These cross appeals - one from the assessee and other by the department and cross objections of the assessee, arise 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 assessee as assessee in default u/s 201(1) under I. T. Act, 1961 and determining 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 against which assessee preferred appeal before Ld. CIT(A) and raised the following grounds:

1. That the assessing officer erred on facts and in law in treating the appellant as an assessee in default under section 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 23.03.2012 operate cricket team in Indian Premier League (IPL, promoted by Board of Control for Cricket in India (BCCI), was in the nature of royalty, as defined under section 9(1) (vi), which is subject to TDS under section 194J of the Act.

2.1 That the assessing officer erred on facts and in 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 in law in observing that the consideration payable towards acquisition of franchisee right was liable for TDS under section 194J of the Act, since the appellant was itself deducting tax at source under the aforesaid section at the time of making payment of consideration, in installments, to franchiser/BCC!.

2.3 Without prejudice, that the assessing officer erred on facts and in law in treating the appellant as an assessee in default 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 under 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, incorrect.

3. That the assessing officer erred on facts and in law in treating the appellant as an assessee in default under section 201 (1), for alleged default of not deducting tax on source under section 194J of the Act from the daily allowance, amounting to &.18 lacs, paid to the cricket players resident in India (Indian players) for reimbursement 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. 45,000. That the assessing officer erred on facts and in law in treating the appellant as an assessee in default under section 201 (1), for alleged default of not deducting tax at source under section 194E read with section 115BBA of the Act from the daily allowance, amounting to Rs. 6, 04, 000, paid to the non-resident cricket players, 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 in 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 section 201(1), for alleged default of not deducting tax at source under section 194B of the Act on the prize money, amounting to &.29,07,594, received by the appellant from BCCI and distributed amongst the Indian 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.2,18,070/-.

6. That the assessing officer erred on facts and in law in treating the appellant as an assessee in default under section 201 (1), for not alleged default of not deducting tax at source under 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 in 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 erred 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 money distributed amongst non-resident players, in relation to cricket event played outside India, since income therefrom did not accrue or arise in India, and hence not liable to tax in India.

7. That the assessing officer erred on facts and in law in treating the appellant as an assessee in default under section 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 financial year 2008-09, on account of re-imbursement of expenses.

8. Without Prejudice, that the assessing officer erred on facts and in law in imposing tax on the appellant under section 201 (1), without appreciating that once tax on receipt/income was paid the recipients, the same could not have been recovered again from the appellant/alleged deductor.

9. Without Prejudice, that the assessing officer erred 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 actual 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 demands u/s 201(1) and 201(1A) have been created as detailed in earlier paragraphs.

5. Ld. CIT(A), while noting the facts of the case and 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 are 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 default 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 royalty, 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 follows against the appellant: The appellant does not enjoy full control (has limited rights) of the Franchise rights vested under the Franchise agreement, 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 section 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, and 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 payments 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 22,68,05,037 crores and corresponding interest U/S 201(lA) at Rs 14,61,69,206/-. Facts of the case / appellants view point

3.1.2 During the Indian Premier League (IPL) bidding in the month of January- February 2008, arranged by the BCCI-IPL, the consortium of Ms. Preity Zinta arid others, won the exclusive Franchise 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 appellant, 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. The said rights under the Franchise Agreement was classified as intangible assets and accordingly the appellant claimed depreciation on such intangible assets at the rate of 25%, claiming a depreciation 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 also had the absolute right to transfer its ownership. To support the argument, that the appellant, is absolute owner of the Kings J.G Punjab cricket team, the appellant ,wishes to draw your Honours attention to 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 perusal 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 the Franchise Agreements and other applicable bye-laws as laid down by the BCCI- IPL. There are certain restrictions/ covenants placed upon as to manner of operating the franchise; sale of franchise and the I.T.A. Nos. 5173,4625 /DEL/2012 C.O. No.430/Del/11 7 termination of the franchise. However, that does not 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, its fit to quote the ruling of Hon Delhi High Court in case of Asia Satellite Telecommunications Co. Ltd. vs. DIT as reported in 332 ITR 340 :

