SACHIN R. TENDULKAR is an actor/model apart from Cricketer [ITAT (Mum)]

Sachin R. Tendulkar vs. Assistant Commissioner of Income-tax, Range 193

IT APPEAL NOS. 428 TO 430 AND 6862 (MUM.) OF 2008

FACTS

Facts of the case, in brief, are that the assessee is a leading cricketer and filed his return of income on 31-10-2003 declaring total income of Rs. 18,51,06,510. In the computation statement filed along with the return, the assessee had shown salary income of Rs. 16,000 from M/s IDL Ltd; Rs. 19,51,98,706 shown as income from business/profession and Rs. 77,63,166 as income from other sources. The Assessing Officer, noted from the tax audit report filed in Form No.3CD that the nature of business/profession has been mentioned as 'sports sponsorship/modelling'. The income and expenditure account has shown Rs. 19,95,27,085 as gross receipts from 'sports sponsorship and advertisements'. As per Schedule-1, this consists of Rs. 5,92,31,211 received in foreign exchange and Rs. 14,02,95,874 received in Indian rupees. The amount of Rs. 5,92,31,211 received in foreign exchange is from the following companies:

The assessee has claimed deduction u/s 80RR amounting to Rs. 1,77,69,363 in respect of the above receipts received in foreign exchange. The Assessing Officer analysed the agreement dated 24-9-2001 with World Tel India & World Tel Inc.; agreement dated 30-6-2000 with VISA International; agreement dated 26-6-2002 with ESPN Star Sports and agreement dated 7-3-1989 with Pepsi Co. Ltd. He also analysed the provisions of sec. 80RR. According to the A.O. , under the provisions of section 80RR, the first issue to be determined is whether the assessee is a playwright, artist, musician, actor or sportsman and the second issue to be determined is whether the income for which deduction is claimed, is derived by him in the exercise of his profession. The Assessing Officer asked the assessee to explain as to how the receipts from the above agreements constitute income derived by him in the exercise of his profession. He also asked the assessee to explain the nature of profession claimed and to justify his claim for deduction u/s 80RR.

It was explained by the assessee that he is a popular model who acts in various commercials for endorsing products of various companies. A major part of the income derived by him during the year is from the exercise of his profession as an 'actor' in these commercials. Since the assessment year 1994-95 the income derived by him from 'acting' has been reflected as income from "business & profession". Income from playing cricket is reflected as 'income from other sources' since he is a non-professional cricketer. It was submitted that section 80RR provides for a deduction from the income derived by an assessee from the exercise of his profession as an 'actor, playwright, artist, musician or sportsman including an athlete. The income derived by the assessee in respect of which deduction u/s 80RR has been claimed is from the exercise of his profession as an "actor". The fees have been received in convertible foreign exchange in consideration for his acting in various commercials for endorsing products. The other conditions mentioned in sec. 80RR have also been satisfied i.e. the amount has been received from a person who is not a resident in India and the amount has been brought into India in convertible foreign exchange within the requisite period.

It was further submitted that the issue was examined in detail for the earlier years and deduction under this section has been allowed by the department since the assessment year 1997-98. While allowing the deduction u/s 80RR, the department has however, held that expenses attributable to the earning of this income ought to be deducted. The matter has been partially allowed by the CIT(A) in the past and is pending before the Tribunal. Accordingly, it was submitted that there should not be any reason to deviate from the stand taken by the department in the past.

On being questioned by the Assessing Officer to explain as to why the income from playing cricket is claimed to be taxed under the head 'other sources', it was explained that since playing cricket is not his profession, the income from playing cricket and logo money received from the BCCI has been shown as 'income from other sources'. This issue has been accepted by the Tribunal in Assessment Year 1997-98 which upheld the contention of the assessee that he is a non-professional cricketer.

Regarding the claim that the deduction u/s 80RR has been allowed in earlier years, the Assessing Officer noted that firstly, the returns for the last few years have not been scrutinized u/s 143(3) and has only been processed u/s 143(1). He held that the principle of res judicata does not apply to income tax proceedings. Secondly, in the Tribunal's order for Assessment Year 1997-98, the issue involved was applicability of CBDT circular No. 447, dated 22-1-1996 and the taxability of awards and prize money. Whether the assessee is entitled to deduction u/s 80RR was not an issue in the above order of the Tribunal. Further, the department has also filed an appeal against the order of the Tribunal.

As regards the claim of the assessee that he is a non-professional cricketer, the Assessing Officer rejected the same because of the following reasons after analysing the meaning of word 'professional cricketer' from the pocket oxford dictionary.

