1987 (10) TMI 90 - AT - Income Tax

Summary

Issues:
1. Taxability of prize money received by the assessee for playing test matches.
2. Whether the prize money constitutes income and is subject to tax.
3. Applicability of Board's instruction for deduction in case of taxability.

Analysis:

Issue 1: Taxability of prize money
The case involved the taxability of prize money received by the assessee, a test cricket player, for playing test matches during the assessment year 1982-83. The total prize money received amounted to Rs. 35,041. The assessee contended that the prize money was a windfall and did not qualify as income. The AAC found that the receipt of prize money was unexpected and not part of the assessee's regular income. The AAC held that such a windfall did not meet the criteria to be considered as income for tax purposes.

Issue 2: Classification of prize money as income
The Department argued that the prize money received by the assessee was income and should be taxed accordingly. They relied on a decision of the Kerala High Court and legal authors to support their stance. However, the counsel for the assessee maintained that the prize money was akin to a gift and did not constitute income. The Tribunal agreed with the AAC's finding that the prize money was a voluntary gift from spectators and fans, devoid of any consideration or regularity. The Tribunal upheld the view that such prize money did not amount to income and therefore was not taxable.

Issue 3: Applicability of Board's instruction for deduction
In the cross objection, the assessee raised an alternative plea regarding a deduction based on a Board's instruction. The AAC acknowledged the binding nature of the Board's instructions but deemed the deduction irrelevant since the prize money was not considered income and was deleted from the assessment. Consequently, the cross objection was deemed infructuous as the main appeal was dismissed. The Tribunal upheld the AAC's decision, dismissing the departmental appeal and rendering the cross objection moot.

In conclusion, the Tribunal affirmed the AAC's ruling that the prize money received by the assessee was not taxable income, as it was a voluntary gift and did not meet the criteria for income under tax laws. The departmental appeal was dismissed, and the cross objection was also deemed infructuous and dismissed.