The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) recently granted tax relief to India’s former wicket-keeper, Sameer Dighe by holding that the proceeds from a benefit match of around Rs 50 lakh cannot be taxed in the hands of the cricketer.
The assessee shot to fame during the India-Australia test series in 2001 where he played a significant role in the country’s win. Soon after, in 2002, he retired from international cricket. During the relevant period, Dighe received Rs. 50 lakhs from a benefit match, organized for him by BCCI.
While completing assessment against him, the Assessing Officer noted that Dighe had not offered to tax a sum of Rs 50.4 lakh during the financial year 2010-11.
Before the authorities, Dighe submitted that a benefit match is played for retired sportsmen to appreciate their past contribution to the game and accordingly the funds would be a “capital receipt” for which, income tax is not payable.
He also relied on a circular issued by the Central Board of Direct Taxes (CBDT) which states that an award received by a non-professional sportsman will not be chargeable to tax in his hands, as it would not be in the nature of income.
The department rejected the above contention and held that the funds received would be taxed in Dighe’s hands as “income from other sources”. The Income Tax Act had been amended on October 1, 2009, to plug loopholes and tax any sum above Rs 50,000 received by an individual without any consideration (or, in other words, without a quid pro quo). A few exceptions were provided under Section 56(2)(vii)(a). For instance, money received from relatives, under a will or at the time of marriage, was not covered and remained tax-free. According to the officer, proceeds from a benefit match is taxable.
While answering the dispute in favour of the assessee, the Tribunal held that Dighe played cricket for India as his passion. Proceeds arising out of the benefit match were in the nature of an award and were not an income, thus the section invoked by the Income Tax official would not apply.
“The assessee was an amateur cricketer and his profession is employment with Air India from where he is getting the 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 Income Tax Act. This proceeds from benefit match received by the assessee are 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,” the bench said.
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