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Facts
The assessee, an individual and renowned cricketer, initially declared an award of Rs. 30 lacs received from BCCI as taxable income in his A.Y. 2013-14 return. Later, realizing it was exempt under Section 10(17A) of the Income Tax Act, supported by CBDT Circular No. 2/2014, he filed an application under Section 154 for rectification. The Assessing Officer and CIT(A) rejected the application, deeming it not a mistake apparent from record and a debatable issue, as the assessee himself had shown it as taxable income.
Held
The Tribunal, relying on its previous remand order and various judicial precedents, found that the assessee was not a professional for the purpose of the award and received it in the capacity of a sportsman, making it exempt from tax under CBDT Circular No. 447. It concluded that the initial declaration of the award as taxable income was a bona fide mistake, thus allowing the rectification under Section 154.
Key Issues
Whether an award received by a non-professional sportsman is exempt from income tax under Section 10(17A) read with CBDT Circulars, and if an initial declaration of such income as taxable constitutes a bona fide mistake rectifiable under Section 154.
Sections Cited
Section 154, Section 143(1), Section 10(17A), Section 56(2)(vii)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’: NEW DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI SUDHIR PAREEK
Appellant against order dated 18.08.2023 u/s 154 of the Income Tax Act, 1961 (in short referred as “the Act”) passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal
ITA No.- 2869/Del/2023 Sarkar Talwar Centre (NFAC) [for the sake of convenience, hereinafter referred to as “CIT(A)] by which appeal filed by the assessee was dismissed.
Facts of the case in chronological manner may be summarized as that the assessee is an individual, who filed his return of income by declaring total income of Rs. 38,90,060/-.
After being processed the same u/s 143(1) of the Act, assessee filed an application u/s 154 of the Act before the Ld. Assessing Officer (AO) and stated that due to bonafide mistake a sum of Rs.
30 lacs received as award from BCCI (Board of Cricket Control of India) which otherwise was exempted u/s 10(17A) of the Act with clarification vide circular no. 2/2014 issued by CBDT, was filed as taxable income as income from other sources. The Ld. AO rejected the claim / prayer of assessee vide order dated 31.10.2017 by stating that it is not a mistake apparent from record within the scope of Section 154 of the Act and since assessee has himself shown the receipt from the BCCI as taxable in his ITR, so, such a mistake cannot be rectified u/s 154 of the Act. Thereafter, assessee filed appeal before CIT(A) which was too dismissed by stating that such a request is beyond the scope and Page 2 of 11
ITA No.- 2869/Del/2023 Sarkar Talwar ambit of Section 154 of the Act and observed that assessee has failed to give a justification regarding mistake apparent from record and it is a debatable issue as assessee has first shown it as a taxable income and then sought exemption. Aggrieved from the order passed by the CIT(A) as above, the assessee preferred an before this Tribunal which was partly allowed vide order dated 23.10.2018. Relevant extract of above order reproduced as below:
“5. After hearing the learned Department Representative and on perusal of the impugned order, we find that the assessee's application u/s.154 has been rejected on the ground that amount of Rs.30 lac received from BCCI has been shown as a taxable income. Once, it is brought to the notice of the Assessing Officer that income shown in the return of income is not in accordance with law and such an income cannot be taxed under the Income Tax Act or is entitled for exemption, then there cannot be estoppel against the assessee to claim it as exempt and Assessing Officer cannot reject the same simply because assessee had shown it in the return of income It is a well settled law that tax can be levied under the express provision of law and if any deduction or exemption is allowable to the assessee in law, then it is the duty upon the Assessing Officer to compute the income and allow such deduction under such express provision of the law. If the assessee claims that such an income is exempted u/s. 10(17A) which is duly supported by CBDT Circular which is binding on the Revenue Authorities, then the same needs to be exempted and allowed in accordance with law Accordingly, we remit the matter back to the file of the Assessing Officer to examine the assessee's claim in light of provisions of law and if such a claim is allowable in view of the CBDT Circular No. 2 of 2014 r.w.s. 10(17A), then same should be allowed. Accordingly, appeal of the assessee is partly allowed for statistical purposes.”
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ITA No.- 2869/Del/2023 Sarkar Talwar 3. Thereafter, in pursuance of above order dated 23.10.2018, the Ld. AO rejected the claim vide order dated 31.10.2019 by stating that the claim of the assessee to allow the exemption u/s 10(17A) of the Act is not acceptable. Appeal filed against above order was dismissed by CIT(A). Aggrieved from above order of Ld.
CIT(A), hence, this appeal for adjudication with following ground:
“Recepts from B.C.C.I. A national Govt. Body for control of cricket in India qualify for exemption u/s 10(17A) of the Income Tax Act. Accordingly, tax paid by the assessee should be refunded to him.
