Income Tax Appellate Tribunal - Mumbai
Dcit Cc 6(2), Mumbai vs M/S Indiawin Sports Pvt Ltd., Mumbai on 16 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, MUMBAI
SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER
ITA No.4497/MUM/2019 ITA No.266/MUM/2021
(Assessment Year: 2016-2017) (Assessment Year: 2017-2018)
&
ITA No.3884/Mum/2023
(Assessment Year 2018-2019)
Deputy Commissioner of Income Tax
Central Circle 6(2), Mumbai
Room No.1903, 19th Floor, Air India Building,
Nariman Point, Mumbai - 400021.
Maharashtra. ............. Appellant
Vs
M/s. Indiawin Sports Private Limited
3rd Floor, Court House,
Lokmanya Tilak Marg, Mumbai - 400002.
[PAN:AADCR8195F] ............. Respondent
Appearance
For the Appellant/ Assessee : Shri Nimish Vora
For the Respondent/Department : Shri R. A. Dhyani
Date
Conclusion of hearing : 08.04.2026
Pronouncement of order : 16.04.2026
[
ORDER
Per Rahul Chaudhary, Judicial Member:
1. These are three appeals preferred by the Revenue pertaining to Assessment Years 2016-2017, 2017-2018 and 2018-2019. Since identical issues were raised in the appeals, the same were heard together and are, therefore, being disposed by way of a common order.
2. We would take-up appeal for the Assessment Year 2016-2017 as the lead matter.
ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023Assessment Year 2016-2017, 2017-2018 & 2018-2019 ITA No.4497/MUM/2019 (Assessment Year 2016-2017)
3. The present appeal preferred by the Revenue is directed against the Order, dated 24/04/2019, passed by the Commissioner of Income Tax (Appeals) - 54, Mumbai [hereinafter referred to as the 'CIT(A)'] whereby Learned CIT(A) had partly allowed the appeal against the Assessment Order, dated 21/12/2018, passed under Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as 'the Act'], for the Assessment Year 2016-2017.
4. The Revenue has raised following grounds of appeal :
"1. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of Rs.44.76 crores being franchise fees paid to BCCI to participate in the IPL by holding the same as Revenue in nature?
2. Whether on the facts and circumstances of the case and in law the CIT(A) has failed to appreciate that the decision of Hon'ble ITAT in assessee's own case in earlier years have not been accepted by the department and appeal before the Hon'ble High court is pending on this issue.?
3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs.39,74,636/- being 10% of the Hospitality expenses of Rs.3,97,46,368/- by holding that the same is related to assesses business?
4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the decision of Hon'ble ITAT in assessee's own case for earlier A.Y.2011-12 & 2012-13, was accepted owing to smallness of tax effect and the decision was not accepted on merits?."
5. The relevant facts in brief are that the Assessee is a company engaged in the business of owning, managing and operating the Mumbai Team of the Indian Premier League. For Assessment Year 2018-2019, the Assessee filed Return of income on 03/10/2018 declaring loss of INR.5,37,15,883/-. The return was processed under Section 143(1) of the Act. Subsequently, the case was selected for scrutiny and Assessment Order was passed under Section 143(3) on 02/04/2021 2 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 determining total income of the Assessee at INR.28,52,52,193/- after making various additions. The Assessing Officer disallowed INR.44,98,40,000/- (INR.44,76,00,000/- plus Krishi Kalyan Cess on service tax of INR.23,38,000/-) being franchisee fees paid to Board of Control for in India (BCCI) to participate in the Indian Premier League (IPL) by holding the same to be capital in nature. Further, the Assessing Officer held that the Assessee was not even entitled to claim depreciation on the aforesaid amount. The Assessing Officer also disallowed INR.39,74,636/- being 10% of the hospitality expenses of INR.3,97,46,368/-by holding that the same are not related to business of the Assessee.
6. Being aggrieved the Assessee filed appeal against the Assessment Order before the Learned CIT(A). The Learned CIT(A) granted relief to the Assessee by deleting the above disallowances. The Learned CIT(A) allowed deduction as claimed by the Assessee in respect of franchisee fees of INR.44,98,40,000/- paid to BCCI to participate in IPL holding the same was revenue in nature. Further, the CIT(A) deleted the disallowance of the hospitality expenses of INR.39,74,636/-. The Learned CIT(A) relied upon the decision of the Tribunal in the case of the Assessee while deleting the aforesaid disallowances.
