Abhinav Aggarwal

Introduction

The year 2011 was quite special for the little master, as India lifted the World Cup and remarkably filled the only void in the legend’s illustrious career. In a career spanning more than 20 years with literally every record to his credit, there is no iota of doubt that Sachin was indeed the God of cricket. But an another interesting event transpired in 2011, where Sachin himself interestingly pleaded that he was an actor and not a professional cricketer in the case of Sachin R. Tendulkar v. Assistant Commissioner of Income Tax adjudged by the Income Tax Appellate Tribunal (ITAT).

The Dispute

The dispute was largely concentrated on the tax deductions an assessee can avail under Section 80RR of the Income Tax Act, 1995. Sachin Tendulkar had received an amount of Rs. 5,92,31,211 from various advertisements and sponsorships done for ESPN Star Sports, Pepsico and VISA. Subsequently, he claimed deduction amounting to Rs. 1,77,69,363 as these incomes were receipts received in foreign exchange. However, the whole issue to avail this benefit was divided in 2 parts:

i) Whether the assessee was an author, playwright, artist, musician, actor or sportsman?

ii) Whether the income for which tax deduction is claimed is derived by him in the exercise of his profession?

Arguments on Behalf of Sachin Tendulkar

 This may sound puzzling to cricket fans around the world, but Sachin claimed that he was an ‘actor’ and a ‘model’ and this was his business and profession. According to him, he was only a “non professional cricketer” and income received from playing cricket and logo money received from BCCI is an “Income from Other Sources” due to acting being his profession. Furthermore, Sachin clarified that he has been getting tax deduction benefits on acting as long as from year 1997 and thus it should not be stopped even now. Alternatively, Sachin argued that if not an actor, he should be assessed as an “artist” for the simple reason being that he was a “public performer” and wide interpretation should be given to the same.

Observations by the Assessing Officer and CIT

Naturally, both the AO and CIT was unable to accept this argument. The AO with the help of Oxford Dictionary went on to define who a professional cricketer is:

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.

 Thus, Sachin obviously fitted this criterion and the AO went further ahead to remark that “if Sachin is not a cricketer then who is a cricketer?” 

As per the second issue, the AO remarked that sponsorship deals with the companies did not only involved acting but also other activities such as usage of Sachin’s name, public appearances etc. Furthermore, it was remarked that Sachin used to act in these advertisements not because of his acting skills but because of his success and personality as a cricketer which made the public trust the brand. Thus, to avail tax deduction only on the basis of acting was not accepted as it was not his primary or an independent profession and such income was attributable to cricket.

The CIT also upheld the decision given by the AO by observing that whenever he would undertake other activities like T V. commercials and shows for sponsoring products of various companies for which he is paid, it would only amount to subsidiary activities which are not directly relatable to his activity of playing cricket.  By “appearing” in such commercials or events, no element or expertise relating to his profession is being used since the profession of the appellant is only one, i.e. playing cricket and the income derived from other subsidiary activities cannot be considered to be “income derived by him in the exercise of his profession”.

The CIT interestingly also rejected the alternative arguments of Sachin to classify him as an artist by remarking on his acting skills. The CIT observed that “The very fact that the appellant in the advertisement or the commercials attracts the attention of the viewers and even if his performance is most average, the payment is made only on account of is “appearing” and not by virtue of him being an “Actor” or “Artist”. Therefore, it finally adjudged that any subsidiary activities which are not directly related to the specific profession cannot be allowed u/s 80RR of the IT Act.

Decision of ITAT- Sachin is an actor too!

The counsel on behalf of Sachin vehemently argued that even if Sachin is getting advertisements because of his cricketing skills, then also he should be classified as an artist as Section 80RR nowhere envisages the capacity in which an artist performs. Also, it was further argued that a person can indeed have two professions at once i.e. a cricketer and an actor/artist too.

The opposing counsel on the other hand argued that Section 80RR specifically mentions that the phrase “exercise of his profession” and “such income” means that there should be a direct nexus between the two and also the activity carried out exercise of profession should not be a mere single/incidental act but should be the main profession i.e. cricket itself. The counsel further placed reliance on the case of Harsha Bhogle v. Assessing Officer wherein it was held that a presenter or a commentator cannot avail the benefit under Section 80RR as he is not an artist.

It will also be pertinent to mention that the opposing counsel went a bit over line by stating that the assessee (Sachin Tendulkar) suffers from an identity crisis by not being sure that whether he is a cricketer/artist/actor and thus should not be given any tax benefit at all.

Finally, ITAT overturned the decisions of both the AO and CIT and held that Sachin is indeed an artist. The ITAT ruled that there is no doubt that Sachin is a cricketer but when he faces the lights and camera, he has to use his own creativity, imagination and skills similar to an artist. He has his own set of skills and talent while acting in an advertisement. Thus, he was classified as an artist by the ITAT and subsequently given tax deduction benefits by ruling that there is no bar in having more than one profession.

Therefore, someone rightly said, there is nothing impossible for Sachin Tendulkar to do, albeit, both on and off the field!

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