Heard rival submissions and carefully scanned the material on record before us.
During the hearing, the Ld. AR submitted that the Assessee / Appellant is a renowned Cricket Player. A sum of Rs. 30 lacs was paid to him by BCCI in F.Y. 2012-13 in recognition of his contribution to cricket. He further submitted that he filed his return of income for A.Y. 2013-14 including this sum of Rs. 30 lacs as part of taxable income. Actually this sum is exempted u/s 10(17A) of the Act and after discovering his mistake, he filed an application for this purpose but same was turned down by the concerned ITO and as well as CIT(A). He further submitted that Page 4 of 11
ITA No.- 2869/Del/2023 Sarkar Talwar after matter being remitted back by ITAT, the Ld. AO without giving proper opportunity to the assessee decided the matter against the assessee / appellant.
Per contra, the Ld. Sr. DR relied upon the order passed by both lower authorities.
In the course of hearing, in support of his contention, the Ld. AR produced following orders:
assessee vs. ITO ii. “Order dated 25.06.1979, 231 ITR 229 (Mad) CIT vs. JG Gopinath iii. Order dated 17.10.1988, 29 ITD 142 (Bang) GR Vishwanath vs. ITO iv. Order dated 28.08.2009, 128 ITD 59 (Chennai) ITO vs. Mariam Beevi v. Order dated 28.06.2013, 157 TTJ 886 (Del- Trib) ACIT vs. KapilDev vi. Order dated 26.07.2013, 28 ITR (T) 376 (Del-Trib.) AbhinavBindra vs. DCIT vii. Order dated 13.04.2018, ITA No. 1327/Mum/ 2016 ACIT vs. Sh. Sameer Sudhakar viii. Order dated 05.10.2018, ITA No. 104/Pun/2018 Mr. ChanrkantGulabraoBorde vs. ITO 7.1 In order dated 25.06.1979, 231 ITR 229 (Mad) CIT vs. JG Gopinath, held by Hon’ble Madras High Court that there is no any specific mode of approval indicated in the statute and no further
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ITA No.- 2869/Del/2023 Sarkar Talwar approval is required. The relevant extract of order reproduced as under:
“.......If any person rendered sincere work to make this scheme a success, and if he is rewarded for it, such grant of reward cannot but be in public interest. There is no specific mode of approval indicated in the statute. No further approval is necessary or called for. The section is clear in its language and does not raise any problem of construction. Therefore, we do not find that any question of law arises out of the Tribunal's order. Even ssuming that a question of law arises, the answer is self-evident and, therefore, the reference shall be wholly academic and unnecessary. The petition is accordingly dismissed. Only because the respondent appears in person and not through counsel, we do not award any costs.”
7.2 In order dated 17.10.1988, 29 ITD 142 (Bang) GR Vishwanath vs. ITO, held that amount given to an individual, who is not a professional cricketer in token of appreciation of qualities possessed by him may not include in the taxable income. The relevant extract of order reproduced as under:
“10. The case of the assessee before us is on a better footing. He is not a professional cricketer. The amounts were given to him by the admirers or lovers of cricket in token of their appreciation of the qualities possessed by the assessee as a cricketer. In the circumstances, we are of the view that the amount of Rs. 4,75,000 received abroad is not includible in the taxable income.”
7.3 In order dated 28.06.2013, 157 TTJ 886 (Del- Trib) ACIT vs. KapilDev, held that the assessee is entitled for exemption in Page 6 of 11
ITA No.- 2869/Del/2023 Sarkar Talwar respect of award money as per circular 447 dated 22.01.1986. The relevant extract of order reproduced as under:
“3.4 Based on the opinion held by Hon'ble ITAT in the case of Sh. Ajay Jadeja wherein it is held that 'the assessee was entitled for exemption in respect of award money as per circular number 447 dated 22.01.1986', the same treatment is being done in the present case of Sh. Kapil Dev. Accordingly, the amount of Rs. 18,24,198/- which was treated as taxable by the AO in the original assessment is considered as exempt as per circular no. 447 of CBDT being the awards and gifts received by the assessee. Further, the same ratio is applied in the case of income receipt from test matches as per circular No.1432 of CBDT and only 75% of Rs.538,546/- (after reducing the contribution to Players' Benevolent Fund) amounting to Rs.403909/- is considered as exempt and Rs.134,637/- considered as taxable professional income."
