER BY THE DEPARTMENT AND CROSS OBJECTIONS OF THE ASSESSEE AR ISE OUT OF THE ORDER PASSED BY LD. CIT(A) XXIII NEW DELHI DATED 10 TH JULY 2012 RELEVANT TO ASSESSMENT YEAR 2010-11. I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 2 2. THESE MATTERS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FACTS INDICATE THAT THE A.O. TREATED THE ASS ESSEE AS ASSESSEE IN DEFAULT U/S 201(1) UNDER I. T. ACT 1961 AND DETER MINING THE TAX LIABILITY UNDER THIS SECTION AT RS.22 82 08 740/- AND LEVIED INTEREST U/S 201(1A) OF RS.14 82 57 005/- VIDE ORDER DATED 23.03.2012 AGAIN ST WHICH ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND RAISED THE F OLLOWING GROUNDS: 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT UNDER SECTI ON 201 (1) AND DETERMINING TAX LIABILITY UNDER THAT SECTION AT RS. 22 82 08 740 AND LEVYING INTEREST UNDER SECTION 201(1AROF THE INCOME -TAX ACT 1961 ('THE ACT') AT RS. 14 82 57 005 VIDE ORDER DATED 2 3.03.2012 OPERATE CRICKET TEAM IN INDIAN PREMIER LEAGUE ('IPL PROMOT ED BY BOARD OF CONTROL FOR CRICKET IN INDIA ('BCCI') WAS IN THE N ATURE OF ROYALTY AS DEFINED UNDER SECTION 9(1) (VI) WHICH IS SUBJECT T O TDS UNDER SECTION 194J OF THE ACT. 2.1 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN DETERMINING THE TAX LIABILITY IN RESPECT THEREOF UNDER SECTION 201 (1) AT RS. 22 68 05 037 AND LEVYING INTEREST UNDER SECTION 201 (LA) AT RS. 14 61 69 206/-. 2.2 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN OBSERVING THAT THE CONSIDERATION PAYABLE TOWARDS ACQUISITION OF FRANCHISEE RIGHT WAS LIABLE FOR TDS UNDER SECTION 194J OF THE ACT S INCE THE APPELLANT WAS ITSELF DEDUCTING TAX AT SOURCE UNDER THE AFORE SAID SECTION AT THE TIME OF MAKING PAYMENT OF CONSIDERATION IN INSTALL MENTS TO FRANCHISER/BCC!. 2.3 WITHOUT PREJUDICE THAT THE ASSESSING OFFICER E RRED ON FACTS AND IN LAW IN TREATING THE APPELLANT AS AN ASSESSEE IN DEF AULT UNDER SECTION 201 OF THE ACT FOR THE FINANCIAL YEAR 2009-1 P FOR NOT DEDUCTING TAX AT SOURCE FROM THE OPENING BALANCE OF LIABILITY OF RS. 264.48 CRORES WITHOUT APPRECIATING THAT SINCE THE LIABILITY WAS CREDITED IN THE BOOKS OF ACCOUNTS IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR I.E. 2008-09 I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 3 THE APPELLANT COULD BE HELD AS ASSESSEE IN DEFAULT ONLY IN THE FINANCIAL YEAR 2008-09. 2.4 FURTHER WITHOUT PREJUDICE THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN COMPUTING THE TAX LIABILITY UND ER SECTION 201 (1) AT RS. 22 68 05 037 AND CONSEQUENTLY LEVYING INTEREST UNDER SECTION 201 (1A) AT RS. 14 61 69 206 WHICH IS IN ANY CASE IN CORRECT. 3. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT UNDER SECTION 2 01 (1) FOR ALLEGED DEFAULT OF NOT DEDUCTING TAX ON SOURCE UNDER SECTIO N 194J OF THE ACT FROM THE DAILY ALLOWANCE AMOUNTING TO &.18 LACS P AID TO THE CRICKET PLAYERS RESIDENT IN INDIA ('INDIAN PLAYERS') FOR RE IMBURSEMENT OF ACTUAL EXPENSES TO BE INCURRED BY SUCH PLAYERS IN THE COURSE OF TRAVEL FOR CRICKET TOURNAMENT. 