Mr.Sunil Gavaskar hereafter referred to as Assesse had received income in the form of foreign remittances, on which the deduction was claimed u/s 80RR in pursuance to an agreement dated 10th May 1999 with M/s ESPN Star sports for rendering services on exclusive basis as a presenter , reporter and commentator. But after discussing the same the claim was denied on the ground that as stated in the provisions of Section 80RR of Income Tax Act 1961( “where a resident individual in India being an author, playwright, artist (musician, actor or sportsman (including an athlete)) derives any income from his profession from the Government of a foreign State or any non-resident in India shall be allowed deduction of 60% of such income for an assessment year beginning from 1st day of April 2001”) the assesse was no more sportsman and the income derived was not from playing cricket and hence not satisfying the condition as per Section 80RR said the AO, Ld. CIT(A) or even Ld. DR. The assesse was of a different view and did not agree to the contentions made.
Submissions before ITAT:
The submissions on behalf of the client were made by Shri. D.V. Lakhani drawing the attention of the Tribunal towards the intention of the provisions as stated by Central Board of Direct tax vide its circular no.28 1 dated 22nd September 1980 that “ Extension of the benefit of deduction in respect of professional income for foreign sources to sportsmen and athletes- Section 80RR – Under Section 80RR, a resident individual being an author, playwright, artist, musician or actor, who derives income in the exercise of his profession from foreign sources and receives such income in India or beings it into India in foreign exchange, it entitled to deduct 25 per cent of the income so received or brought into India in computing his total income. This provision is designed to encourage authors, playwrights, artists, musicians and actors in our country to project their activities outside India with a view to contributing to greater understanding of our country and its culture abroad and also for augmenting our foreign exchange resources. With a view to encouraging our sportsmen and athletes to compete in international events, the Finance Act has amended Section 80RR to include them in the category of persons entitled to the benefit of that section” and also stated that It is well settled law that that beneficial provisions of the law must be construed liberally. While interpreting a beneficial legislation rule of liberal construction should be preferred over the rule of strict interpretation that enables to achieve its object over that one that tend to frustrate it.
Purposive Construction is a well-accepted rule of interpretation which says that the courts must look upon the object which the statute seeks to achieve, especially while interpreting any beneficial legislation. If there is an ambiguity, a purposive approach for interpreting the Act is necessary. If two views are possible, one effectuates the purpose or intendment of the provision and the other frustrates it, the former must be preferred. Every effort should be made to make a purposive construction with a view to effectuate the purpose and object of the statutory provision.
Reference of the following case laws were also provided in addition :
The assesse also submitted the definition of Sportsperson from Wikipedia, the free encyclopaedia which supported the statement that the term sportsman may also be used to describe a former player who continues to remain associated and engaged, for the promotion of the related sport activities. The facts of the case are that the asses see has been undoubtedly a cricketer of international stature. He was honoured with ‘Arjun Award’ by the Government of India and ‘Maharashtra Bhushan’ by the Government of Maharashtra as life time achievement award for his sporting excellence. It has been shown to us that the assessee has been playing cricket matches in India and abroad, even after he had stopped playing tournaments of international and national levels. The evidences of such district level and other smaller level matches participated and played by the assessee were brushed aside by the AO on the ground that such kind of tournaments and matches are of no relevance. In our view action of the AO is not justified.
The assesse did not give the reference of the Harsha Bhogle vs ITO 114 TTJ 266 as in that case the assesse was trying to claim deduction u/s 80RR as an actor / artist for the same service as provided by Shri Sunil Gavaskar.
Held by ITAT
It is been held that assignment has been given to the assessee and this role has been performed by him effectively, because of his having been a cricketer of international stature and he was chosen for the skill and knowledge he possessed and the delivery he could have given because of this skill and experience. We can, unhesitatingly, say that the contribution for promotion to the game of cricket is possible not only while playing in the field but also outside the field while performing various other crucial roles, like that of a coach, empire and commentator etc. The entire role of the assessee and the activity performed by him for which he was remunerated, have a direct and proximate link with the game of cricket. In the given facts of this case, one cannot visualise earning of this income, de-horse the assessee having been a cricketer and a sportsman and nor can it be visualised independent of the game of cricket. We have already held in earlier part of our order that assessee falls in the category of a ‘sportsman’. Thus, in our considered opinion, the facts of this suggest that the impugned income has been derived by the assessee in the exercise of his profession as a ‘sportsman’.
On the above statements the Tribunal pronounced in the open court on 16th March 2016 that “facts of this case suggest, the assessee is eligible to claim deduction u/s 80RR, and therefore no belief could have been formed for escapements of his income. The claim is allowable on merits also, as discussed above in detail. Thus, the benefit of deduction claimed u/s 80RR was in accordance with law, and therefore, disallowance made by the AO in this regard is directed to be deleted.”