2018 (8) TMI 1360 - AT - Income Tax

Income from other sources u/s 56 - Taxability of Awards for Sportsmen - assessee has received various awards - Indian professional shooter - Held that - As mentioned elsewhere, the awards received by the assessee are all from Central Government or the State Government. Therefore, subsequent clarification mentioned hereinabove squarely applies on the facts of the case in hand.

Summary

Issues:
1. Addition of awards received by the assessee under the head income from other sources.
2. Applicability of CBDT Circular No. 447 dated 22.01.1986.
3. Interpretation of sections 17A, 17B, and 18 of the Direct Tax Laws [Amendment] Act, 1987.
4. Taxability of awards received by the assessee from various authorities.
5. Impact of subsequent clarification by the Board on tax exemption for awards.

Issue 1: Addition of awards received by the assessee under the head income from other sources.
The Assessing Officer added the awards received by the assessee to their income under section 56 of the Income Tax Act, 1961, based on the amalgamation of sections 17A, 17B, and 18 into a single clause 17A. The assessee contended that these awards were not taxable, citing CBDT Circular No. 447 dated 22.01.1986, which exempts such awards from taxation.

Issue 2: Applicability of CBDT Circular No. 447 dated 22.01.1986.
The ld. CIT(A) relied on the Circular to rule in favor of the assessee, referencing a previous Tribunal judgment in A.Y. 2009-10 that held awards received by non-professional sportsmen as non-taxable under this Circular. The Circular was deemed to exclude such receipts from the purview of income, thus not subject to tax under section 56.

Issue 3: Interpretation of sections 17A, 17B, and 18 of the Direct Tax Laws [Amendment] Act, 1987.
The Assessing Officer's interpretation of the amalgamated sections led to the addition of awards to the assessee's income. However, the Tribunal's reliance on the CBDT Circular and the subsequent clarification by the Board regarding tax exemption for awards approved by the Central or State Government influenced the decision in favor of the assessee.

Issue 4: Taxability of awards received by the assessee from various authorities.
The awards received by the assessee from different authorities, including District Sport council, Ministry of Commerce, Ministry of Sport Authority of India, and others, totaled to ?96,92,703. The dispute revolved around whether these awards should be considered taxable income.

Issue 5: Impact of subsequent clarification by the Board on tax exemption for awards.
The subsequent clarification by the Board approved rewards by the Central or State Government for medal winners of specific games to be exempt from tax. Since the awards received by the assessee were from government bodies, this clarification applied, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal upheld the decision of the ld. CIT(A) and dismissed the Revenue's appeal, citing the applicability of the CBDT Circular and the subsequent clarification by the Board on tax exemption for awards approved by the Central or State Government.