3.1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN DETERMINING THE TAX LIABILITY UNDER SECTION 201(1) AT &. 1 80 000 AND LEVYING INTEREST UNDER SECTION 201 (1A) AT RS. 45 0 00. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LA W IN TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT UNDER SECTION 2 01 (1) FOR ALLEGED DEFAULT OF NOT DEDUCTING TAX AT SOURCE UNDER SECTIO N 194E READ WITH SECTION 115BBA OF THE ACT FROM THE DAILY ALLOWANCE AMOUNTING TO RS. 6 04 000 PAID TO THE NON-RESIDENT CRICKET PLAYE RS FOR REIMBURSEMENT OF ACTUAL EXPENSES TO BE INCURRED BY SUCH PLAYERS IN THE COURSE OF TRAVEL FOR CRICKET TOURNAMENT. 4.1 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN DETERMINING THE TAX LIABILITY UNDER SECTION 201(1) AT & 60 400 AND LEVYING INTEREST UNDER SECTION 201(1A) AT &.15 100. 5. THAT THE. ASSESSING OFFICER ERRED ON FACTS AND' IN LAW IN TREATING THE APPELLANT AS AN ASSESSEE IN 'DEFAULT UNDER SECT ION 201(1) FOR ALLEGED DEFAULT OF NOT DEDUCTING TAX AT SOURCE UNDE R SECTION 194B OF THE ACT ON THE PRIZE MONEY AMOUNTING TO &.29 07 59 4 RECEIVED BY THE APPELLANT FROM BCCI AND DISTRIBUTED AMONGST THE IND IAN PLAYERS IN EQUAL RATIO. I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 4 5.1 THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN DETERMINING THE TAX LIABILITY UNDER SECTION 201(1) AT RS.8 72 280/- AND LEVYING INTEREST UNDER SECTION 201(1A) AT RS.2 18 0 70/-. 6. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT UNDER SECTI ON 201 (1) FOR NOT ALLEGED DEFAULT OF NOT DEDUCTING TAX AT SOURCE UNDE R SECTION 194E READ WITH SECTION 115BBA OF THE ACT ON THE PRIZE MONEY AMOUNTING TO RS.19 38 396/- RECEIVED BY THE APPELLANT FROM BCCI AND DISTRIBUTED AMONGST THE NON-RESIDENT PLAYERS IN EQUAL RATIO. 6.1 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN DETERMINING THE TAX LIABILITY UNDER SECTION 201(1) AT RS. 1 93 840 AND LEVYING INTEREST UNDER SECTION 201(1A) AT RS. 48 460. 6.2 WITHOUT PREJUDICE THAT THE ASSESSING OFFICER ER RED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE APPELLANT WAS NOT IN ANY CASE LIABLE TO DEDUCT TAX AT SOURCE FROM THE AMOUNT OF PRIZE MO NEY DISTRIBUTED AMONGST NON-RESIDENT PLAYERS IN RELATION TO CRICKE T EVENT PLAYED OUTSIDE INDIA SINCE INCOME THEREFROM DID NOT ACCRU E OR ARISE IN INDIA AND HENCE NOT LIABLE TO TAX IN INDIA. 7. THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT UNDER SECTI ON 201 (1) FOR NOT DEDUCTING TAX AT SOURCE ON THE OPENING BALANCE OF [ {ABILITY OF RS. 24 46 450 CREDITED TO P Z FILM WORLD IN THE FINANC IAL YEAR 2008-09 ON ACCOUNT OF RE-IMBURSEMENT OF EXPENSES. 8. WITHOUT PREJUDICE THAT THE ASSESSING OFFICER E RRED ON FACTS AND IN LAW IN IMPOSING TAX ON THE APPELLANT UNDER SECTI ON 201 (1) WITHOUT APPRECIATING THAT ONCE TAX ON RECEIPT/INCOME WAS PA ID THE RECIPIENTS THE SAME COULD NOT HAVE BEEN RECOVERED AGAIN FROM T HE APPELLANT/ALLEGED DEDUCTOR. 