Interesting Tax Dispute - Whether Sachin Tendulkar Actor or Cricketer?

Recently someone shared on Whatsapp an interesting tax dispute where the issue of whether Sachin Tendulkar Actor or Cricketer was judged by ITAT.

For Sachin Tendulkar year 2011 was special when it comes to his cricketing profession as during this year where India won the World Cup. Along with this, one more interesting event happened in the life of Sachin Tendulkar 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).

Sachin Tendulkar Actor or Cricketer – History of Tax Dispute

Sachin Tendulkar had received an amount of Rs. 5,92,31,211 from various advertisements and sponsorships did for ESPN Star Sports, Pepsico, and VISA. Subsequently, he claimed a deduction amounting to Rs. 1,77,69,363 as these incomes were receipts received in foreign exchange.

The dispute was largely concentrated on the tax deductions an assessee can avail under Section 80RR of the Income Tax Act, 1995.

To avail this benefit under Section 80RR, one has to decide on the two aspects of this section.

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

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

Sachin Tendular’s Arguement:-

Sachin Tendulkar explained as he is a popular model who acts in various commercials for endorsing products of various companies. A major part of the income derived by him during the year is from the exercise of his profession as an ‘actor’ in these commercials. Since the assessment year 1994-95, the income derived by him from ‘acting’ has been reflected as income from ‘business & profession”. Income from playing cricket is reflected as ‘income from other sources’ since he is a non-professional cricketer.

Sachin clarified that he has been getting tax deduction benefits on acting as long as from the year 1997. Hence, it should not be stopped even now. Also, 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

Due to this surprising revealations that Sachin is an ACTOR and his cricketing profession is non-professional cricket, the AO in no way ready accept this arguement.

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.

Hence, AO’s decision is that Sachin Tendulkar is a professional cricket but not a non-professional cricketer.

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 that 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.

Income Tax Appellate Tribunal (ITAT) Deicision

The counsel on behalf of Sachin 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 the exercise of the 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.

The opposing counsel went agressive on Sachin Tendulkar 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.

However, ITAT rejected the arguments of AO and CIT and held that SACHIN IS AN ARTIST.

The interesting observations which obiviously defends what Sachin argued are acceptable to ITAT and to the whole world of his fans.

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.

Conclusion:- The reason to write this post is that few are spreading this court judgement in social media as if a surprising defence from the God of Cricket. However, whatever he did is legally correct and upheld by the land of the law by the judgement of ITAT. Hence, let us respect the legendary cricketer as a true BHARAT RATNA.

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