Similar view was taken by the Assessing Officer in AY 1995-96 as well as 1999-2000. Thus, when in the subsequent year the Assessing Officer himself has accepted that the assessee is an amateur cricketer and not a professional cricketer, there could be no justification to hold that during the accounting year relevant to AY 1992- 93 and 1993-94, the assessee was a professional cricketer. That in the case of other cricketers who also played for Indian Cricket Team, viz., Shri Ajay Jadeja and Shri Manoj Prabhakar, the appellate authorities and the Hon'ble Courts have decided the issue in favour of the assessee, however, the details of which is already discussed by the Assessing Officer in his order for AY 1994-95, therefore, the same is not being discussed again for the sake of brevity. In view of the totality of above facts, we direct the Assessing Officer to allow exemption to the assessee which is available as per Board’s Circulars to the amateur cricketers.
7.4 In Order dated 26.07.2013, 28 ITR (T) 376 (Del-Trib.)
AbhinavBindra vs. DCIT, held that sportsman who is not a professional sportsman and has been given award, a liberal
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ITA No.- 2869/Del/2023 Sarkar Talwar construction of circular no. 447 is required. The relevant extract of order reproduced as under:
“14. Coming back to the facts of the assessee's case, Shri Abhinav Bindra is the first person in the history of independent India to have won the Olympic Gold Medal. In a country whose population is more than 100 crores, if a sportsman who is not a professional sportsman has won the gold medal for the first time after 60 years of independence of the country and he has been given the awards/rewards/prizes mainly by various Governments, local authorities, trusts and institutions and of course some corporate/individuals, a liberal construction of Circular No.447 is required. Considering the facts of the case and the nature and spirit of Circular No.447, we hold that in the case of the assessee, viz., Shri Abhinav Bindra, all the rewards/prizes/gifts received by him are covered by Circular No.447 dated 22nd January, 1986 and, therefore, should not be treated as income in his hands. Accordingly, the addition of Rs.63,10,601/- made by the Assessing Officer and the enhancement of Rs.2,34,00,000/- made by the learned CIT(A) is deleted.”
7.5 In Order dated 13.04.2018, 2016
ACIT vs. Sh. Sameer Sudhakar, held that the amount paid to amateur sportsman, not a professional will not be liable to tax in his hands as it would not be in the nature of income. The relevant extract of order reproduced as under:
“10. ......But we find that this amount represents the gratitude from the fans and followers by attending the benefit match conducting in honor of the assessee, who is a retired cricketer of international repute. This type of receipts has specifically been exempted by the CBDT circular No. 477 [F. No. 199/86-IT(A-1)] dtd. 22.01.1986, 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
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ITA No.- 2869/Del/2023 Sarkar Talwar 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 for 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. This proceeds from benefit match received by assessee is in appreciation of his past achievements in the International Cricket arena and such type of receipt cannot be taxed because these type of receipts are specifically exempted. Accordingly, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the order of CIT(A).
7.6 In Order dated 05.10.2018, Mr.
ChanrkantGulabraoBorde vs. ITO, held that the recipient of award is not professional, and it is received in the capacity of a sportsman, then rewards / OTB are exempted from the tax in view of Circular
The relevant extract of order reproduced as under:
Therefore, the principle is obvious that, so long as the recipient is not a professional and the award/OTB is not the receipt for the professional reasons, and it is received in the capacity of a "Sportsman", the OTB/rewards are exempt from tax in view of the CBDR Circular No.447 (supra). Similar OTB/awards are exempted in the case of (1) Shri Abhinav Bindra; (2) Shri Sameer Sudhakar Dighe; and (3) Shri Navab Mansur Ali Khan Pataudi (supra) etc., On facts, the said OTB/rewards are received by the assessee who is merely an ex-cricketer and not a professional cricketer. He was merely a sportsman. From the above finding of fact and law evolved in other cases, it is evident that the facts of the above case are identical to the facts of the present case on hand. AO did not make out a case that the assessee is a professional. Considering the favourable decisions on merits of the case too, we are of the opinion that the decision of CIT(A) upholding the addition made by the AO needs to be reversed. Accordingly, the grounds / additional ground raised by the assessee are allowed.”
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ITA No.- 2869/Del/2023 Sarkar Talwar 8. Foregoing discussion and established legal position, enables us to reach the conclusion that the assessee / appellant is not a professional and award in question is not the receipt for the professional reasons and received simply in the capacity of a “sportsman” and so amount of award is exempted from tax in view of the relevant circular no. 447 (supra) . It does not make any difference that assessee previously showed in ITR as taxable income, since it seems to be a bonafide mistake only. The case of assessee / appellant is wholly and squarely covered by order in the case of Mr. Chanrkant Gulabrao Borde vs. ITO (supra), and hence entitled to get relief as prayed, appeal deserves to be allowed and order of Ld. CIT(A) is not sustainable.
Consequently, appeal of the assessee is allowed.
Order pronounced in the Open Court on 14.08.2024
Sd/- Sd/- (S RIFAUR RAHMAN) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 14/08/2024. Pooja/-
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ITA No.- 2869/Del/2023 Sarkar Talwar