9. WITHOUT PREJUDICE THAT THE ASSESSING OFFICER ER RED ON FACTS AND. IN LAW IN NOT RESTRICTING THE COMPUTATION OF INTEREST UNDER SECTION 201(LA) OF THE ACT UP TO THE DATE OF PAYMENT OF AC TUAL TAX BY THE RECIPIENTS. I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 5 10. THE APPELLANT CRAVES LEAVE TO ADD TO AMEND OR VARY THE ABOVE GROUNDS OF APPEAL AN OR BEFORE THE DATE OF HEARING. 4. THE ASSESSEE RAISED VARIOUS PLEAS TO SUPPORT THE GROUNDS RAISED WHILE CHALLENGING THE ORDER OF THE A.O. WHEREBY TWO DEMAN DS U/S 201(1) AND 201(1A) HAVE BEEN CREATED AS DETAILED IN EARLIER PA RAGRAPHS. 5. LD. CIT(A) WHILE NOTING THE FACTS OF THE CASE A ND ASSESSEES VIEW / ARGUMENTS IN PARA 3.1.1 TO 3.1.10 HAS CONCLUDED IN PARA 3.1.11 TO PLEAD FOR DELETION OF THE DEMANDS CREATED. THE ABOVE PARAS A RE REPRODUCED BELOW FOR READY REFERENCE: 3.1.1 THE LD ACIT (LD. AO) TDS NEW DELHI IN THE CASE OF THE APPELLANT VIDE ORDER DATED 23 MARCH 2012 U/S 201(1) /201(IA) FOR THE AY 2010-11 HELD THE APPELLANT AS AN 'ASSESSEE HI D EFAULT' FOR NOT DEDUCTING TDS ON THE TOTAL OF FRANCHISE FEE PAYABLE OVER TEN YEARS OF RS.304 CRORES CREDITED IN THE BOOKS OF ACCOUNT FOR THE FY 2008-09 ON THE GROUND THAT THE SAME IS IN THE NATURE OF 'ROY ALTY' AS DEFINED UNDER SECTION 9(1)(VI) OF THE ACT WHICH IS SUBJECT TO IDS UNDER SECTION 194J OF THE ACT. THE LD. AO TDS WHILE FRAMING THE ASSESSMENT ORDER U/S 201(1)/201(1A) FOR THE AY 2010-11 HELD AS FOLLO WS AGAINST THE APPELLANT: THE APPELLANT DOES NOT ENJOY FULL CONTROL (HAS LIMI TED RIGHTS) OF THE FRANCHISE RIGHTS VESTED UNDER THE FRANCHISE AGREEME NT AS IT COULD NOT SELL THE FRANCHISE-RIGHT WITHOUT PRIOR CONSENT OF BCCI; THE APPELLANT HIMSELF HAS DEDUCTED IDS U/S 194J ON ACTUAL PAYMENTS MADE HENCE THE ARGUMENT OF THE APPELLANT THAT SECT ION 194J IS NOT APPLICABLE IS NOT VALID; FURTHER THE LIABILITY FOR IDS ARISES ON PAYMENT OR CREDIT WHICHEVER IS EARLIER IN THE PRESENT THE APPELLANT HAS CREDITED THE AMOUNT OF RS 264.48 CRORES AT THE BEGINNING OF THE FY 2009-10 A ND WAS LIABLE TO DEDUCT IDS ON THE WHOLE AMOUNT; I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 6 AS THE APPELLANT HAS DEDUCTED TDS ON ANNUAL PAYMENT S OF RS 30.4 CRORES FOR FY 2009-10 10-11 AND 11-12 ACCORDINGLY FOR DETERMINING THE TDS LIABILITY ON RS 264.48 CRORES AN OFFSET OF SUCH TDS DEDUCTED ON ALL ANNUAL FRANCHISE PAYMENT IS ALLOWED. THE NET LIABILITY FOR NON DEDUCTION OF IDS U/S 201(1) IS' COMPUTED AT RS 22 6 8 05 037 CRORES AND CORRESPONDING INTEREST U/S 201(LA) AT RS 14 61 69 206/-. FACTS OF THE CASE / APPELLANT'S VIEW POINT 3.1.2 DURING THE INDIAN PREMIER LEAGUE ('IPL) BIDDI NG IN THE MONTH OF JANUARY- FEBRUARY 2008 ARRANGED BY THE BCCI-IPL THE CONSO RTIUM OF MS. PREITY ZINTA ARID OTHERS WON THE EXCLUSIVE FRANCHI SE RIGHTS TO OWN OPERATE AND RUN THE KINGS XI PUNJAB TEAM THOUGH FOR A CONSIDERATION OF RS 304 CRORES PAYABLE OVER A PERIOD OF TEN YEARS IN EQUAL INSTALLMENTS OF RS 30.40 CRORES FROM 2008-17. THE A PPELLANT GIVEN THE NATURE OF RIGHTS ACQUIRED BY IT BY SIGNING THE BCCI-IPL CONTRACT VIZ. FRANCHISE AGREEMENT HAD CAPTALISED THE ENTIRE SUM OF RS 304 CRORES IN ITS BOOKS OF ACCOUNT IN THE FY 2008-09. T HE SAID RIGHTS UNDER THE FRANCHISE AGREEMENT WAS CLASSIFIED AS INT ANGIBLE ASSETS AND ACCORDINGLY THE APPELLANT CLAIMED DEPRECIATION ON SUCH INTANGIBLE ASSETS AT THE RATE OF 25% CLAIMING A DE PRECIATION OFRS.76 CRORES IN THE FY 2008-09. 