Music to Sony - Income Tax obtained Statement from Ricky Martin by threat and duress - High Court quashes Summons Issued in 1998

By Vijay Kumar

"THE applause and the energy of the public are my addiction- they are my vice."

Ricky Martin — the image was hosted by the publisher and was not captured.The pop sensation Ricky Martin loves India. He once said "India has been an important part of my spiritual growth. Whenever I get the chance, I go to India, and especially visit Puri (Odisha), where I practice Yoga. It has helped me a lot in my personal and professional life. I was in Rishikesh (Uttarakhand). I found some great ashrams and spiritual retreats there."

During his visit to India in 1998, he had a strange encounter with India's Income Tax Department. See what he said in a letter to the Deputy Commissioner of Income Tax, Non-Resident Circle, New Delhi in 1999.

"I refer to the statement on oath recorded by you on December 7, 1998 at the Hotel Radisson in New Delhi, India. I was coerced and forced to sign this statement on oath and was overwhelmed by the duress exercised by you on me. This statement under oath was extracted by you from me under threats from you that I would not be allowed to leave India until I signed this statement under oath.

After returning to my home country, I have examined my records and I am now in a position to confirm that I do not have any contract with Sony Music Entertainment (India) Pvt. Ltd. India for my live performance in New Delhi on December 6, 1998 or for any sale of CD's or cassettes in India or for any other matter.

I also wish to clarify that there is no direct artist recording agreement between myself, in my individual capacity, and Sony Music USA or its associated companies.

I hope that this letter will clarify this issue and enable you to close the matter."

This letter formed part of an order by the Delhi High Court recently. It was a petition by Sony Music Entertainment Pvt Ltd in 1999 against the summons and letter dated 7th December 1998, letter and notices dated 14th December 1998, summons dated 11th January 1999 and letter dated 18th January 1999 issued to it by the Income Tax Department (ITD) and the guarantee dated 7th December 1998 furnished by it in connection with a live concert of the renowned performer Mr. Ricky Martin in New Delhi on 6th December 1998.

It seems that the ITD proceeded on the basis that there could be a possible evasion of tax on the earnings of Sony in India as a result of the agreements signed by Ricky Martin with Sony Corporation of America ('SCA'). The ITD proceeded on the footing that there should have been a corresponding agreement between the Assessee which is the Indian subsidiary of SCA and Mr Martin.

In the writ petition, Sony alleged that it was coerced by the ITD into furnishing a guarantee on 7th December 1998 agreeing inter alia to meeting any tax demand that may become payable as a result of the performance of Mr. Ricky Martin. The guarantee further stated that the Petitioner had no objection to being appointed as an agent of Mr. Ricky Martin under Section 163(1) of the Income Tax Act, in connection with income deemed to accrue or arising to him if any, from manufacturing and sale of audio cassettes in India by Sony Music Entertainment India Pvt. Ltd. under the matrix agreement with Sony Corporation USA.

The Delhi High Court decided this 1999 writ petition last month. The High Court observed,

1. There is nothing brought on record by the ITD to show that there was a contract between the Petitioner and Mr. Ricky Martin in regard to his concert in Delhi on 6th December 1998.

2. The ITD has also not denied that DNPL, the organiser of the concert, had no contract with the Petitioner.

3. This writ petition has been pending since 1999 and there was a sufficient time for the ITD to have placed on record the outcome of the investigation which it was supposed to undertake pursuant to the impugned notices issued to the Petitioner.

4. The counter affidavit was filed way back on 17th February 1999 at a stage when the investigation was still incomplete. Nothing has been placed on record in these seventeen years by the ITD to inform the Court of the consequent result of said investigation.

5. Court is constrained to conclude that the case of the Petitioner as has been made out in the petition remains un-rebutted by the ITD.

The Court quashed the impugned summons, notices, and letters and orders. The guarantee furnished by the Petitioner to the Department on 7th December 1998 shall stand discharged.

The High Court also made it clear that no further coercive steps shall be taken by the ITD against the Petitioner pursuant to the impugned summons, letters, notices and guarantee.

You can see this case in 2016-TII-27-HC-DEL-INTL