( i )He relates and belongs to the cricketing profession;

( ii )He is engaged in the activity of playing cricket as a paid job rather than as an amateur. He does not lay cricket only as a hobby. It would be correct to say that playing cricket is the source of his livelihood and is therefore, his profession;

( iii )He is undoubtedly a famous and competent cricketer. The assessee is reported to be playing international cricket since the age of 16 and has been playing for the Indian cricket team, since then. He is stated to hold the record for the most runs in One-Day Internationals and the most centuries both in One-day Internationals and in test cricket. He received the Rajiv Gandhi Khel Ratna, India's highest sporting honour, for 1997-98 and was a Wisdom Cricketer of the Year in 1997.

He, accordingly, held that the assessee is a professional cricketer. The Assessing Officer also observed that if Sachin is not a cricketer then who is a cricketer

Rejecting the various explanations given by the assessee, the Assessing Officer rejected the claim of deduction u/s 80RR on the ground that the assessee is a professional cricketer. For a person to have second profession as an actor, the second profession of acting should be independent of his main profession. In the instant case, the assessee does not have any independent profession and income from acting by endorsing any products in advertisements the assessee does not become a person whose profession is acting. Further the income from modelling/acting and other activities relating to advertisement etc. does not amount to income derived from the exercise of his profession as cricketer. According to the A.O. the income from product endorsement may at best be claimed as attributable to the profession of cricket but the expression derived from has a narrower connotation than the expression 'attributable to'. The immediate and effective source of the above income is advertisements and this income is not derived from playing cricket. It does not have a direct or immediate nexus with the profession of playing cricket. He accordingly held that the assessee is not entitled to deduction u/s 80RR amounting to Rs. 1,77,69,363.

HELD

We have considered the rival submissions made by both the sides, perused the orders of the A.O. and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee has received an amount of Rs. 19,92,27,085/- as gross receipts from sports sponsorship and advertisements which included an amount of Rs. 5,92,31,211/- received in convertible foreign exchange from ESPN Star Sports, Pepsico Inc and VISA. There is also no dispute to the fact that in the Tax Audit Report in Form No. 3CD filed along with return of income, the nature of business/profession of the assessee has been mentioned as sports sponsorship/modelling. There is also no dispute to the fact that the assessee claimed deduction u/s 80 RR amounting to Rs. 2,08,59,707/- on account of above receipt of Rs. 5,92,31,211/- on the ground that he was allowed such deduction in the past and that the income derived by the assessee in respect of which deduction u/s 80RR has been claimed is from the exercise of his profession as an "actor".

We find the A.O. rejected the claim of deduction u/s 80RR on the ground that the assessee is a professional cricketer and the income from modelling and advertising is not derived from the exercise of his profession. According to the A.O., by endorsing any products in advertisements the assessee does not become a person whose profession is acting. According to the A.O. the income from product endorsement may at best be claimed as attributable to the profession of cricket but the expression derived from has a narrower connotation than the expression 'attributable to'.

We find the CIT(A) confirmed the action of the A.O. on the ground that by profession the assessee is neither an 'actor or an 'artist'. The activity of appearing in such advertisement or commercial etc. cannot be equated with that of an actor or artist and this activity is subsidiary activity of the assessee and is also not directly related to his profession of playing cricket. Therefore, any subsidiary activity which are not directly related to the specific profession cannot be allowed u/s 80RR of the I.T. Act. It is the submission of the ld. Counsel for the assessee that in view of the dictionary meaning of the words "acting" and "artist" and in the light of the ratio of various decisions cited, the income from modelling and advertisements should be treated as derived from the exercise of his profession as an "actor" or an "artist". According to the ld. Counsel for the assessee, a person can have more than one profession.

We find there is no dispute to the fact that the assessee in the instant case has declared income from playing cricket as "income from other sources" on the ground that he is only a cricketer and is not a professional cricketer. This issue has already been decided by the Tribunal in favour of the assessee and as admitted by the ld. D.R. Nothing was brought to our notice that the Revenue has challenged the order of the Tribunal before the Hon'ble High Court.