7. Being aggrieved, the Revenue has carried the issue in appeal before the Tribunal in the grounds reproduced in paragraph 2 above.
Ground No. 1 & 2
8. We will first take up Ground No. 1 & 2 raised by the Revenue challenging the order passed by Learned CIT(A) accepting Assessee's claim for deduction of Franchise fee expenses of INR.44,98,40,000/- as revenue expenses.
9. The Learned Departmental Representative placed reliance upon the scrutiny report and written submissions placed on record during the course of hearing.
3 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023Assessment Year 2016-2017, 2017-2018 & 2018-2019 The relevant extract of the written submission reads as under:
"AO has made additions based on: (Para 5 Page 2 onwards of AO)
1. From perusal of profit and loss account it is seen that assessee has paid Rs.44.76 crore to BCCI as franchise fees for IPL and the same has been claimed as revenue expenditure for the year under consideration (Para 5.1 Page 2 of AO).
2. The company has entered into franchise agreement dated
10.04.2008 with BCCI-IPL. As per this agreement company has received franchise rights for the IPL for a period of 10 years which can be extended further.
3. The term of the league itself is indefinite and the benefit is not limited to one year (Para 5.2 Page 2 of AO)
4. Perusal of agreement it is noticed that not only the right to own and operate the team but a bundle of other rights have also been given to the assessee including rights relating to corporate entertainment, premium seating right, right to retain all gate receipts of the franchisee's own home games right to sell merchandise at the stadium etc. (Para 5.3. Page 2 of AO).
5. Also it is pertinent to note that assessee has acquired right to receive/share central rights income which is the amount of income received by BCCI-IPL from a plethora central rights comprising of media rights, umpire sponsorship rights, title sponsorship rights, official sponsorship rights to sell stadium advertisement and game rights.
6. It can be seen that in lieu of the payment of franchise fees the assessee has been granted a bundle of rights which provide long term benefits of enduring nature (Para 5.4 Page 3 of AO).
7. Noteworthy points culled out by the AO from Franchise Agreement
- (Para 5.6 Page 6 of AO).
- Franchise rights acquired by the assessee are indifine and continuing in nature. (They will remain vested with the acquiring party as long as league continues)
- Franchise can even sell the Franchise rights or controlling interest to the third party.
- As a consideration for a right to operate a Franchise and to be a member of the league each franchisee is required to pay to the IPL franchise fee in 10 equal annual installments.
4 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023Assessment Year 2016-2017, 2017-2018 & 2018-2019
8. Gist of salient features of the Franchise Agreement summed up by AO (Para 5.7 Page 7 of AO)
9. Hence franchise has acquired a bundle of rights which is in the nature of commercial or business right of the nature of license as intangible asset u/s 32(1)(ii) of the Act. (Para 5.8 Page 7 of AO)
10. Entire franchisee payment made for setting up such business represents capital expenditure. Merely a condition that payments can be made in equal instalments over a period of time or at a certain percentage of future rights income does not alter the character of these payments. (Para 5.9 Page 7 of AO)
11. Final Finding (Para 5.10 Page 7 of AO)"
The relevant extract of scrutiny report is set out herein under:
"3. Grounds no. 1 and 2 relates to the disallowance of Rs.44,98,40,000/- (Rs..44,76,00,000/- plus Krishi Kalyan Cess on service tax of Rs.23,38,000/-) being franchisee fees paid to Board of Control for in India (BCCI) to participate in the Indian Premier League (IPL) by holding it as capital in nature and not allowing the depreciation on the total cost of the intangible asset in case the above amount is treated as capital in nature.
