While disposing an appeal filed by the Revenue against the order of the CIT(A), who allowed appeal of Cricket player Partiv Patel, the Ahmedabad ITAT confirmed that income from playing cricket is taxable under the head “P & G from Business and Profession”.
However, the Tribunal remitted the matter back to the Assessing Officer by observing that both the authorities have failed to establish the nexus between each head of expenditure claimed by the assessee against his declared taxable income.
The assessee, Mr. Parthiv Patel derives income from playing cricket sport, sponsorship and marketing, filed return declaring his income under the head “P&G from Business and profession”. He claimed various expenses under the head business development, office, salary, office rent, other interests, petrol expenses, repair/maintenance, telephone, travelling, vehicle, stationary and depreciation totaling to Rs.31,73,928/- and Rs.45,88,255/- for two separate years. The AO denied the claim by finding that these are not business expenditures since playing cricket is not a “Business or Profession”. He observed that the activity is not in the nature of “trade” or “manufacture.”
On first appeal, the CIT(A) observed that the assessees’ income is liable to be treated as “income from Business or Profession” and partly allowed his claim in respect of expenditure. Aggrieved by the order, Revenue approached the ITAT.
The division bench of the ITAT noted that “there can hardly be any dispute that the assessee is a cricketer receiving match fees/retainerships from various cricket bodies as declared under the head ‘income from business and profession’. The assessee has further claimed the impugned expenditure against the same in two assessment years in question. Learned counsel representing assessee clarifies that the assessing authority itself had verified correctness of the impugned expenses. The same however does not emanate from the assessment order. We further find that neither the Assessing Officer nor the CIT(A) has sought to establish a direct nexus between assessees professional income from playing cricket along with his expenditure in question claimed u/s.37 of the Act. It is not out of place for us to refer to the above statutory provision allowing deduction of expenses which are wholly and exclusively incurred for the purpose of the business. It is evident to us that the learned CIT(A) has merely drawn his conclusions qua genuineness aspect instead of establishing the above stated nexus between each head of expenditure vis-à-vis assessee’s taxable income declared. We deem it appropriate in these facts and circumstances that the issue in question requires Assessing Officer’s re-adjudication in accordance with law after affording adequate opportunity of hearing to the assessee so asto prove the above direct nexus.”
Read the full text of the order below.
