TMI Blog2011 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... as an artist and therefore entitled to deduction u/s 80RR of the Act the assessee had claimed an amount of Rs. 57,969/- towards staff welfare expenses - Since the expenses claimed were in cash and were unverifiable in nature - CIT(A) restricted the same to Rs. 5000/-, which in our opinion is reasonable under the facts and circumstances of the case Regarding entertainment expense - the CIT(A) restricted the disallowance to Rs. 50,000/- on the ground that the disallowance made on estimated basis appears to be on higher side. Car expenses - Admittedly, no log book has been maintained by the assessee, therefore, personal use of motor car for self and other family members cannot be ruled out. Accordingly, the disallowance of 1/5th of the motor car expenses amounting to Rs. 1,42,824/-being very reasonable under the facts and circumstances is justified. - 428 TO 430 AND 6862 (MUM.) OF 2008 - - - Dated:- 20-5-2011 - R.K. PANDA, SMT. ASHA VIJAYARAGHAVAN, JJ. Arvind Sonde for the Appellant. Sanjeev Dutt for the Respondent. ORDER R.K. PANDA, Accountant Member. - The above four appeals filed by the assessee are directed against the separate orders of the CIT(A)-XIX, Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the assessee is a playwright, artist, musician, actor or sportsman and the second issue to be determined is whether the income for which deduction is claimed, is derived by him in the exercise of his profession. The Assessing Officer asked the assessee to explain as to how the receipts from the above agreements constitute income derived by him in the exercise of his profession. He also asked the assessee to explain the nature of profession claimed and to justify his claim for deduction u/s 80RR. 2.3 It was explained by the assessee that 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. It was submitted that section 80RR provides for a deduction from the income derived by an assessee from the exercise of his profession as an 'actor, playwright, artist, mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that he is a non-professional cricketer, the Assessing Officer rejected the same because of the following reasons after analysing the meaning of word 'professional cricketer' from the pocket oxford dictionary. (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; (iii) He is undoubtedly a famous and competent cricketer. The assessee is reported to be playing international cricket since the age of 16 and has been playing for the Indian cricket team, since then. He is stated to hold the record for the most runs in One-Day Internationals and the most centuries both in One-day Internationals and in test cricket. He received the Rajiv Gandhi Khel Ratna, India's highest sporting honour, for 1997-98 and was a Wisdom Cricketer of the Year in 1997. He, accordingly, held that the assessee is a professional cricketer. The Assessing Officer also observed that if Sachin is not a cricketer then who is a cricketer? 2.8 So far as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d versions thereof, during the term of this agreement in respect of the products. 2. Model for advertisements of the products in all other media e.g press, magazines, radio, outdoor, and packaging/promotional items etc. 3. Act as an ambassador of PEPSICO Inc. during all his public appearances and endorse the products wherever he goes and at all times. 4. Engage in promoting the products through campaigns and at any locations or cities as determined by PEPSICO Inc which shall not include; (a) Any 'door-to-door' campaign, or (b) Any promotion involving mass contact with the Public. For any such promotion PEPSICO Inc. will ensure a reasonable distance is maintained between Sachin and the public. 5. Personally drink and promote the products and in particular Pepsi at public and private appearances and functions and at home." 2.9 The A.O. noted that the assessee has claimed deduction under section 80RR on the remuneration received from the above services also. He noted that the activities like 'product spokesman work', 'use of clothing and footwear' issuing book lets/diaries on Sachin's statistics' and signing of items including certificate of honour/achi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ad film also sees Sachin not as an actor or model but as Sachin Tendulkar, the cricketing legend. In an ad film, what matters is the sheer presence of Sachin the cricketer. It really does not matter even if he performs badly in the film. (4) An ad film featuring Sachin succedds because Sachin is a success as a cricketer. The assessee's popularity and income from advertisements would depend on his performance in cricket and not on his acting abilities. (5) As the Tax Audit Report in Form No. 3CD filed with the Return, the nature of business/profession is stated to be "sports Sponsorship/modelling". The assessee's reply dated 24-2-2006 says that "The income derived by our client, in respect of which deduction under section 