3.1 Facts of the issue: On perusal of the Profit and Loss account for assessment year 2018-2019, it was noticed that the Assessee company had paid Rs.44,98,40,000/- to the BCCI as franchisee fees for IPL and the same has been claimed as revenue expenditure for the year under consideration. The company has entered into franchisee agreement dated 10.04.2008 with BCCI- IPL. As per this agreement the company has received franchisee rights for the IPL from "Mumbai Indians" for a period of 10 years which can be extended further. In the current year the Assessee has claimed Rs.44,98,40,000/- as expenditure on this account.
As per the terms of franchise agreement, fixed payments are to be made for initial period of 10 years to league association and subsequent to that period, there is an arrangement of revenue sharing. The term of the league is indefinite and the benefit is not limited to one year. In light of the same it becomes important to analyses the true nature of the payment under the head 'Franchise Fees'. On going through franchise agreement between BCCI and the Assessee, it is noticed that not only the right to own and operate the team, but a bundle of other rights to be enjoyed by the 5 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 franchisee in the manner it decides, have also been given to the Appellant by BCCI, corporate entertainment/premium seating rights, right to retain all Gate Receipts of the Franchisee's home League Matches, right to sell merchandise at the Stadium etc. Furthermore, the Assessee also has right to share in central rights income which is the amount of income received by BCCI-IPL from the exploitation of central rights comprising of media rights, umpire sponsorship rights, title sponsorship rights, official sponsorship right to sell stadium advertisement and game rights. It can be seen that in lieu of the payment of franchise fees the Assessee has been granted a bundle of rights which provide long-term benefits of an enduring nature. The same qualifies the expenditure on the acquisition of these rights incurred by the Assessee as capital expenditure as it is a business right of the nature of license or franchise described as intangible assets under Section 32(13) of the Act. Therefore, the expenditure on account of franchise fees needs to be capitalized and disallowed as revenue expenditure. Accordingly, the Assessing Officer disallowed the franchisee fees and added to the income of the Assessee 3.2. Decision of the Ld. CIT(A): The Ld.CIT(A) in its order deleted the addition made by the Assessing Officer by placing reliance on the decision of Hon'ble ITAT, Mumbai (ITA No. 5290 & 5291 dated 22/07/2016) in Appellant's own case for Assessment Year 2009-10 & 2010-2011 on similar issue wherein the Tribunal held that the franchisee fees is in the nature of revenue expenditure and the same has to be allowed as such.
3.3. Comments of the AO: The decision of the Ld. CIT(A) with regard to issue of franchisee payments is not acceptable. The assessee had acquired Commercial Rights for the conduct of its business activity for the tournament Indian premium league(IPL) in which the assessee is a franchisee holder by virtue of the Agreement dated 10/04/2008 with BCCI-IPL. The said benefit arising out of te agreement is of an enduring nature and hence, ought to be treated as a capital expenditure.
The Franchisee, vide this agreement, acquired a bundle of rights which is in the nature of a commercial or business right of the nature of license or franchise described as intangible assets under Section 32(1)(ii) of the Act: It can be seen from the franchise agreement that the assessee had acquired Commercial Rights for the conduct of its business activity for the tournament Indian premium league (IPL) in which the assessee is a franchisee holder by the virtue of the Agreement dated 10/04/2008 with BCCI-IPL.6 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023
Assessment Year 2016-2017, 2017-2018 & 2018-2019 It has been further clearly noted out by the Assessing Officer in the Assessment Order that it emerges that the assessee company has acquired a right to operate a team in IPL for profit and as a consideration the company has made the payment of franchisee fees By making these payments the company has received a right to set up individual business of operating a team in the League. It is setting up a completely new business. Even after expiry of the period of the League there is no embargo on the company to continue to run the business. Thus entire franchisee payment made for setting up such business represents capital expenditure merely a condition that these capital expenditure. Merely a condition that these payments are required to be made in annual installments or at a certain percentage of the future rights income, does not alter the character of these payments from capital to revenue.
