ACIT (TDS), TDS, Circle-1(1), Hyd, Hyderabad V. Celebrity Cricket League Ltd., Hyd, Hyderabad

ITA 514/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6048 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-11-2016
• Assessment Year: 2013-2014
• Appeal Filed On: 12-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: P RAVI SESHAGIRI RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA.NO.513 & 514/HYD/2016 ASSESSMENT YEARS 2012-2013 & 2013-2014 ACIT (TDS), TDS CIRCLE- 1(1), HYDERABAD. VS. M/S. CELEBRITY CRICKET LEAGUE LTD., HYDERABAD. PAN AAECC2068B (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. SUMAN MALIK FOR ASSESSEE : SHRI P. RAVISESHAGIRI RAO DATE OF HEARING : 07.11.2016 DATE OF PRONOUNCEMENT : 11.11.2016 ORDER PER J. SUDHAKAR REDDY, A.M. THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT(A)-8, HYDERABAD DATED 22.01.2016 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DEMAND RAISED UNDER SECTION 194J FOR THE AYS 2012-13 & 2013-14. 2. WHETHER THE LEARNED CIT(APPEAL) IS CORRECT IN NOT A PPRECIATING THE FACT THAT THE AMOUNT PAID BY THE FRANCHISEE TO THE COMPANY IS FOR ENJOYING THE RIGHT TO RECRUIT PLAYERS THROUG H A LICENSE. 3. THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT TH AT THE FACTS OF M/S. CAREER LAUNCH INDIA (P) LTD. VS. CIT DECIDED B Y HON'BLE DELHI HIGH COURT ARE DISTINGUISHABLE FROM THE PRESE NT CASE. 4. ANY OTHER GROUND WHICH THE APPELLANT MAY URGE EITHE R BEFORE OR AT THE TIME OF HEARING. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY (CELEBRITY CRICKET LEAGUE PRIVATE LIMITED) ENTERED IN TO 2 ITA.NOS.513& 514/HYD/2016 M/S. CELEBRITY CRICKET LEAGUE LTD., HYDERABAD. AGREEMENTS WITH FRANCHISEE HOLDERS TO SHARE REVENUES THAT ARE GENERATED FROM : (I) TELEVISION REVENUE EARNED THROUGH EXPLOITING BROADCASTING RIGHTS OR FROM SALE TV FCT SALES. (II) TITLE SPONSORSHIP REVENUE EARNED BY COMPANY. (III) REVENUE FROM GROUND BRANDING OF MATCHES, ETC. 2.1. IN ABOVE CASES, THE COMPANY HAS AGREEMENTS WIT H FRANCHISEE HOLDERS (SUCH AS TELUGU TEAM, TAMIL TEAM , KANNADA TEAM, KERALA TEAM, ETC.) TO SHARE THE REVENUES RECEIVE D FROM THE ABOVE ACTIVITIES. IN ALL THE ABOVE CASES THE COMPANY D OES NOT PERFORM ANY WORK FOR THE FRANCHISEE HOLDERS. THE COM PANY GENERATES REVENUE FROM VARIOUS OUTSIDERS FOR EXPLOI TING THE ABOVE FACILITIES. 3. WE HAVE HEARD SMT. SUMAN MALIK, LD. D.R. AND SHR I P. RAVISESHAGIRI RAO, LEARNED COUNSEL FOR THE ASSESS EE. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAPERS ON RECORD AND THE ORDER S OF THE AUTHORITIES BELOW, WE HELD AS FOLLOWS. 3.1. THE SHORT POINT THAT ARISE FOR OUR CONSIDERATION IS WHETHER THE LD. CIT(A) IS RIGHT IN HOLDING THAT DEDUCTION OF TAX AT SOURCE UNDER SECTION 194J IS NOT ATTRACTED UNDER THE F ACTS AND CIRCUMSTANCES OF THIS CASE. 4. ASSESSEE CONTENDED THAT THE AGREEMENT IN QUESTION WAS A REVENUE SHARING AGREEMENT AND HENCE IT DOES NOT REQUIRE DEDUCTION OF TAX AT SOURCE. THE FIRST APPELLATE AUTHORIT Y AGREED WITH THIS CONTENTION OF THE ASSESSEE. THE ASSESSEE-CO MPANY OWNS SPONSORSHIP RIGHTS AND BROADCASTING RIGHTS EXCLUSIVE LY FOR ALL THE 3 ITA.NOS.513& 