80RR has been claimed is from the exercise of his profession of an actor. There is a contradiction in the two statements because modelling and acting are two separate and different professions. Deduction u/s 80RR is not available to a model as a model is not an "author, playwright, artist, musician, actor or sportsman" in terms of section 80RR. A model is not an artist because 'artist' as commonly understood refers to a musician, painter, singe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e satisfied for being entitled to the deduction u/s 80RR are; (i) The assessee must be resident individual in India (ii) The individual must either be an author, playwright, musician, actor, or sportsman including an athlete; (iii) The income must be derived by him in the exercise of his profession; (iv) The income must be brought into in India in convertible foreign exchange within the prescribed period. 4.1 It was submitted that the said income has been "derived" by the assessee for acting/modelling in various TV commercials; therefore, he should be considered as an 'actor' for the purpose of sec. 80RR of the Act. Since the amount has been received in foreign exchange and brought to India in convertible foreign exchange, all the conditions u/s 80RR have been satisfied and he should be entitled to the deduction. The dictionary meaning of the word 'actor' was brought to the notice of the CIT(A). It was also argued that the assessee's performance in the TV commercials partakes the character of acting and therefore, he should be considered as an actor for the purpose of section 80RR of the Act. 4.2 Alternatively, it was submitted that he should be considered as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer by holding as under: "6. I have gone through various submissions made by the appellant as well as the findings of the Assessing Officer. On going through the provisions of Sec. 80RR of the IT Act, the conditions which need to be satisfied in the present context are : (a) An individual, resident in India; (b) Being an author, Playwright, Artist [Musician, actor or sportsman (including an athlete) (c) Includes any income derived by him in exercise of his profession; (d) Amount received from the Government of a Foreign State or any person not residing in India. (e) Income must be brought to India in convertible foreign exchange within specified time. In the present case, the conditions which are in dispute relate to (b) (c) above. 6.1 The AO has elaborated on the nature of income which has been claimed to be exempt by the appellant u/s 80RR of the IT Act, 1961. In this regard, the AO has analysed various agreements with M/s World Tel India, M/s World Tel. Inc., M/s VISA International, M/s ESPN, M/s Star Sports and M/s Pepsi Co. Inc. Through the analysis of these agreements the AO has attempted to disprove that the receipts from such companies are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofession of the appellant. There is no doubt in my mind that the profession of the appellant is only "playing cricket" and other activities are only subsidiary in nature. It has also been clearly discussed by the A.O. that the agreements which the appellant has entered into are directly related on the condition that he should continue to play cricket. However, he is not being paid for any activity related to "playing cricket". To sum up, 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". For addressing the second issue relating to the appellant being an "actor" or an "artist" as claimed by him, as an alternative argument, the appellant has resorted to various dictionary meaning as well as court decisions to support his claim u/s 80RR of the IT Act, 1961. The appellant has claimed to be an "Actor" as an alternative profession on the grounds of "appearing" in various commercials, advertisements etc. If we examine the matter in a little more depth it will be observed that the appellant is being paid not for his activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the assessee submitted that the assessee derived income from salary, income from other sources as a cricketer and income from modelling/sponsorships shown as "income from business/profession". He submitted that the assessee is not a professional cricketer. The deduction u/s 80RR has been allowed in the past u/s 143(3) assessments and u/s 143(1) assessment and only in the AYs 2003-04, the Assessing Officer visited the provisions of sec. 80RR which, he should not have done. He submitted that for the AYs. 1997-98, 1998-99 and 1999-2000, benefit of deduction u/s 80RR has been allowed. The assessee has fulfilled all the conditions mentioned in the provisions of sec. 80RR. He submitted that the only profession of the assessee is acting/modelling. Referring to page 8 of the assessment order where the Assessing Officer has held that the assessee is a professional cricketer, he submitted that the Tribunal in assessee's own case has held that the assessee is not a professional cricketer in view of the CBDT circular. The assessee is not aware as to whether the department has gone to the High Court or not. 6.1 The ld. counsel for the assessee drew the attention of the Bench to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a person can have more than one profession. He accordingly submitted that the assessee is entitled to the deduction u/s 80RR on the disputed income both as an "actor" or an "artist". 