By JAGDISH T. PUNJABI I DEVENDRA JAIN I TEJASWINI GHAG
Chartered Accountants
Section 56(2)(vii), CBDT circular no. 477
[F. No. 199/86-IT(A-1)], dated 22.1.1986 – Award received by a non-professional
sportsman will not be chargeable to tax in his hands.
FACTS
The assessee, retired from international cricket in the year
2002, was appointed as a cricket coach by BCCI to train the players at national
level. During the year under consideration,
a benefit match was arranged by BCCI for assessee. The assessee received net
proceeds of Rs. 50.44 lakh, which he treated as capital receipt. In the course
of assessment proceedings, the Assessing Officer (AO) asked the assessee to
explain why the amount under consideration should be treated as a capital
receipt. The assessee explained that the
benefit match is a game played for retired sportsmen to appreciate personal
talent and skill in sports and accordingly funds collected on behalf of benefit
match is a capital receipt. He placed
reliance on CBDT circular no. 477 [F. No. 199/86-IT(A-1)], dated
22.1.1986. The AO, treated the amount
received from benefit match as a revenue receipt and taxed it u/s. 56(2)(vii)
of the Act.
Aggrieved, the assessee preferred an appeal to CIT(A) who
considering the submissions made by the assessee and also the Board Circular
No. 477 (supra) decided the appeal in favour of the assessee.
Aggrieved, the revenue preferred an appeal to the Tribunal.
HELD
The assessee is a full time employee of Air India. The benefit match was conducted by BCCI,
which is a regulatory body for cricket in India to appreciate the personal
talent and skill in this sport because the assessee is a retired sportsman and
the proceeds arising out of this benefit match are in the nature of award. The Tribunal relying on the decision of the
Bangalore Bench of Tribunal in the case of G. R. Viswanath vs. ITO [(1989)
29 ITD 142 (Bang.)] held that there is no direct nexus between the payment
and assessee’s profession and these receipts being capital in nature cannot be
brought to tax.
The Tribunal also noted that the Delhi Bench of the Tribunal
has in the case of Abhinav Bindra vs. DCIT [(2013) 28 ITR (Trib.) 376 (Delhi)]
has considered the identical issue and also the provisions of section 56(2)(v)
and has held that if a sportsman who is not a professional sportsman has been
given awards/rewards/prizes then a liberal construction of Circular No. 447 is
required and amount of awards/rewards/prizes are held to be capital in nature.
The Tribunal held that the amount represents the gratitude
from the fans and followers by attending the benefit match conducted in honour
of the assessee who is a retired cricketer of international repute. This type of receipts are specifically
exempted by CBDT Circular No. 477 which states that the amount paid to amateur
sportsman who is not a professional will not be liable to tax in his hands as
it would not be in the nature of income.
The assessee was an amateur cricketer and his profession is employment
with Air India from where he is getting salary.
He played the game of cricket for India as his passion and the receipts
of the net proceeds from the benefit match was only in the nature of
appreciation of his personal achievements and talent and thus, cannot be
brought to tax by invoking the provisions of section 56(2)(vii)(a) of the
Act. These proceeds from the benefit
match received by the assessee are in appreciation of his past achievements in
International Cricket arena and such type of receipt cannot be taxed. The Tribunal upheld the order of the CIT(A).
The appeal filed by the Revenue was dismissed