It is also important to note that the 'Franchise' itself can be sold, subject to terms and conditions in the agreement, by the franchisee. Thus, the right acquired is a transferable right and the payments made by the franchisee to BCCI to obtain and enjoy the rights is. therefore, in the nature of capital expenditure Further, the provisions of Section 55 of the Act has been amended from time to time thereby widening the concept of property for inclusion in the tax net under the head "Capital Gain" wet 01/04/1988, Finance Act 1987 has included tenancy rights. room permits and loom hours as capital assets in sec 55(2)(a) of the Act, The Finance Act 2002 has brought in definition of capital asset "right to carry on any business". Further "Capital Asset has been defined in Section 2(14) of the Act to mean property of any kind, except those specifically excluded. Thus, property is a word of widest import and signifies every possible interest which a person can hold or enjoy except those specifically excluded. Hence, property includes tangible, intangible, fixed, floating, movable and immovable properties.
Furthermore, this is a recurring issue and department has filed appeal under Section 260A for Assessment Year 2009-2010 on the similar issue in Bombay High Court which is pending for adjudication. In view of the same, 2 appeal on this issue is recommended. (Tax Effect: INR. 13,90,00,560/-) xx xx COMMENTS OF THE DCIT (HQ) (Judl.):
The AO and the Addl. CIT have submitted on ground numbers 1 & 7 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 2 that the issue related to the disallowance of Rs. 44,98,40,000/- (Rs. 44,76,00,000/- plus Krishi Kalyan Cess on service tax of Rs. 23,38,000/-) being franchisee fees paid to Board of Control for in India (BCCI) to participate in the Indian Premier League (IPL) by holding it as capital in nature and not allowing the depreciation on the total cost of the intangible asset in case the above amount is treated as capital in nature and the Ld. CIT(A) has deleted the addition made by the AO by placing the reliance on the decision of Hon'ble ITAT. Mumbai (Income Tax Act, 1961 No. 5290 & 5291 dated 22.07.2016) in appellant's own case for A.Y. 2009-10 & Α.Υ. 2010-11 on similar issue wherein the Hon'ble ITAT held that the franchise fees is in the nature of revenue expenditure and the same has to be allowed as such. Further, the AO and the Addl. CIT has submitted that the decision of Ld. CIT(A) is not acceptable for the reason that the expenditure incurred on account of Franchise Fees for securing right to participate in Indian Premier League as revenue expenditure instead of capital expenditure, whereas provisions of section 32(1)(ii) and that of Section 55(2)(a) of the IT Act, 1961 evidently provide that Franchise and right to carry on any business are capital in nature and also the revenue filed the appeals before the Hon'ble Bombay High Court against the order of Hon'ble ITAT dated 22.07.2016 for A.Y 2009-10 and 2010-11 vide ITXA No. 1068/2017 and ITXA No. 1318/2017. Therefore, further appeal to Hon'ble ITAT is recommended on this issue, if approved."
10. Per Contra, the Learned Authorised Representative for the Assessee relied upon the following decisions of the Tribunal in the case of the Assessee:
- ITA No.5290&5291/Mum/2014 [Assessment Year 2009-10 & 2010-11, dated 22/07/2016]
- ITA No.6261/Mum/2016 [Assessment Year 2011-2012, dated 28/04/2017]
- ITA No.5813 & 6262/Mum/2016 [Assessment Year 2012-2013, dated 13/02/2019]
- ITA No.59&60/Mum/2019, ITA No.230&231/Mum/2019 [Assessment Year 2013-2014 & 2014-2015, dated 06/03/2020]
- ITA No.4614 & 4678/Mum/2018 [Assessment Year 2015-2016, dated 19/02/2020]
11. We have given thoughtful consideration to the rival submissions and 8 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 have perused the material on record.
12. Recently, following issues had come up for consideration of the Special Bench of the Mumbai Tribunal in the case of the case of Royal Multisport Pvt. Ltd. & Ors [ITA Nos.3602/Mum/2014, ITA No.3727/Mum/2014 and ITA No.1113&1114/Mum/2016, Assessment Year 2009-2010, 2010-2011 & 2011-2012, dated 31/10/2025].
"The following questions have been raised for consideration of the Special Bench so constituted by the Hon'ble President, ITAT vide his order dated 15-09-2020:
"Q.No. 1. Whether the franchise payment made by the assessee is capital or revenue in nature?
Q.No.2. In case, such payment is held as capital, whether the assessee is entitled to claim depreciation on the entire franchise fee and league deposit or the depreciation is allowable only on the annual installment of franchise payment and league deposit actually paid by the assessee?"