3.1.3 THE APPELLANT HAS ACQUIRED THE ABSOLUTE RIGHT TO OWN THE CRICKET TEAM VIZ. -KINGS XI PUNJAB' IN PERPETUITY AND ALS O HAD THE ABSOLUTE RIGHT TO TRANSFER ITS OWNERSHIP. TO SUPPORT THE ARG UMENT THAT THE APPELLANT IS ABSOLUTE OWNER OF THE KINGS J.G PUNJA B CRICKET TEAM THE APPELLANT WISHES TO DRAW YOUR HONOUR'S ATTENTION T O THE FOLLOWING TERMS AND CONDITIONS OF THE FRANCHISE AGREEMENT AT CLAUSE 2 4.3 4.4 7.1 AND CLAUSE 10 (ON SALE OF FRANCHISE). ON THE PE RUSAL OF THE SAID CLAUSES YOUR HONOUR CAN SEE THAT THE APPELLANT HAS CERTAINLY ACQUIRED SUBSTANTIAL RIGHTS AND NOT LIMITED RIGHTS AS CONTENDED BY THE LD AO IDS. 3.1.4 ALL PARTICIPATING IPL TEAMS ARE GOVERNED BY T HE FRANCHISE AGREEMENTS AND OTHER APPLICABLE BYE-LAWS AS LAID DO WN BY THE BCCI- IPL. THERE ARE CERTAIN RESTRICTIONS/ COVENANTS PLAC ED UPON AS TO MANNER OF OPERATING THE FRANCHISE; SALE OF FRANCHIS E AND THE I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 7 TERMINATION' OF THE FRANCHISE. HOWEVER THAT DOES N OT TAKE AWAY THE EXCLUSIVITY AND THE FACT THE APPELLANT IS THE SOLE OWNER OF THE KINGS XI 'PUNJAB CRICKET TEAM. GIVEN THE FACT THE APPELLANT ACQUIRES COMPLETE RIGHTS TO OPERATE THE FRANCHISE THIS PAYMENT IS NOTHING BUT FOR ACQUISITION PERPETUAL RIGHTS . TO OPERATE THE FRANCHISE AND NOT 'ROYALTY' AS PER EXPLANATION 2 TO SECTION 9(1)(VI). AT THIS POINT IT'S FIT TO QUOTE THE RULING OF HON' DELHI HIGH COURT IN CASE OF ASIA SATELLITE TELECOMMUNICAT IONS CO. LTD. VS. DIT AS REPORTED IN 332 ITR 340: ............... 55 KEEPING IN VIEW THE AFORESAID PRINCIPLES WE NO W EMBARK UPON THE INTERPRETATIVE PROCESS IN DEFINING THE AMBIT AND SC OPE OF TERM 'ROYALTY' APPEARING IN EXPLANATION 2 TO SUB-CLAUSE (VI) OF SE CTION 9(1) OF THE ACT. SUB-CLAUSE (I) DEALS WITH THE TRANSFEROR ALL O R ANY RIGHTS (INCLUDING THE GRANTING OR A LICENCE) IN RESPECT OF APPELLANT ETC. THUS WHAT THIS SUB-CLAUSE ENVISAGES IS THE TRANSFER OF ' RIGHTS IN RESPECT OF PROPER /V ' AND NOT TRANSFER OF 'RIGHT IN THE PROPE R/V'. THE TWO TRANSFERS ARE DISTINCT AND HAVE DIFFERENT LEGAL EFFECTS. IN F IRST CATEGORY. THE RIGHTS ARE PURCHASED- WHICH ENABLE USE OF THOSE RIG HTS WHILE WITH SECOND CATEGORY NO PURCHASE IS INVOLVED ONLY RIGH T TO USE HAS BEEN GRANTED. OWNERSHIP DENOTES THE RELATIONSHIP BETW EEN A PERSON AND AN OBJECT FORMING THE SUBJECT MATTER OF HIS OWNERSH IP. IT CONSISTS OF BUNDLE OF RIGHTS. ALL OF WHICH ARE RIGHTS IN REM B EING GOOD AGAINST THE ENTIRE WORLD AND NOT MERELY AGAINST A SPECIFIC PERS ON AND SUCH RIGHTS ARE INDETERMINATE IN DURATION AND RESIDUARY IN CHAR ACTER AS HELD BY THE SUPREME COURT IN. THE CASE OF SWADESHI RANJAN S INHA VS. HARDEV BANERJEE [AIR 1992 SC 1590}. WHEN RIGHTS IN RESPECT OF A PROPERTY ARE TRANSFERRED AND NOT THE RIGHTS IN THE PROPERTY. THERE IS NO TRANSFER OF THE RIGHTS IN REM WHICH MAY BE GOOD AGAINST THE