6.5 The ld. DR on the other hand while supporting the order of the CIT(A) submitted that the only dispute in the impugned ground is regarding the nature of income i.e. whether the income is derived from exercise of his profession as an actor, artist or a player. He submitted that the use of word 'exercise' in the phrase "exercise of his profession" suggests that activity of sports/acting/artist etc. must be put to use to earn the income being claimed as deduction u/s 80RR. He submitted that Circular No. 22, dated 17-7-69 has explained the purpose of introducing Section 80RR. The provision is designed to encourage successful artist, actors etc. in our country to project their activities outside India with a view to contributing greater understanding of our country and its culture abroad. This suggests that the income yielding activity should be rendered in such a manner that it contributes to the better understanding of our country and its culture abroad. He submitted that the use of word 'professio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccupation of time of assessee is not required. Wherever the time and physical presence is required, it is mentioned specifically which is restricted to only few occasions and days in a year which is for making ad films or attending public functions/corporate meetings. So considering the total time spent by assessee in cricket, the time spent in physically appearing in TV ad films is very miniscule such as he has to model only once in a year for Pepsi Co. and be available only at 3 occasions in a year for events organised by VISA and each appearance not being more than 2 hours. Hence by the yardsticks of time and effort also, the major part of assessee's contribution is towards playing cricket. Further there is neither skilled performance nor any creativity as an actor or artist by appearing in ad films while endorsing a product. The services provided by the assessee as per endorsement agreements do not involve use of any activity or role as an actor/artist. 6.10 Referring to the decision of the Hon'ble Bombay High Court in the case of CIT v. Lallubhai Nagardas Son [1993] 204 ITR 93 he submitted that the Hon'ble High Court in the said decision has held that a share broker does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case; therefore, the assessee is not entitled to get the benefit of deduction under the provisions of sec. 80RR. He submitted that in the instant case there is an identity crisis. The assessee is not an actor/artist/professional cricketer but he is only a cricketer; therefore, when the assessee himself is not sure as to whether he is a professional cricketer/an artist/an actor, therefore, deduction u/s 80RR should not be allowed to the assessee. He also relied on the following decisions:- 1. Liberty India v. CIT [2009] 317 ITR 2181 (SC) 2. Dilip K. Sheth v. ITO [2010] 128 TTJ 41 (Mum.) 3. Lallubhai Nagardas Sons, (supra) 6.17 The ld. counsel for the assessee in his rejoinder submitted that there is no question of any identity crisis. The assessee has fulfilled all the criteria of being an actor or an artist. The prize money/award money was held to be exempt as per the CBDT circular. Since the prize money/award money has been exempted in the case of the assessee; therefore, the circular applies to the assessee that he is not a professional cricketer. He submitted that if the assessee is held to be a professional cricketer and it is held that the income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dorsing any products in advertisements the assessee does not become a person whose profession is acting. According to the A.O. the income from product endorsement may at best be claimed as attributable to the profession of cricket but the expression derived from has a narrower connotation than the expression 'attributable to'. 7.2 We find the CIT(A) confirmed the action of the A.O. on the ground that by profession the assessee is neither an 'actor or an 'artist'. The activity of appearing in such advertisement or commercial etc. cannot be equated with that of an actor or artist and this activity is subsidiary activity of the assessee and is also not directly related to his profession of playing cricket. Therefore, any subsidiary activity which are not directly related to the specific profession cannot be allowed u/s 80RR of the I.T. Act. It is the submission of the ld. Counsel for the assessee that in view of the dictionary meaning of the words "acting" and "artist" and in the light of the ratio of various decisions cited, the income from modelling and advertisements should be treated as derived from