2014 (2) TMI 258 - AT - Income Tax

Claim of exemption on award money Allowance of expenditure Held that - The incomes are offered under the head income from business or profession , that does not mean that assessee is a professional player - assessee is playing for the country under the aegis of BCCI and he has no individual professional involvement to play in any match as he wish - the findings of the CIT(A) upheld that assessee is not a professional cricketer Decided against Revenue. Restriction of disallowance u/s 57(iii) of the Act - Expenditure claimed against earning of logo money Held that - There was no reason to interfere with the well-reasoned order of the learned CIT(A) -There is no dispute with reference to the Circular of Board which in principle accepted that players have to incur expenditure - Even though the allowance at 75% of receipt by the Circular was withdrawn during the year, considering that assessee has paid about 45% of the amount by way of cheque, the disallowance out of cash expenditure would work out almost 40% of the amount paid in cash Decided against Revenue. Restriction of disallowance u/s 57(iii) of the Act - Expenditure claimed against earning of match fees Held that - AO was not justified in disallowing the entire expenditure on the reason that being a popular cricketer and was also captain of Indian cricket for several years no expenditure would be incurred by the cricketer and all expenses were borne by the BCCI - CIT(A) has erred in restricting the amount to 50% of the claim - in the earlier year also, he has examined the expenditure incurred by the assessee and considered 20% of the amount only to be disallowed - Since assessee has accepted such disallowance in earlier year, it is reasonable to restrict the disallowance to 20% of the claim as in earlier year to be consistent with the facts of the case - the order of the CIT(A) modified and claim of expenditure is allowed subject to disallowance at 20% - Decided partly in favour of Assessee. Deduction u/s 80RR of the Act Amount received towards advertisement for acting in ad-movies Held that - The CIT(A) got carried away by the role of assessee as cricketer - Even though assessee may be reputed cricketer, for acting in T.V./ print media, it requires special talent Even though he may not be professional cricketer, he can pursue modelling as a professional - the A.O. rejected the claim on the reason that assessee was not a professional cricketer and income from modelling on advertisements was not derived from exercise of his profession The decision in Sachin R. Tendulkar vs. ACIT 2011 (5) TMI 20 - ITAT MUMBAI followed - the income received by the assessee from modelling and appearing in T.V. commercials and similar activities could be termed as income derived from the profession of an artist - there was no bar on the part of the assessee to have its second profession as an artist apart from playing cricket thus, the assessee is eligible for deduction under section 80RR of the I.T. Act Decided in favour of Assessee.

Summary

Issues Involved:
1. Exemption of award money under Section 10(17A).
2. Allowance of expenditure against logo money under Section 57(iii).
3. Deduction under Section 80RR for foreign receipts from acting in advertisements.

Detailed Analysis:

Issue 1: Exemption of Award Money under Section 10(17A)

The Revenue contested the exemption of Rs. 3 lakhs received as "Man of the Match" awards, arguing that the assessee is a professional player and thus the award money should be taxable. The assessee, a reputed cricketer and an officer at the State Bank of India, contended that he is not a professional cricketer and that the amounts received were not taxable based on Board Circular No. 447/199/1/86IT(A1) dated 22.01.1986. The CIT(A) upheld the assessee's claim, following the ITAT Bangalore Bench decision in the case of Mr. G.R. Viswanath vs. Fifth ITO 29 ITD 142, and ruled that the amounts received were exempt from tax. The Tribunal agreed with the CIT(A) that the assessee is not a professional cricketer and upheld the exemption of the award money.

Issue 2: Allowance of Expenditure Against Logo Money under Section 57(iii)

The assessee claimed an expenditure of Rs. 18,86,455 against the income from logo money of Rs. 32,24,411. The A.O. disallowed the entire expenditure, stating that the assessee failed to explain its relevance to earning the logo money. The CIT(A) partially accepted the claim, allowing Rs. 8,75,000 paid by cheque and disallowing 20% of the total claim due to lack of verifiable bills and vouchers. The Tribunal upheld the CIT(A)'s decision, noting that the Board's Circular recognized that players incur substantial expenses, and the disallowance was reasonable.

Issue 3: Deduction under Section 80RR for Foreign Receipts from Acting in Advertisements

The assessee claimed a deduction under Section 80RR for Rs. 40,00,197, being 75% of foreign receipts from acting in advertisements. The A.O. denied the claim, arguing that the assessee, being a cricketer and an employee of SBI, cannot be considered a professional actor. The CIT(A) upheld the A.O.'s decision, stating that the assessee's popularity as a cricketer led to the advertisement offers, not his professional acting skills. The Tribunal disagreed, citing the ITAT Mumbai decision in the case of Sachin R. Tendulkar vs. ACIT, which recognized that acting in advertisements required special talent and could be considered a profession. The Tribunal allowed the deduction under Section 80RR.

Separate Judgments:

ITA.No.194/Hyd/2002: Revenue's appeal dismissed.

ITA.No.46/Hyd/2003: Revenue's appeal dismissed; Assessee's appeal partly allowed.

ITA.No.225/Hyd/2003: Assessee's appeal partly allowed.

ITA.No.647/Hyd/2004: Assessee's appeal allowed.

ITA.No.1040/Hyd/2004: Assessee's appeal partly allowed.

Conclusion:

Overall, the Tribunal upheld the CIT(A)'s rulings on the exemption of award money and the allowance of expenditure against logo money. It also recognized the assessee's entitlement to deduction under Section 80RR for foreign receipts from acting in advertisements, aligning with precedents set in similar cases.