WORLD BUT NOT AGAINST THE TRANSFEROR. IN THAT CASE THE TRANSFERE E DOES NOT HAVE THE RIGHTS WHICH ARE INDETERMINATE IN DURATION AND RESI DUARY IN CHARACTER. LUMP SUM CONSIDERATION IS NOT DECISIVE O F THE MATTER. THAT SUM MAY BE AGREED FOR THE TRANSFER OF ONE RIGHT TW O RIGHTS AND SO ON ALL THE RIGHTS BUT NOT THE OWNERSHIP. THUS THE DEFI NITION OF TERM ROYALTY IN RESPECT OF THE. COPYRIGHT LITERARY ARTISTIC OR SCIENTIFIC WORK PATENT INVENTION PROCESS ETC. DOES NOT EXTEND TO THE OUT RIGHT PURCHASE OF THE RIGHT TO USE AN ASSET. IN CASE OF ROYALTY THE OWNE RSHIP ON THE PROPERTY OR RIGHT REMAINS WITH OWNER AND THE TRANSFEREE IS P ERMITTED TO USE THE I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 8 RIGHT IN RESPECT OF SUCH PROPERTY. A PAYMENT FOR T HE ABSOLUTE ASSIGNMENT AND OWNERSHIP OF RIGHTS TRANSFERRED IS N OT A PAYMENT (OR THE USE OF SOMETHING BELONGING TO ANOTHER PARTY AND THERE(ORE ' NO ROYALTY. IN AN OUTRIGHT TRANSFER TO BE TREATED AS S ALE OF PROPERTY AS OPPOSED TO LICENCE ALIENATION OF ALL RIGHTS IN THE PROPERTY IS NECESSARY . '(EMPHASIS SUPPLIED) 3.1.5 IN SUM ~D SUBSTANCE THE APPELLANT SUBMITS THAT WHAT WAS ACQUIRED BY THE APPELLANT UNDER THE. FRANCHISE AGR EEMENT IS NOTHING BUT AN ABSOLUTE ACQUISITION OF AN INTANGIBLE ASSET AND THAT DELHI HIGH COURT'S RULING IN ASIA SATELLITE CASE SUPPORTS THE ARGUMENT OF THE APPELLANT. GIVEN THAT THE APPELLANT SUBMITS THAT THE PAYMENT PER THE FRANCHISE AGREEMENT TO BCCI IS NOTHING BUT A PAYMEN T FOR ACQUISITION OF ABSOLUTE OWNERSHIP AND THAT LEGALLY THERE IS NO QUESTION OF DEDUCTION OF IDS U/S 194J OF THE ACT READ WITH S ECTION 9(L)(VI). FURTHER ALSO IN CASE OF PARSONS BRINCKERHOFF INDIA (P) LTD. V. ADIT: 118 'ITJ 214 DEALT WITH THE AFORESAID PROVISIONS O F EXPLANATION (2) TO SECTION 9(1)(VI) OF THE ACT AND HELD THAT CONSIDERA TION PAID TOWARDS OUTRIGHT PURCHASE OF INTANGIBLE ASSET WOULD NOT FA LL WITHIN THE MEANING OF 'ROYALTY' UNDER THE SAID SECTION. 3.1.6 IT WOULD BE PERTINENT TO POINT OUT THAT THE AFORESAID FRANCHISE RIGHT WAS CAPITALIZED IN THE BOOKS OF ACCOUNTS AS A N 'INTANGIBLE ASSET' ON WHICH DEPRECIATION WAS CLAIMED UNDER SECTION 32( 1)(II) WHICH HAS BEEN UPHELD AND ACCEPTED BY THE ASSESSING OFFICER CHANDIGARH IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE AC T. YOUR HONOUR'S ATTENTION IS INVITED TO THE PROVISION S OF SECTION 32(1)(II) OF THE ACT WHICH READS AS UNDER: '32. (1) IN RESPECT OF DEPRECIATION OF-- (Z) ..................................... ; (II) KNOW-HOW PATENTS COPYRIGHTS TRADE MARKS LI CENCES FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMIL AR NATURE BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1 ST DAY OF APRIL 1998 OWNED WHOLLY OR PARTLY BY THE ASSESSEE AND USED F OR THE PURPOSES OF THE BUSINESS . OR PROFESSION THE FOLLOWING DEDUCTI ONS SHALL BE ALLOWED. (II) IN THE CASE OF ANY BLOCK OF ASSETS SUCH PERCE NTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED : I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 9 ........ : .... '( EMPHASIS SUPPLIED) TWO THINGS EMERGES FROM THE PROVISIONS OF SECTION 32(1)(II) IN THE CONTEXT OF CLAIM' OF DEPRECATION ON FRANCHISE RIGHT S A) WHETHER FRANCHISE RIGHT IS A DEPRECIABLE ASSET B) OWNERSHIP . CLEARLY THE APPELLANT IS ELIGIBLE FOR THE DEPRECATION ON FRANC HISE RIGHTS AS THE SECTION 32(L)(II) CLEARLY ENTITLES IT AND SECONDLY WHETHER THE APPELLANT BECOME COMPLETE OWNER OF THE KINGS XI PUNJAB DESPIT E A PART PAYMENT. HON' SUPREME COURT IN THE CASE OF MYSORE . MINERALS LTD. VS CIT : 239 ITR 775 AFTER ANALYZING THE DICTIONARY ME ANINGS OF THE WORD. 'OWNER' IN THE CONTEXT OF AVAILABILITY OF DE PRECIATION ON BUILDINGS ACQUIRED BY THE ASSESSEE AT PAGE 780 OF THE JUDGEMENT HELD AS UNDER: 'IN OUR OPINION THE TERM 'OWNED' AS OCCURRING IN S ECTION 32(1) OF THE' INCOME TAX ACT 1961 MUST BE ASSIGNED A WIDER MEAN ING. ANYONE IN POSSESSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINION OVER THE PROPERTY AS WOULD ENABLE OTHERS BEING EXCLUDED THERE FROM AND HAVING THE RIGHT TO USE AND OCCUPY' THE PROPERTY AN D/OR TO ENJOY ITS USUFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDINGS THOUGH A FORMAL DEED OF TITLE MAY NOT HAVE BEEN EXECUTED AND REGISTERED AS CONTEMPLATED BY THE TRANSFER OF PROPERTY ACT THE R EGISTRATION ACT ETC. 'BUILDING OWNED BY THE ASSESSEE' THE EXPRESSIO N AS OCCURRING IN SECTION 32(1) OF THE INCOME-TAX ACT MEANS THE PERSO N WHO HAVING ACQUIRED POSSESSION OVER THE BUILDING IN HIS OWN RI GHT USES THE SAME FOR THE PURPOSES OF THE BUSINESS OR PROFESSION THOU GH A LEGAL TITLE HAS NOT BEEN CONVEYED TO HIM CONSISTENTLY WITH THE REQU IREMENTS OF LAWS SUCH AS THE TRANSFER OF PROPERTY ACT AND THE REGIST RATION ACT ETC. BUT NEVERTHELESS IS ENTITLED TO HOLD THE PROPERTY TO TH E EXCLUSION OF ALL OTHERS. ' IN ANOTHER DECISION HON' SUPREME COURT IN THE CASE OF TECHNO SHARES AND STOCKS LTD. VS CIT: 327 ITR 323 HELD THAT LICE NSE ACQUIRED TO TRADE ON THE FLOOR OF BOMBAY STOCK EXCHANGE THROUGH THE MEMBERSHIP CARD IS AN 'INTANGIBLE ASSET' ELIGIBLE FOR DEPRECI ATION UNDER SECTION 32(1)(II) OF THE ACT. THE AFORESAID DECISION ENDORS ES THAT A RIGHT/LICENSE TO DO SOMETHING (TO TRADE IN STOCK EX CHANGE) IN PERPETUITY' TO THE EXCLUSION OF THE REST OF THE WOR LD WOULD BE REGARDED AS 'INTANGIBLE ASSET' IN THE NATURE OF 'LI CENSE' OR 'ANY OTHER BUSINESS OR COMMERCIAL RIGHT' OWNED BY AN ASSESSEE ELIGIBLE FOR DEPRECIATION UNDER SECTION 32(1 )(II) OF THE ACT. I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 10 3.1.7 IN THAT VIEW OF THE MATTER AND COLLECTIVELY IT IS SUBMITTED THAT THE IMPUGNED FRANCHISE RIGHT/RIGHT TO' OWN CRICKET TEAM DOES NOT FALL WITHIN THE PROVISIONS OF EXPLANATION 2 TO SECTION 9(1)(VI) AND THERE WAS THEREFORE NO FAILURE ON THE PART OF APPELLAN T IN NOT DEDUCTING TAX AT SOURCE UNDER SECTION 194J OF THE ACT AT THE TIME OF CREDIT OF RS.304 CROR 'N THE BOOKS OF ACCOUNTS OF THE FINANC IAL YEAR 200'8-09. FURTHER WITHOUT PREJUDICE TO THE ABOVE SUBMISSIO NS IN PARA B2 THE APPELLANT CONTENDS THAT FAILURE FOR NON DEDUCTION OF IDS CANNOT BE ALLEGED DURING THE FY 2009-10 SINCE DURING