2016 (4) TMI 350 - AT - Income Tax

Deduction u/s 80RR - Income derived from profession as a sportsman - Held that - In the facts of the case before us, it is noted that the assessee has derived its income as a result of his agreement with M/s ESPN Star Sports for the services provided by the assessee as a presenter and commentator and other allied activities which have been discussed in the relevant clauses of the agreement. Thus, assignment has been given to the assessee and this role has been performed by him effectively, because of his having been a cricketer of international stature and he was chosen for the skill and knowledge he possessed and the delivery he could have given because of this skill and experience. We can, unhesitatingly, say that the contribution for promotion to the game of cricket is possible not only while playing in the field but also outside the field while performing various other crucial roles, like that of a coach, empire and commentator etc. The entire role of the assessee and the activity performed by him for which he was remunerated, have a direct and proximate link with the game of cricket. In the given facts of this case, one cannot visualise earning of this income, de-horse the assessee having been a cricketer and a sportsman and nor can it be visualised independent of the game of cricket. We have already held in earlier part of our order that assessee falls in the category of a sportsman . Thus, in our considered opinion, the facts of this suggest that the impugned income has been derived by the assessee in the exercise of his profession as a sportsman . Thus, the facts of this case suggest that the assessee is eligible to claim deduction u/s 80RR, and therefore no belief could have been formed for escapements of his income. The claim is allowable on merits also, as discussed above in detail. Thus, the benefit of deduction claimed u/s 80RR was in accordance with law, and therefore, disallowance made by the AO in this regard is directed to be deleted. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of notice issued under section 148 and the reassessment proceedings initiated.
2. Rejection of the claim under section 80RR amounting to Rs. 97,71,079.
3. Levy of interest under section 234B amounting to Rs. 38,07,838.

Issue-wise Detailed Analysis:

1. Validity of Notice Issued Under Section 148 and the Reassessment Proceedings Initiated:
The primary issue raised by the assessee was the existence of two sets of "reasons" for reopening the assessment. The first set was undated and approved by the Additional DIT and DIT, whereas the second set dated 6th June 2007 did not have any approval from the competent authority. The Tribunal found that the reopening was done without complying with the mandatory jurisdictional condition of section 151, making the reopening bad in law. Furthermore, the Tribunal noted that the first set of reasons was neither furnished to the assessee nor considered by the AO, and thus could not be used to validate the reopening.

2. Rejection of the Claim Under Section 80RR Amounting to Rs. 97,71,079:
The Tribunal examined whether the assessee, a former cricketer, qualified as a "sportsman" and if the income derived was in the exercise of his profession. It was found that the assessee continued to promote cricket through commentary and other related activities, which were directly linked to his profession as a cricketer. The Tribunal emphasized the beneficial nature of section 80RR, intended to encourage sportsmen and other professionals to project their activities internationally and augment foreign exchange resources. It was concluded that the assessee's activities fell within the scope of section 80RR, making him eligible for the deduction.

3. Levy of Interest Under Section 234B Amounting to Rs. 38,07,838:
The Tribunal noted that this ground was consequential and did not require specific adjudication as the primary grounds related to the validity of the reassessment and the claim under section 80RR were decided in favor of the assessee.

Conclusion:
The Tribunal quashed the reassessment on the grounds of non-compliance with section 151 and held that the assessee was eligible for the deduction under section 80RR. Consequently, the levy of interest under section 234B was also dismissed as it was consequential to the primary issues. The appeals for both assessment years 2001-02 and 2002-03 were partly allowed, with the primary grounds being decided in favor of the assessee.