As regards the submission of the learned counsel for the assessee that the income from modelling and sponsorship has to be considered either as 'actor' or an 'artist', we find similar issue had come up before the Tribunal in the case of Mr. Amitabh Bachchan ( supra ). In that case the payment received by Mr. Amitabh Bachchan for acting as an 'anchor' for a TV programme by using his skill as an actor/artist anchoring TV show, which contributed greater understanding of our country and immense popularity was held to be derived by him as an artist and deduction u/s 80RR was allowed to him in respect of payment receive by him from foreign company. The relevant observations of the Tribunal at para 17 of the order reads as under:-

"If we look into the definitions, it is very difficult to exclude the present assessee from being an artist. After all the word 'artist' is term of wider connotation and does not accept the restrictions as are made out by the Department. The Board itself examined the word "artist" to include photographers and YV news film cameraman as also a director of a film or a script writer. The various meanings assigned to the term 'artist' by different standard dictionaries clearly show that the term "artist" is a term which has wide meaning not merely restricted to the meaning of fine arts but encompasses within its scope, a skilled performer. We also accept the contention of the assessee that certain obligations attached to Shri Amitabh Bachchan under various agreements which are part of the record clearly demand from him exhibition of skill as an artist if not as an actor. A photographer just takes the photos of the image already existing in the nature and does nothing creative except the way and method the photography is taken but that makes the difference and he is known as an artist. Similarly, a person who is performing in the KBC programme cannot be considered performing only as an anchor and does not use skills as an artist imposing certain questions and creating interest in the programme. The success of the KBC programme compared to other similar programmes clearly shows some distinctive features that created interest in the programme that was hosted by the assessee. The difference between KBC programme and rest of other programmes is mainly in our opinion, the usage of the skills of Shri Amitabh Bachchan, as an actor or an artist. In our opinion, the assessee has derived the disputed income as an artist within the wider meaning ascribed to it as extracted above and also in the light of the relevant clauses of agreement which require him to exhibit such skills. Some portion of the income is definitely due to his backing of excellence as an actor too. It is very difficult to segregate Shri Amitabh Bachchan as an assessee from being an actor in any work what he does. In our opinion, the provisions of deductions are mainly beneficial provisions and have to be construed in a manner that achieves the intention of the legislature as made in the circular from time to time and also the legislature amendments that are made to the sections in order to widen the scope of the persons falling under the relevant section. In the case of Harsha Bhogle (supra) the tribunal went into the objects and intention of s. 80RR of the Act and it was observed in para 23 at p. 737 that Harsha Bhogle mainly performed on television and such activities were not making any contribution to the greater understanding of our country and its culture abroad although it was augmenting the foreign exchange resources of our country but that is not enough to claim tax deduction under s. 80RR of the Act, whereas if one were to look into the contents of the KBC programme, the programme itself is so designed wherein actor is required to make the programme very interesting and imaginative and has definitely contributed greater understanding of our country and its culture abroad. The programme of KBC was not only watched in India but all over the globe and mainly dealt with Indian history, its geography, rich cultural heritages, its mythological stories, its constitution and legal system and its rich resources. Even on this account, the activities of Shri Amitabh Bachchan are clearly distinguishable to that of a television presenter and TV commentator of cricket matches as was held in the case of Harsha Bhogle (supra). The assessee has produced before us some of the literatures on KBC programme which we have already reproduced elsewhere in our order. We are therefore of the opinion that the assessee is an artist while he received the disputed income within the meaning of s. 80RR of the Act. We, therefore, direct the A.O. to grant relief of deduction under s. 80RR of the Act."

Now coming to the facts of the present case, the assessee, while appearing in advertisements and commercials, has to face the lights and camera. As a model, the assessee brings to his work a degree of imagination, creativity and skill to arrange elements in a manner that would affect human senses and emotions and to have an aesthetic value. No doubt, being a successful cricketer, it has added to his brand value as a model. But the fact remains that the assessee has to use his own skills, imagination and creativity. Every person or for that matter every sportsman do not possess that degree of talent or skill or creativity and face the lights and camera etc. The various decisions cited by the ld. D.R., in our opinion are not applicable to the facts of the present case and are distinguishable.

Considering the totality of the facts of the case and in the light of the ratio laid down in the decisions cited above, we are of the considered opinion that the income received by the assessee from modelling and appearing in T.V. commercials and similar activities can be termed as income derived from the profession of "an artist". As admitted by the ld. D.R., the assessee can have more than one profession. Therefore, there is no bar on the part of the assessee to have its second profession as an artist apart from playing cricket. In this view of the matter, we are of the considered opinion that the amount of Rs. 5,92,31,211/- received by the assessee amounts to income derived by the assessee in the exercise of his profession as an artist and therefore entitled to deduction u/s 80RR of the Act. We hold accordingly. The ground raised by the assessee is accordingly allowed.

Editor