THE REL EVANT FINANCIAL YEAR THERE IS NEITHER CREDIT NOR PAYMENT OF THE AM OUIIT OF RS. 304 CRORES. IT IS REITERATED THAT THE APPELLANT CANNOT BE TREATED AS 'ASSESSEE IN DEFAULT' FOR FAILURE TO DEDUCT TAX AT SOURCE UNDER SECTION 194J OF THE ACT DURING THE FINANCIAL YEAR 2009-10 I N THE ABSENCE OF CREDIT IN. THE BOOKS OF ACCOUNT . FOR THE GROSS AMOUNT OF RS.304 CRORES DURING THE . RELEVANT FMANCIAL YEAR. 3.1.9 TAX LIABILITY UNDER SECTION 201(1) WAS INCORR ECT. FURTHER WITHOUT PREJUDICE TO THE ABOVE PARAS AT B. 2/B.3 THE TAX LIABILITY DETERMINED UNDER SECTION 201(1) OF RS.22 68 05 037 AND CONSEQUENTIAL INTEREST LIABILITY OF RS. 14 61~69 20 6 DETERMINED UNDER SECTION 201(LA) OF THE ACT IS INCORRECT WHICH NEE DS TO BE RECTIFIED. THE APPELLANT IT IS SUBMITTED TILL THE DATE OF PA SSING THE IDS ORDER U/S 20 1( 1) I.E. 23.2.2012 HAD ALREADY PAID FRAN CHISE FEE TO THE EXTENT OF RS.130 72 00 000 . TO THE BCCI AND HAD CONSEQUENTLY DEDUCTED AND DEPOSITED IDS OF RS~15 40 25 848 THER EFROM. ACCORDINGLY THE APPELLANT IS ENTITLED FOR CREDIT O F THE AFORESAID AMOUNT FROM THE GROSS. TDS LIABILITY OF RS.30 40 00 000 UPHELD IN THE ASSESSMENT ORDER WHICH WOULD -RESULT IN TAX LIABIL ITY OF RS.14 99 74 152 INSTEAD OF RS.22 68 05 037 DETERMI NED UNDER SECTION 201(1) OF THE ACT CONSEQUENTLY THE INTEREST LIABIL ITY OF RS.L4 61 69 206 COMPUTED UNDER SECTION 201(IA) OF T HE ACT IS ALSO INCORRECT WHICH NEEDS TO BE RE-COMPUTED. INDEPENDENT TAX OPINIONS I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 11 3.1.10 TO PROVE BONA FIDE THE APPELLANT SOUGHT LEG AL OPINION BOTH AT THE START OF THE TRANSACTION AND DURING THE COURSE OF APPEAL ENCLOSED AS PART OF THE SUBMISSIONS ALREADY MADE TO YOUR HON OUR THE SAID OPINION THOUGH IN NO WAY BINDING ON YOUR HONOUR PRO VIDES ENOUGH. SUPPORT ON THE PROPOSITION 'AS ADVOCATED BY THE APP ELLANT IN PARA B.2 ABOVE. CONCLUSION 3.1.11IN THE END THE APPELLANT RESPECTFULLY SUBMIT S THAT THE RIGHTS ACQUIRED BY IT UNDER THE FRANCHISE AGREEMENT IS AN ACQUISITION OF PERPETUAL RIGHT AND THAT THE APPELLANT IS AN ABSOLU TE OWNER OF KINGS XI PUNJAB. GIVEN THAT THERE IS NO QUESTION THAT S UCH AN ACQUISITION OF INTANGIBLE ASSET (OUTRIGHT BUY) WOULD BE SUBJECT T O THE TDS U/S 194J READ WITH SECTION 9(1)(VI) OF THE ACT. THAT THE APP ELLANT ITSELF DEDUCTED IDS ON THE ANNUAL FRANCHISE FEE IN NO WAY CAN BE TAKEN AS AN ARGUMENT THAT THE FRANCHISE FEE IS LEGALLY SUBJE CT TO TDS U/S 194J OF THE ACT. THE APPELLANT THUS HUMBLY REQUEST YOU R HONOUR TO DELETE THE FINDINGS OF THE LD AO IDS NEW DELHI THAT THE APPELLANT IS GUILTY OF NON COMPLIANCE OF SECTION 194J AND CONSEQUENTLY THE ORDER U/S 2010) ON THE POINT OF NON DEDUCTION OF IDS ON TOTA L FRANCHISE FEES REQUIRES TO BE DELETED. 6. LD. COUNSEL FOR THE ASSESSEE HAS FURTHER DEMONST RATED DIFFERENCE BETWEEN THE VIEWS OF THE A.O. (TDS) AND THE A.O. (C O. CIRCLE) CHANDIGARH AND BY PLACING RELIANCE ON VARIOUS CASE LAW PLEADE D FOR DELETION OF THE IMPUGNED DEMANDS. 