Case Law Details
M/s Knight Riders Sports Private Limited Vs. ACIT (ITAT Mumbai)
We shall first take up the core issue involved in the present appeal as to whether the Franchise fee paid by the assessee to BCCI-IPL was rightly claimed by it as a revenue expenditure, or the same being in the nature of a capital expenditure was rightly disallowed by the lower authorities. We find that the assessee had entered into a franchise agreement with BCCI- IPL in April, 2008. That pursuant to the aforesaid agreement the assessee was vested with the right to operate the franchise and to be a member of the league and operate a team in the city of Kolkata and participate in the IPL tournament, which was owned and operated by BCCI-IPL. The assessee in terms of Clause 7 of the franchise agreement remained under an obligation to pay to BCCI-IPL the annual Franchise fee of the following amount:
(a). in respect of the period 2008-17 (inclusive), as under:-
(i) a sum of USD 22,52,700/- equivalent to INR 9,01,08,000/- towards “League deposit” on or before 2nd January in each such year, which thereafter was to be appropriated towards the annual Franchise consideration on the date of the First match of the League in the year in which the League Deposit was paid. The League deposit was refundable in any year if the league did not take place at all in such year, under which circumstance the amount was to be refunded without interest; AND
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