the exercise of his profession as an "actor" or an "artist". According to the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is performing in the KBC programme cannot be considered performing only as an anchor and does not use skills as an artist imposing certain questions and creating interest in the programme. The success of the KBC programme compared to other similar programmes clearly shows some distinctive features that created interest in the programme that was hosted by the assessee. The difference between KBC programme and rest of other programmes is mainly in our opinion, the usage of the skills of Shri Amitabh Bachchan, as an actor or an artist. In our opinion, the assessee has derived the disputed income as an artist within the wider meaning ascribed to it as extracted above and also in the light of the relevant clauses of agreement which require him to exhibit such skills. Some portion of the income is definitely due to his backing of excellence as an actor too. It is very difficult to segregate Shri Amitabh Bachchan as an assessee from being an actor in any work what he does. In our opinion, the provisions of deductions are mainly beneficial provisions and have to be construed in a manner that achieves the intention of the legislature as made in the circular from time to time and also the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a resident individual who is an author, playwright, artist, musician, actor or sportsman, including an athlete; (ii) The gross total income of such a person must include income derived by him "in the exercise of his profession"; (iii) The income must be derived from a Government of a foreign State or from any person not resident in India. If these requirements are met, then in computing the total income of the individual a deduction is allowable, to the extent provided, at a proportion of the amount which is brought into India in convertible foreign exchange within the stipulated period. The deduction was available during the course of the assessment years beginning on 1st April, 2001, 1st April, 2002, 1st April, 2003 and 1st April, 2004. No deduction is permissible with effect from the assessment year beginning on 1st April, 2005. 7. The Finance Act of 1969 inserted s. 80RR w.e.f. 1st April, 1970. The reasons for the introduction of the provision were explained in Circular No. 22 of 17th July, 1969 thus : "This provision is designed to encourage successful authors, playwrights, artists, musicians and authors in our country to project their activities outside India with a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fine arts. The expression "artist" occurs after the expression author, and playwright and before the expression musician, actor or sportsman. An artist is defined in the Corpus Juris Secondum as follows : "A person of special skill or ability in any field, one who is highly accomplished, especially one versed in the liberal arts. Also one who professes and practices one of the fine arts. The term 'artist' may refer to one skilled in trade or art; and has been held broad enough to include architects and a surveyor. The term has been held not include a dancing instructor, a neon sign maker, a barber, cook, dressmaker, milliner, or tailor." The expression is defined in the Random House Dictionary as follows : "1. One who produces works in any of the arts that are primarily subject to aesthetic criteria. 2. A person who practices one of the fine arts especially a painter or sculptor. 3. One whose trade or profession requires knowledge of design, drawing, painting etc. a commercial artist. 4. A person who works in one of the performing arts, as an actor, musician, or singer, a public performer, a mime artist of the dance. 5. One who exhibits exceptional skill in his work." Websters Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is work a degree of imagination, creativity and skill to arrange elements in a manner that would affect human senses and emotions and to have an aesthetic value. No doubt, being a successful cricketer, it has added to his brand value as a model. But the fact remains that the assessee has to use his own skills, imagination and creativity. Every person or for that matter every sportsman do not possess that degree of talent or skill or creativity and face the lights and camera etc. The various decisions cited by the ld. D.R., in our opinion are not applicable to the facts of the present case and are distinguishable. 7.8 Considering the totality of the facts of the case and in the light of the ratio laid down in the decisions cited above, we are of the considered opinion that the income received by the assessee from modelling and appearing in T.V. commercials and similar activities can be termed as income derived from the profession of "an artist". As admitted by the ld. D.R., the assessee can have more than one profession. Therefore, there is no bar on the part of the assessee to have its second profession as an artist apart from playing cricket. In this view of the matter, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance to Rs. 50,000/- on the ground that the disallowance made on estimated basis appears to be on higher side. 9.2 After hearing both the sides, we find the disallowance of Rs. 50,000/- is quite justified under the facts and circumstances of the case and accordingly the same is upheld. Ground No. 3 raised by the assessee is dismissed. 