6.1 THE LD. CIT(A) HAS DECIDED THE FIRST ISSUE AGAI NST THE ASSESSEE SECOND ISSUE IN FAVOUR OF THE ASSESSEE AND THE ISSU ES IN GROUNDS NO.2.4 AND 2.4.1 WERE HELD TO BE REDUNDANT AND IRRELEVANT; WHE REAS GROUND NO.3 TO 4.1.1 WERE DISMISSED; WHEREAS GROUND NO.5 AND 6.2 WERE RE MANDED FOR CLARIFICATION AND GROUND NO.7 WAS ALLOWED WHEN GRO UNDS NO.1 8 & 9 WERE GENERAL GROUNDS WHICH WERE NOT ADJUDICATED UPON. I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 12 7. AGAINST THE ACTION OF LD. CIT(A) WHERE PART REL IEF WAS GIVEN THE ASSESSEE HAS COME UP IN APPEAL WHERE ADDITIONS WER E DELETED DEPARTMENT HAS COME UP IN APPEAL AND AGAINST THE APPEAL OF THE REVENUE C.O. HAS BEEN FILED BY THE ASSESSEE TO SUPPORT THE ORDER OF LD. C IT(A) IN THIS REGARD. 8. AT THE VERY OUTSET LD. COUNSEL FOR THE ASSESSEE WHILE GIVING FULL DESCRIPTION OF THE ISSUES RAISED IN THESE APPEALS / C.O. AND TAKING US THROUGH VARIOUS DOCUMENTS HAS STRONGLY PLEADED THAT IN THE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER IT WOULD BE JUST AND APPROPRIATE TO SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR RE-CONSIDERATION AND DECIDING THE ISSUES AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE AS SOME VITAL POINTS RE MAINED UNNOTICED AND RELEVANT DOCUMENTS HAVE NOT BEEN CONSIDERED AND MOR EOVER ON CERTAIN ISSUES EVEN ORDER PASSED IS A NON SPEAKING ORDER. LD. D.R. HAS VERY FAIRLY SUBMITTED THAT THOUGH DEPARTMENT SUPPORTS THE ORDER OF THE A.O. IN ITS TOTALITY AND PARTIALLY SUPPORTS THE ORDER OF LD. CI T(A) YET HE SUBMITTED THAT IN CASE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. FOR RE-CONSIDERATION OF THE ISSUE RAISED IN THESE MATTERS AFRESH DEPARTMEN T HAS NO OBJECTION. 9. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MAT ERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDERS OF AUTHORITIES BE LOW THE RELEVANT PROVISIONS OF LAW AND FIND THAT CERTAIN VITAL ASPEC TS OF THE CASE HAVE NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW AS EVEN THE REL EVANT AGREEMENT HAS NOT BEEN APPROPRIATELY CONSIDERED OR DISCUSSED BEFORE P ASSING THE RESPECTIVE ORDERS BY THE AUTHORITIES BELOW. THUS CONSIDERING THE ENTIRETY OF THE FACTS CIRCUMSTANCES AND MATERIAL ON RECORD WE FIND IT JU ST AND APPROPRIATE TO SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE T HE MATTER BACK TO THE FILE OF THE A.O. FOR DE NOVO CONSIDERATION OF THE ISSUES IN VOLVED WITH THE DIRECTION I.T.A. NOS. 5173 4625 /DEL/2012 C.O. NO.430/DEL/11 13 TO THE A.O. TO CONSIDER RELEVANT MATERIAL ALREADY O N RECORD OR TO BE OBTAINED DURING THE COURSE OF DE NOVO PROCEEDINGS AND REDECI DE IT BY PASSING A WELL REASONED AND SPEAKING ORDER AFTER GIVING DUE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 10. AS A RESULT ALL THE MATTERS ARE TREATED TO BE ALLOWED FOR STATISTICAL PURPOSE. 11. ORDER PRONOUNCED IN THE OPEN COURT SOON AFTER T HE CONCLUSION OF HEARING ON 08 TH OCT. 2013. SD./- SD./- (B. C. MEENA) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08 TH OCTOBER 2013 SP. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV NEW DELHI AR ITAT 5. CIT(ITAT) NEW DELHI NEW DELHI