............... 55, Keeping in view the aforesaid principles, we now embark upon the interpretative process in defining the ambit and scope of term royalty appearing in Explanation 2 to sub-clause (vi) of Section 9(1) of the Act. Sub-clause (i) deals with the transferor all or 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 proper/v. The two transfers are distinct and have different legal effects. In first category. the rights are purchased- which enable use of those rights while with second category, no purchase is involved, only right to use has been granted. Ownership denotes the, relationship between a person and an object forming the subject matter of his ownership. It consists of bundle of rights. all of which are rights in rem, being good against the entire world and not merely against a specific person and such rights are indeterminate in duration and residuary in character as held by the Supreme Court in. the case of Swadeshi Ranjan Sinha 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 transferee does not have the rights which are indeterminate in duration and residuary in character. Lump sum consideration is not decisive of the matter. That sum may be agreed for the transfer of one right, two rights and so on all the rights but not the ownership. Thus the definition of term royalty in respect of the. copyright, literary, artistic or scientific work, patent, invention, process, etc. does not extend to the outright purchase of the right to use an asset. In case of royalty, the ownership on the property or right remains with owner and the transferee is permitted 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 the absolute assignment and ownership of rights transferred is not a payment (or the use of something belonging to another party and, there(ore, no royalty. In an outright transfer to be treated as sale 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 Agreement is nothing but an absolute acquisition of an intangible asset and that Delhi High Courts 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 payment for acquisition of absolute ownership and that legally there is no question of deduction of IDS U/S 194J of the Act read with section 9(l)(vi). Further, also in case of Parsons Brinckerhoff India (P) Ltd. v. ADIT: 118 ITJ 214, dealt with the aforesaid provisions of Explanation (2) to section 9(1)(vi) of the Act and held that consideration paid towards outright purchase of intangible asset would not fall 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 an 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 Act. Your Honours attention is invited to the provisions 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, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1 st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business . or profession, the following deductions shall be allowed. (ii) in the case of any block of assets, such percentage 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 rights a) Whether Franchise Right is a depreciable asset b) ownership. Clearly, the appellant is eligible for the deprecation on Franchise rights as the section 32(l)(ii) clearly entitles it and secondly whether the appellant become complete owner of the Kings XI Punjab despite a part payment. Hon Supreme Court in the case of Mysore . Minerals Ltd. vs CIT : 239 ITR 775 after analyzing the dictionary meanings of the word. "owner", in the context of availability of depreciation on buildings acquired by the assessee, at page 780 of the judgement held as under: "In our opinion, the term "owned" as occurring in section 32(1) of the Income tax Act, 1961, must be assigned a wider meaning. 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 and/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 Registration Act, etc. "Building owned by the assessee" the expression as occurring in section 32(1) of the Income-tax Act means the person who having acquired possession over the building in his own right uses the same for the purposes of the business or profession though a legal title, has not been conveyed to him consistently with the requirements of laws such as the Transfer of Property Act and the Registration Act, etc., but nevertheless is entitled to hold the property to the 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 license acquired to trade on the floor of Bombay Stock Exchange through the membership card is an intangible asset, eligible for depreciation under section 32(1)(ii) of the Act. The aforesaid decision endorses that a right/license to do something (to trade in stock exchange), in perpetuity" to the exclusion of the rest of the world, would be regarded as "intangible asset" in the nature of "license" 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 appellant 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 Financial Year 2008-09. Further, without prejudice, to the above submissions in para B2, the appellant contends, that failure for non deduction of IDS cannot be alleged during the FY 2009-10, since during the relevant financial year, there is neither credit nor payment of the amoUIit 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 in 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 incorrect. 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. 14,61~69,206 determined under section 201(lA) of the Act is, incorrect, which needs to be rectified. The appellant, it is submitted, till the date of passing the IDS order U/S 20 1( 1), i.e. 23.2.2012, had already paid franchise 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, therefrom. Accordingly, the appellant is entitled for credit of the aforesaid amount from the gross. TDS liability of Rs.30,40,00,000 upheld in the assessment order, which would -result in tax liability of Rs.14,99,74,152, instead of Rs.22,68,05,037 determined under section 201(1) of the Act Consequently, the interest liability of Rs.l4,61,69,206 computed under section 201(IA) of the 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 legal opinion both at the start of the transaction and during the course of appeal, enclosed as part of the submissions already made to your honour, the said opinion though in no way binding on Your Honour provides enough. support on the proposition as advocated by the appellant in Para B.2 above. Conclusion 3.1.11In the end, the appellant respectfully submits, that the rights acquired by it under the Franchise Agreement is an acquisition of perpetual right and that the appellant is an absolute owner of Kings XI Punjab. Given that, there is no question, that such an acquisition of intangible asset (outright buy) would be subject to the TDS U/S 194J read with section 9(1)(vi) of the Act. That the appellant, itself deducted IDS on the annual franchise fee in no way can be taken as an argument that the franchise fee is legally subject to TDS u/s 194J of the Act. The appellant, thus, humbly request your 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 total franchise fees requires to be deleted.

6. Ld. Counsel for the assessee has further demonstrated difference between the views of the A.O. (TDS) and the A.O. (Co. Circle) Chandigarh and by placing reliance on various case law, pleaded for deletion of the impugned demands.

6.1 The Ld. CIT(A) has decided the first issue against the assessee, second issue in favour of the assessee and the issues in grounds No.2.4 and

2.4.1 were held to be redundant and irrelevant; whereas ground No.3 to 4.1.1 were dismissed; whereas ground No.5 and 6.2 were remanded for clarification and ground No.7 was allowed, when grounds 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 relief was given, the assessee has come up in appeal, where additions were 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. CIT(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 remained unnoticed and relevant documents have not been considered and moreover 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. CIT(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, department has no objection.

9. We have heard both the sides, considered the material on record. We have also gone through the orders of authorities below, the relevant provisions of law and find that certain vital aspects of the case have not been considered by the authorities below as even the relevant agreement has not been appropriately considered or discussed before passing the respective orders by the authorities below. Thus considering the entirety of the facts, circumstances and material on record, we find it just and appropriate to set aside the orders of authorities below and restore the matter back to the file of the A.O. for de novo consideration of the issues involved 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 on record or to be obtained during the course of de novo proceedings and redecide it by passing a well reasoned and speaking order after giving due opportunity 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 the 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