Mahesh Bhupathi has been a resolute fighter on the tennis court since he turned pro in 1995. Clawing his way up the ATP rankings, he has earned a career prize money of $5,191,184. But on Monday he decisively lost the tenacious fight he waged right up to the Supreme Court to avoid paying tax on Rs 28.5 lakhs he claims to have paid as guru dakshina to his father for the tennis tips before he turned pro.
A Bench comprising Chief Justice S H Kapadia and Justices K S Radhakrishnan and Swatanter Kumar did not take even five minutes to toss out Bhupathi’s appeal against the Karnataka High Court verdict. Not only that, the Bench refused to remove the stinging observation made by the HC that the agreement for payment by the son to the father was a sham transaction.
The HC had found merit in the I-T department’s decision to reject Bhupathi’s claim that his father had given him useful lessons, helping him to become a professional tennis player, and that he had agreed to pay him back for the tips he got from him between 1989 and 1994.
There was one catch in the plea, the agreement between father and son for the latter to pay back was made in 1994 after Bhupathi had started earning and the I-T department concluded that it was a ploy to avoid taxation.
A surprised HC had conceded that it was coming across such an agreement between a father and son duo for the first time. “It is the pious and moral obligation of the father to maintain the son during his minority or till he independently starts earning. If there was really an agreement between the father and son, such agreement would have come into existence before training the son by the father,” the HC had said.
“In this case, the agreement has been entered into after the assessee (Bhupathi) started getting remuneration from the tennis association, which only shows that the agreement has come into existence only to defeat the tax liability,” the HC had said while dismissing Bhupathi’s appeal against the IT department’s decision.