Vide Order, dated 31/10/2025, passed the Special Bench of the Tribunal adjudicated the issues in the following manner:
"Conclusion:
126. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the Question No. 1 is left open and not adjudicated upon considering the facts and circumstances of the present case as so observed in paragraph 91 herein above. In respect of Question No. 2, the depreciation shall be allowed on the entire franchise fee of Rs. 268 crores, being the actual cost of the intangible assets so acquired during the financial year and not on Rs. 26.80 crores actually paid during 88 Royal Multisport Private Limited (Special Bench) the financial year subject to necessary adjustment as warranted in subsequent financial years as observed by us in para 125 herein above.
127. In light of aforesaid, all matters stand disposed off and matter remitted to the Division Bench for passing appropriate orders."
On perusal of the above it becomes clear that answering the Question No.2, the Special Bench of the Tribunal held that assessee would be 9 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 entitled to claim depreciation on the entire amount of franchise fees of INR.260 Crores (being the actual cost of intangible assets). However, the Special Bench of the Tribunal did not answer Question No.1 pertaining to the nature of 'franchise payment'.
13. It is admitted position that in the case of the Assessee the Co-ordinate Bench of the Tribunal has held that the Assessee would be entitled to claim deduction for amount actually paid to BCCI during the relevant previous year for participating in IPL holding the same to be revenue in nature. Since there is no change in the factual or legal position, the decisions of the Co-ordinate Benches of the Tribunal in the case of the Assessee continue to hold the field. The Revenue has not accepted the aforesaid decisions of the Tribunal and is in appeal before the Hon'ble Bombay High Court. It has been stated that ITXA No.1068/2017 and ITXA No.1318/2017 preferred by the Revenue for the Assessment Year 2009-2010 and 2010-2011, respectively, are pending adjudications before the Hon'ble Bombay High Court.
14. We have perused the recent decision of the Tribunal in the case of the Assessee [ITA No.4576/Mum/2023, Assessment Year 2020-2021, dated 27/03/2026] placed on record by the Learned Authorized Representative for the Assessee, the relevant extract of which reads as under:
"5. The ground No. 1 to 3 of the appeal of the Revenue to the treatment of franchisee fee paid by the assessee. The Assessing Officer held the same to be capital expenditure, on the premise that the assessee had acquired enduring commercial rights in the nature of a franchise or license, falling within the scope of intangible assets under Section 32(1)(ii) of the Act. The AO's contention is predicated on the premise that the franchise agreement grants a "bundle of rights" of an enduring nature, effectively creating a new business and an intangible asset. Conversely, the Assessee maintains that these are recurring operational costs. According to the Assessing Officer through franchisee agreement, the assessee acquired a bundle of rights which is in the nature of commercial or business right of the nature of license or franchise described as tangible assets u/s 32(1)(ii) of the Act. The Assessing Officer noticed that the assessee had 10 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 acquired commercial rights for the conduct of its business activity for the tournament Indian Premium League (IPL) in which the assessee is a franchisee holder by the virtue of the agreement dated 10.04.2008 with the BCCI-IPL.
5.1 The Assessing Officer further noted that it emerges that the assessee company has acquired a right to operate a team in IPL for profit and as a consideration the company has made the payment of franchisee fees. By making these payments the company has received a right to set up individual business of operating a team in the League. It is setting up a completely new business. Even after expiry of the period of the League there is no embargo on the company to continue to run the business. Thus entire franchisee payment made for setting up such business represents capital expenditure. Merely a condition that these payments are required to be made in annual instalments or at a certain percentage of the future rights income, does not alter the character of these payments from capital to revenue.
5.2 Further, the Assessing Officer noted that the 'franchise' itself can be sold, subject to terms and condition in the agreement, by the franchisee and thus right acquired by the assessee is transferable right and the payment made by the franchisee to BCCI to obtain and enjoy the rights and therefore, in the nature of capital expenditure.
5.3 The Assessing Officer further noted that similar issue was there in earlier years where the Ld. CIT(A) and the ITAT has deleted the addition but to keep the issue alive and said decision were not accepted by the Department and the matter was pending before the Hon'ble High Court. Therefore, to keep the issue alive, disallowance of franchisee fee may hold to be capital expenditure.