10. In ground No. 4, the assessee has challenged the order of the ld. CIT(A) in confirming the disallowance of Rs. 50,000/- out of telephone expenses. 10.1 After hearing both the sides, we find the A.O. disallowed an amount of Rs. 1,16,540/- out of telephone expenses of Rs. 4,86,412/- on the ground that the bills were in the name assessee's wife. In appeal, the CIT(A) restricted the disallowance to Rs. 50,000/- on the ground that although the bills were in the name of the wife of the assessee, a number of calls were made by the assessee from the phones. The Revenue is not in appeal against the findings of the CIT(A). Considering the totality of the facts and circumstances of the case, the disallowance of Rs. 50,000/- in our opinion is quite reasonable and no interference is called for. Ground No. 4 of assessee's appeal is accordingly dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003-04. We have already decided the issue and the ground raised by the assessee has been dismissed. Following the same ratio, the ground raised by the assessee is dismissed. 14. Ground No. 3 relates to order of CIT(A) in confirming the disallowance of Rs. 25,000/- made by the A.O. on account of entertainment expenses out of total expenditure of Rs. 3,72,448 claimed by the assessee. 14.1 After hearing both the sides, we find the above ground is identical to ground No. 3 in ITA No. 429/Mum./2008 for A.Y. 2003-04. We have already decided the issue and the ground raised by the assessee has been dismissed. Following the same ratio, the ground raised by the assessee is dismissed. 15. Ground No. 4 relates to the order of the CIT(A) in confirming the disallowance of Rs. 37,000 made by the A.O. on account of telephone expenses out of total expenditure of Rs. 3,70,029 claimed by the assessee. 15.1 After hearing both the sides, we find the above ground is identical to ground No. 4 in ITA No. 429/Mum./2008 for A.Y. 2003-04. We have already decided the issue and the ground raised by the assessee has been dismissed. Following the same ratio, the ground raised by the assessee is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rokers (P.) Ltd. [2007] 291 ITR 500 2, reassessment proceeding initiated by the A.O. are legally valid. Accordingly, this ground raised by the assessee is dismissed. 19. Ground No. 2 relates to denial of deduction u/s 80RR amounting to Rs. 3,35,53,410/-. 19.1 After hearing both the sides, we find the above ground is identical to ground No. 1 in ITA No. 429/Mum./2008 for A.Y. 2003-04. We have already decided the issue and the ground raised by the assessee has been allowed. Following the same ratio, the ground raised by the assessee is allowed. 20. Ground No. 3 relates to order of the CIT(A) in confirming the disallowance Rs. 25,000 made by the A.O. on account of entertainment expenses out of total expenditure of Rs. 2,82,861 claimed by the assessee. 20.1 After hearing both the sides, we find the above ground is identical to ground No. 3 in ITA No. 429/Mum./2008 for A.Y. 2003-04. We have already decided the issue and the ground raised by the assessee has been dismissed. Following the same ratio, the ground raised by the assessee is dismissed. 21. Ground No. 4 relates to order of the CIT(A) in confirming the disallowance Rs. 43,600/- made by the A.O. on account of telephone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is allowed. 26. Ground No. 3 relates to the order of the CIT(A) in confirming the A.O.'s disallowance of Rs. 85613/- being 20% of the motor car expenses. 26.1 After hearing both the sides, we find the above ground is identical to ground No. 5 in ITA No. 429/Mum./2008 for A.Y. 2003-04. We have already decided the issue and the ground raised by the assessee has been dismissed. Following the same ratio, the ground raised by the assessee is dismissed. 27. Ground No. 4 relates to the order of the CIT(A) in confirming the disallowance Rs. 30,000 made by the A.O. on account of telephone expenses out of total expenditure of Rs. 4,18,044 incurred by the assessee. 27.1 After hearing both the sides, we find the above ground is identical to ground No. 4 in ITA No. 429/Mum./2008 for A.Y. 2003-04. We have already decided the issue and the ground raised by the assessee has been dismissed. Following the same ratio, the ground raised by the assessee is dismissed. 28. Ground No. 5 relates to the charging interest u/s 234B(3). 28.1 After hearing both the sides, we are of the considered opinion that charging interest u/s 234B(3) is mandatory and consequential in nature. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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