514/HYD/2016 M/S. CELEBRITY CRICKET LEAGUE LTD., HYDERABAD. MATCHES PLAYED IN INDIA AND ABROAD. THE FRANCHISE H OLDERS HAVE NO ROLE WHATSOEVER, IN THE MATTERS OF SALE OF THESE SPO NSORSHIP RIGHTS AND BROADCASTING RIGHTS TO THIRD PARTIES. HENCE , THERE IS NO INVOLVEMENT OF ANY SERVICE RENDERED BY THE FRANCHISEE S TEAMS TO THE ASSESSEE-COMPANY. THE ASSESSEE SHARES ITS REVENUE S THAT ARE GENERATED FROM THE FOLLOWING ACTIVITIES WHICH ARE NOT CONNECTED WITH THE SALE OF TICKETS. A) TELEVISION REVENUE EARNED THROUGH EXPLOITING BROADCASTING RIGHTS OR FROM SALE TV FCT SALES. B) TITLE SPONSORSHIP REVENUE EARNED BY COMPANY. C) REVENUE FROM GROUND BRANDING OF MATCHES, ETC. 4.1. THESE EXCLUSIVE RIGHTS BELONG TO THE ASSESSEE COMPANY AND ARE ACTUALLY EXPLOITED BY THIRD PARTIES FOR GETTING REVENUE THROUGH ADVERTISEMENTS DURING THE BROADCASTING OF THE C RICKET MATCHES IN TV AND ADVERTISEMENTS DISPLAYED IN THE GROUN D DURING THE COURSE OF CRICKET MATCHES. THE ENTITLEMENT FO R SHARING THE REVENUE FROM THE ABOVE ACTIVITIES IS A PRIVILEGE EX TENDED TO THE FRANCHISE TEAMS BY THE ASSESSEE, AS THEY PAY TO THE AS SESSEE- COMPANY A CERTAIN SPECIFIED AMOUNT AS FRANCHISE FEES. BY VIRTUE OF THIS PAYMENT OF FRANCHISE FEE THEY BECOME A PARTNER IN SHARING THE EXCLUSIVE RIGHTS ENJOYED BY THE ASSESSEE-COMPANY. THEREFORE THE FRANCHISE FEES PAID TO THE ASSESSEE-COMPANY BY THE FRANCHISE TEAMS ARE IN THE FORM OF ROYALTY PAYMENTS W HICH ATTRACT TDS AT 10% AND IT IS NOT THE OTHER WAY ROUND. THER EFORE THE ELEMENT OF DEDUCTION OF TDS IS NOT RELEVANT IN THIS CONTEXT OF SHARING OF REVENUE. 4.2. THE ASSESSEE-COMPANY IS NOT REQUIRED TO RECRUIT PLAYERS UNDER THE AGREEMENT WITH THE ASSESSEE, AS OPINE D BY THE 4 ITA.NOS.513& 514/HYD/2016 M/S. CELEBRITY CRICKET LEAGUE LTD., HYDERABAD. ASSESSING OFFICER. THE PROCESS OF RECRUITMENT IS NOT A PART OF THE TERMS AND CONDITIONS OF THE CONTRACT BETWEEN THE ASSESS EE COMPANY AND THE FRANCHISE. 5. IN THIS CASE, THE FRANCHISE HOLDER IS NOT RENDERIN G ANY PROFESSIONAL OR TECHNICAL SERVICES TO THE ASSESSEE NOR HAS ANY RIGHT OVER THE RIGHTS SOLD BY THE ASSESSEE-COMPANY TO THIRD PARTIES. AS PER THE AGREEMENT, THE ASSESSEE-COMPANY SH ARES A PART OF THE REVENUE THAT IS GENERATED FROM THE SALE OF BROADCASTING RIGHTS, TITLE SPONSORSHIP INCOME AND/OR GROUND ADVERTISING REVENUE AS PER THE AGREEMENT, FOR THE FEE R ECEIVED BY THE ASSESSEE FROM THE FRANCHISEE. 6. THUS, ON THESE FACTS, THE VIEW OF THE LD. CIT(A ) THAT PROVISIONS OF SECTION 194J OF THE ACT DOES NOT APPLY O N THE FACTS OF THIS CASE HAS TO BE UPHELD. REVENUES APPEAL IS A CCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.11.2016. SD/- SD/- (SMT. P. MADHAVI DEVI) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 11 TH NOVEMBER, 2016. VBP/- COPY TO 1. ASST. COMMISSIONER OF INCOME TAX (TDS), TDS CIRCL E-1(1), B BLOCK, 4 TH FLOOR, INCOME TAX TOWERS, AC GUARDS, MASAB TANK, HYDERABAD 500 004. 2. M/S. CELEBRITY CRICKET LEAGUE LTD., H.NO.8-2-293/A /1128, 5 TH FLOOR, JUBILEE SQUARE, ROAD NO.36, JUBILEE HILLS, HYDERABAD. 3. CIT(A)-8, HYDERABAD. 4. CIT (TDS), HYDERABAD. 6. D.R. ITAT A BENCH, HYDERABAD. 7. GUARD FILE.