By TIOL News Service

PUNE, DECEMBER 13, 2018: The issue at hand before the bench is whether a 'sportsman' is eligible to claim exemption on One Time receipt (OTB) amount as provided under CBDT Circular No.447. YES is the answer. The Tribunal also held that issue of grounds for re-opening of assessment being invalid, cannot be contested for the first time before the Tribunal itself, if the assessee simply accepted such reasons for re-opening assessment & did not contest them before the AO.

Facts of the case

The assessee is a former cricketer. During the relevant AY, he worked with M/s Cooper Engineers Ltd. In his returns for the relevant AY, the assessee declared income such as Honorarium from BCCI, rental income, income from other sources and capital gains. The assessee had also received about Rs 75 lakhs from the BCCI as One-Time Receipt (OTB) award and claimed it to be exempt as per mandate of CBDT Circular No.447 of 1986 dated 22-01-1986. He also received a similar OTB award from the Baroda Cricket Association for his achievements & contribution to Indian cricket. Although such returns had originally been accepted, the AO later re-opened assessment for such AY, and denied the exemption claimed u/s 10(17A)(ii) on grounds that the assessee was not a professional cricketer, but instead only a sportsman. On appeal, the CIT(A) sustained such findings.

On appeal, the Tribunal held that,

++ coming to the issue of adequacy of reasons recorded by the AO before assuming jurisdiction u/s 148 r/w Section 147 of the Act, the AO claimed to have assumed jurisdiction to verify exempted income claimed by the 'A' in his return of income. Such claim was examined in light of the CBDT Circulars which orders for exemption of such OTB-receipts in cases of sportsman. AO did not refute the assessee's claim that he is not a professional. He is merely a sportsman. At the relevant point of time, Mr. Chandrakant Gulabrao Borde is an employee of Cooper Engineers Ltd. Chinchwad and hence, he constitutes sportsman only. Considering the decision of the High Court of Rajasthan in CIT Vs. Bigabass Maheshwari Sewa Samiti, it is clear that the AO cannot assume jurisdiction u/s 148 to merely verify any claim made by the assessee. Hence the AO failed to satisfy the test of adequacy of the reasons for assuming jurisdiction u/s 147 r/w Section 148 of the Act;

++ also considering the decision in the case of Abhinav Bindra Vs. DCIT it is clear that so long as the recipient of OTB/award is a sportsman, the Circular No.447 provides exemption. Similarly, in ACIT Vs. Shri Sameer Sudhakar Dighe it was held that so long as the recipient is not a professional and the award/OTB is not the receipt for the professional reasons, and it is received in the capacity of a "Sportsman", the OTB/rewards are exempt from tax in view of the CBDR Circular No.447. The AO did not make out a case that the assessee is a professional. Thus the findings of the CIT(A) upholding those of the AO must be set aside.

(See 2018-TIOL-2398-ITAT-PUNE)