5.4 On further appeal, the Ld. CIT(A) following the decision of the Co- ordinate Bench of the Tribunal in earlier years deleted the addition observing as under:
"5.2 The submissions of the appellant have been carefully considered. The issue under dispute pertains to the treatment of franchisee fees paid by the assessee as capital expenditure by the AO. This is a recurring issue in the appellant's own case for AY 2009-10 onwards. My predecessor CIT(A) had deleted similar addition for AY 2016-17 and 2017-18 replying on the binding judgement of the Hon'ble ITAT, Mumbai, in the appellant's own case for earlier years AYs. 2009-10 and 2010-11 in ITA No.5290&5291 dated 22.07.2016 wherein the Hon'ble ITAT, 11 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 Mumbai, had held that as this franchisee fees is in the nature of revenue expenditure, the same has to be allowed as such. The same view was also held by me in AY 2018-19 based on the binding judgement of the jurisdictional ITAT and, the facts remaining the same, I have no reason to deviate from the above stand. Thus, the addition made by the AO of Rs. Rs. 61,11,05,781/- is deleted in view of the binding judgement of the Hon'ble ITAT, Mumbai, in the appellant's own case for earlier years on identical facts. This ground of appeal is thus allowed."
5.6 The claim of the consequent depreciation was also held to be infructuous observing as under:
"6.1 Since the AO held the Franchisee Fee payment as a capital expenditure, he allowed depreciation @25% on this "intangible capital asset". In the assessment order the AO has held that ".....cost of the asset to the franchisee is, therefore, the cost paid during the year by the franchise on which depreciation would be allowable at the prescribed rate in that year. The adjusted cost after depreciation would be the WDV of the block of intangible asset at the end year if the right is the lone asset in the block. Every year the payment made towards franchise payment would be added to the opening WDV of the intangible asset for that year and depreciation would be allowed accordingly at the prescribed rate on the so adjusted WDV. If no payment is made in that year, depreciation shall be allowed only on the opening WDV if there is no other addition to the block." The AO accordingly allowed deprecation @ 25% on this intangible capital asset amounting to Rs. 61,11,05,781/ and depreciation amounting to Rs.15,27,76,445/- was accordingly allowed by the AO.
6.2 The appellant submitted the written submissions in respect of grounds no. 2, 3 and 4 as under:
This ground that the depreciation should be allowed on the total accumulated cost of asset of Rs. 639.44 croresis an alternate ground and without prejudice to Appellant's contention in paragraph 1 above regarding the Appellants claim for deduction of the said payment as an allowable revenue expenditure.
In order of Hon'ble Commissioner of Income-tax (Appeals) for AY 2011- 12, AY 2012-13, AY 2013-14, AY 2014-15 12 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 and AY 2016-17, while deciding similar ground on same set of facts, it was held that the alternate ground need not be adjudicated since the Franchisee fees have been held as revenue in nature.
6.3 Since the expenditure towards franchise fee payments has been held as revenue in nature, there is no question of allowing depreciation on revenue expenditure and so these grounds regarding the claim of depreciation and method of calculation of depreciation become academic in nature and hence infructuous. These grounds are accordingly dismissed."
5.7 We have heard rival submissions of the parties and perused the relevant materials on record. It is an undisputed position that the issue stands squarely covered by the decisions of the Tribunal in the assessee's own case for preceding assessment years on identical facts. The Revenue has not brought on record any distinguishing feature, nor has it been shown that the earlier decisions have been reversed or stayed by any higher forum. The Ld. CIT(A), in allowing the Assessee's claim adhered to the principle of judicial discipline by following the binding precedents set by this Tribunal in the Assessee's own case for AYs 2009-10 through 2018-19. The Tribunal has consistently held that such franchise fees are revenue in nature.
