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Tax Publishers Compensation for cancelling Champions League T20 tournament - whether taxable in India *Facts:* Assessee the premier sports body in charge of cricket in India had organized a tournament called Champions League T20 (CLT20) where in top T20 teams of South Africa and Australia were to participate in a T20 tournament to be held year on year which was in concurrence with Cricket South Africa (CSA) and Cricket Australia (CA). Broadcast rights for the said CLT20 was with Star sports who had to pay a compensation for the premature cancellation of the broadcast rights post year 2015. Since the cricket bodies decided to cancel the existing contract envisaging continuous participation of their teams, the assessee entered into a cancellation agreement in India which had a non-compete clause that none of the two cricketing bodies CSA/CA will organize such a similar tournament even if it was held outside India and if at all it was held it can only be done by the assessee alone. Compensation was paid to both CSA/CA due to cancellation of the CLT20 tournament. It was held by the revenue that the assessee triggered a Dependent Agency Permanent Establishment (DAPE) for CSA/CA and since the compensation/non-compete agreement was signed in India and since it arose of an would be Indian tournament it was held to be taxable as business income under section 28(va) r/w the respective DTAA's. On further appeal by the assessee - Held in favour of the assessee that - There was no DAPE for CSA/CA in India. No business income could be attributed accordingly in India. The payment was for non-compete rights but for loss of an income earning apparatus called CLT20 and thus was not an income that accrued or arose in or out of India. It was a capital receipt. The non-compete clause also meant if at all the CLT20 or similar tournament was conducted it could be held only by the assessee outside India and not in India so the compensation paid for the termination was for an income earning source/apparatus which was not from India but outside India. Signing the agreement in India is not a deciding factor. Revenue had failed to establish how the DAPE was triggered. *Case:* The Board of Control for Cricket in India v. Dy. CIT 2023 TaxPub(DT) 2557 (Mum-Trib)

Tax Publishers

Compensation for cancelling Champions League T20 tournament - whether taxable in India

Facts:

Assessee the premier sports body in charge of cricket in India had organized a tournament called Champions League T20 (CLT20) where in top T20 teams of South Africa and Australia were to participate in a T20 tournament to be held year on year which was in concurrence with Cricket South Africa (CSA) and Cricket Australia (CA). Broadcast rights for the said CLT20 was with Star sports who had to pay a compensation for the premature cancellation of the broadcast rights post year 2015. Since the cricket bodies decided to cancel the existing contract envisaging continuous participation of their teams, the assessee entered into a cancellation agreement in India which had a non-compete clause that none of the two cricketing bodies CSA/CA will organize such a similar tournament even if it was held outside India and if at all it was held it can only be done by the assessee alone. Compensation was paid to both CSA/CA due to cancellation of the CLT20 tournament. It was held by the revenue that the assessee triggered a Dependent Agency Permanent Establishment (DAPE) for CSA/CA and since the compensation/non-compete agreement was signed in India and since it arose of an would be Indian tournament it was held to be taxable as business income under section 28(va) r/w the respective DTAA's. On further appeal by the assessee -

Held in favour of the assessee that -

There was no DAPE for CSA/CA in India. No business income could be attributed accordingly in India.

The payment was for non-compete rights but for loss of an income earning apparatus called CLT20 and thus was not an income that accrued or arose in or out of India. It was a capital receipt.

The non-compete clause also meant if at all the CLT20 or similar tournament was conducted it could be held only by the assessee outside India and not in India so the compensation paid for the termination was for an income earning source/apparatus which was not from India but outside India. Signing the agreement in India is not a deciding factor.

Revenue had failed to establish how the DAPE was triggered.

Case: The Board of Control for Cricket in India v. Dy. CIT 2023 TaxPub(DT) 2557 (Mum-Trib)