5.8. While the Revenue contends that the matter is pending before the Hon'ble High Court, it is a settled position of law that the mere pendency of an appeal higher forum does not dilute the binding nature of an existing Co-ordinate Bench decision unless the same has been stayed or overturned. Finding no change in the material facts or the legal landscape for the year under consideration, we find no infirmity in the Ld. CIT(A)'s order and we accordingly upheld the same. The ground No.1 to 3 of the appeal of the Revenue are accordingly dismissed." (Emphasis Supplied)
15. On perusal of above, it becomes clear that the Co-ordinate Bench of the Tribunal has held that it is undisputed position that the issue of allowability of franchise fees payment (made during the relevant previous year) as a revenue expenditure stands decided in favour of the Assessee by way of the decisions of Co-ordinate benches of the Tribunal in the Assessee's own case [for the Assessment Years 2009-
2010 to 2015-2016]. We find that the Revenue has failed to distinguish 13 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 the above decisions of the Co-ordinate Benches of the Tribunal either on facts or in law. Therefore, respectfully following the same, Ground No. 1 and 2 raised by the Revenue is dismissed.
Ground No. 316. Next we would take Ground No.3 relates to disallowance of Hospitality Expenses of INR.39,74,636/-. The Assessee had claimed deduction for Hospitality Expenses of INR.3,97,46,368/-. The Assessing Officer disallowed 10% of the Hospitality Expenses holding the same were not related to the business of the Assessee. The Learned CIT(A) deleted the disallowance of INR.39,74,636/- (being 10% of the Hospitality Expenses) made by the Assessing Officer. Therefore, the Revenue has carried the issue in appeal before this Tribunal.
17. We have heard both the sides and have perused the material on record. We note that the issue of disallowance of hospitality expenses stands decided by the Co-ordinate Benches of the Tribunal in favor of the Assessee and against the Revenue in Assessee's own case for the following assessment year:
- ITA No. 5291/Mum/2014 [Assessment Year 2010-11, dated 22/07/2016]
- ITA No.5812/Mum/2016 [Assessment Year 2011-2012, dated 20/09/2017]
- ITA No.5813 & 6262/Mum/2016 [Assessment Year 2012-2013, dated 13/02/2019]
- ITA No.59&60/Mum/2019, ITA No.230&231/Mum/2019 [Assessment Year 2013-2014 & 2014-2015, dated 06/03/2020]
- ITA No.4614 & 4678/Mum/2018 [Assessment Year 2015-2016, dated 19/02/2020]
18. We have perused the above decision of the Tribunal and note that in identical facts and circumstances, the Co-ordinate Benches of the Tribunal has deleted the disallowance of 10% of hospitality expenses 14 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 made by the Assessing Officer on the ground that the same were not related to the business of the Assessee. The Tribunal accepted the contention of the Assessee that the hospitality expenses were related to the business of the Assessee and held that ad-hoc disallowance made by the assessing officer could not be sustained. The Revenue has failed to distinguish the above decisions of the Tribunal either on facts or in law. Further, for the Assessment Year 2017-2018, the Revenue has not challenged the order of CIT(A) deleting the disallowance of hospitality expenses, and for the Assessment Year 2018-2019, the claim for hospitality expenses was allowed in the assessment proceedings.
19. In view of the above we do not find any infirmity in the order of the Learned CIT(A) deleting the ad-hoc disallowance of Hospitality Expenses, and therefore, Ground No.3 raised by the Revenue is dismissed.
Ground No. 420. Since we have dismissed Ground No.1 to 3 raised by the Revenue after taking into consideration the decisions of Co-ordinate Benches of the Tribunal whereby the issues were decided in favour of the Assessee on merit, Ground No.4 raised by the Revenue is also dismissed.
21. In result the appeal preferred by the Revenue is dismissed.
ITA No.266/MUM/2021 (Assessment Year 2017-2018)22. ITA No. 266/Mum/2025 has been preferred by the Revenue against the Order, dated 31/12/2020, passed by the Learned CIT(A) whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 30/12/2019, passed under Section 143(3) of the Act for the Assessment Year 2017-2018. The Revenue has raised solitary ground which reads as under:
"1. The Ld. CIT(A) erred in holding the expenditure incurred on account 15 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 of Franchise Fees for securing right to participate in Indian Premier League as revenue expenditure whereas provisions of section 32(1)(ii) and that of Section 55(2)(a) of the I T Act, 1961 evidently provide that Franchise and right to carry on any business are capital in nature?."
23. The issues raised by the Revenue in the above ground are identical to those raised by the Revenue in Ground No.1 and 2 raised in appeal for the Assessment Year 2016-2017. During the course of hearing both the sides agree that our findings/adjudication in relation to Ground No. 1 & 2 raised by the Revenue in appeal for the Assessment Year 2016-2017 shall apply mutatis mutandis to Ground No.1 raised in appeal for the Assessment Year 2017-2018. Therefore, taking into consideration our findings/adjudication in Paragraph 8 to 15 above in relation to Ground No.1 and 2 raised in appeal for the Assessment Year Assessment Year 2016-2017, we declined to interfere with the order passed by Learned CIT(A) whereby the Assessee's claim for deduction for Annual Franchises fee of INR.51,25,02,000/- was allowed by Learned CIT(A) holding the same to be Revenue in nature. Accordingly, Ground No.1 raised by the Revenue in appeal for the Assessment Year 2017-2018 is dismissed.
24. In result, appeal preferred by the Revenue is dismissed.
ITA No.3884/MUM/2023 (Assessment Year 2018-2019)25. ITA No. 3884/Mum/2023 has been preferred by the Revenue against the Order, dated 22/08/2023, passed by the Learned CIT(A) whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 02/04/2021, passed under Section 143(3) of the Act for the Assessment Year 2018-2019.
26. The Revenue has raised the following grounds of appeal:
"i. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in allowing the expenditure incurred on account of Franchise Fees for securing right to participate in Indian Premier League as 16 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023 Assessment Year 2016-2017, 2017-2018 & 2018-2019 revenue expenditure instead of capital expenditure, whereas provisions of section 32(1)(ii) and that of Section 55(2)(a) of the IT Act, 1961 evidently provide that Franchise and right to carry on any business are capital in nature?
ii. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that the benefits arising out of entering into the Franchisee agreement with BCCI ie. the share in central rights income, are of enduring nature which will provide long term benefits to the assessee and hence, ought to be treated as a capital expenditure?
ⅲ. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred deleting the disallowance made by the AO of the Franchisee payments done by the assessee company as a revenue expenditure and treating the same as capital expenditure & allowing the due depreciation on the same for the year under consideration?"
27. During the course of hearing both the sides agree that our findings/adjudication in relation to grounds raised by the Revenue in appeal for the Assessment Year 2016-2017 shall apply mutatis mutandis to the corresponding grounds raised in appeal for the Assessment Year 2018-2019. Both the sides adopted the submissions made in appeal for the Assessment Year 2016-2017 which have been taken into consideration in light of the applicable facts. Therefore, taking into consideration our findings/adjudication in relation to grounds raised in appeal for the Assessment Year 2016-2017 we hold as under:
(a) In view of paragraph 8 to 15 above, Ground No.1 & 2 raised by the Revenue in the appeal for the Assessment Year 2018-2019 are dismissed.
(b) In view of paragraph 16 to 19 above, Ground No.3 raised by the Revenue in the appeal for the Assessment Year 2018-2019 is dismissed.
28. In result, the appeal preferred by the Revenue for the Assessment Year 2018-2019 is dismissed.
17 ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023Assessment Year 2016-2017, 2017-2018 & 2018-2019 3 In conclusion, all the three appeals preferred by the Revenue are dismissed.
Order pronounced on 16.04.2026.
Sd/- Sd/-
(Vikram Singh Yadav) (Rahul Chaudhary)
Accountant Member Judicial Member
मुंबई Mumbai; िदनां क Dated :16.04.2026
Milan, LDC
18
ITA No. 4497/Mum/2019, ITA No.266/Mum/2021 & ITA No.3884/Mum/2023
Assessment Year 2016-2017, 2017-2018 & 2018-2019 आदे श की ितिलिप अ े िषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. थ / The Respondent.
3. आयकर आयु / The CIT
4. धान आयकर आयु / Pr.CIT
5. िवभागीय ितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
आदे शानु सार/ BY ORDER, स ािपत ित //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai 19