TMI Blog2006 (11) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... ught on record by the assessee and the Department is justified in bringing the same as part of the professional income of the assessee in the year in question and we decline to interfere. 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 out in the circular from time to time and also the legislative amendments that are made to the sections in order to widen the scope of the persons falling under the relevant section. In the case of Harsha Bhogle v. Assessing Officer [ 2002 (5) TMI 201 - ITAT BOMBAY-F] the Tribunal went into the objects and intention of section 80RR of the Act and it was observed that Harsha Bhogle, mainly performed on television and such activities were not making any contribution to the greater understanding of our country and its culture abroad although it was augmenting the foreign exchange resources of our country but that is not enough to claim tax deduction u/s 80RR of the Act, whereas if one were to look into the contents of the KBC programme, the programme itself is so designed wherein actor is required to make the programme very inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the claims of the assessee in this regard and brought to tax the entire sum of Rs. 50.92 crores in the assessee s hands. The assessee on this issue went up in appeal before the CIT(A) who gave his findings as under : I have carefully considered the facts of the case and the submissions of the appellant. I have also gone through the order of the ITAT, Mumbai dated 18-5-2005. There is no doubt the facts of the appellant s case, reasons for disallowance by the Assessing Officer and the submissions against disallowance made by the appellant are similar to those for assessment year 2001-02. The ITAT in its above order reached the following conclusions : ( i ) It was established that the agreements entered into in 1995 by the appellant with ABCL were genuine agreements (para 6.2 of ITAT s order). ( ii ) The agreements of 1995 between the appellant and ABCL were not self-serving and did not represent a make believe arrangement (para 7 of ITAT s order). ( iii ) The dispute between the appellant and ABCL was validly referred to the Arbitrator on the strength of clause 20 of the agreement dated 10-1-1995 and the dispute were validly resolved under the relevant provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mental appeal is liable to be dismissed and the same is dismissed. 4. That takes us to the assessee s appeal. In the assessee s appeal the following two grounds have been raised : 1. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming the addition of Rs. 6,34,734/- on account of receipt of Versa car from Maruti Udyog Ltd. and the reasons assigned for doing so are wrong and contrary to the facts and circumstances of the case and provisions in law. 2. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in holding that the appellant is not eligible for deduction under section 80RR of the Income-tax Act, 1961 and the reasons assigned by him in this regard are contrary to the facts and circumstances of the case and provisions of the Income-tax Act, 1961 and rules made thereunder: 5. The assessee along with his son Shri Abhishek Bachchan had entered into an agreement dated 10-1-2005 with M/s. Maruti Udyog Ltd. (M/s. MUL), wherein they had agreed to render their services for sale promotion of the company s new product Versa Car . The consideration receivable for such services was agreed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt towards rendering the services as per the agreement which itself was entered into on 10-1-2005 with Maruti Udyog Ltd. Thus, the assessee has in all probability received the car during the year under consideration. In absence of contrary evidences brought on record by the assessee and the Department is justified in bringing the same as part of the professional income of the assessee in the year in question and we decline to interfere. 9. For the assessment year in question the assessee has filed his return of income on 31-10-2002 declaring a total income of Rs. 14,19,92,580/-. He filed a revised return of income on 31-10-2003 declaring the revised income at Rs. 8,11,45,120/-. The revised return was filed after claiming the deduction of estimated expenses of 30 per cent of the professional receipts. During the course of assessment proceedings for the earlier year, viz., 2001-02, the assessee was asked to support his claim of deduction of the estimated expenses claimed in the revised return. The claim was withdrawn for the assessment year 2001-02 vide letter dated 13-3-2004. In the assessment year 2001-02, the assessee did not furnish the prescribed form in Form No. 10H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced Form No. 10H required for the purpose of claiming deduction under section 80RR. 10. It was submitted before the learned CIT(A) that the assessee is an individual resident in India and is a well known artist. The income has been received from a person non-resident in India, viz. E-Entertainment Ltd. (EEL), a foreign company incorporated in British Virgin Islands. The income has been brought into India by the assessee or on his behalf in terms of the Tripartite Agreement with EEL and SILP which is in consonance with the provisions of section 80RR of the Act. It was contended on behalf of the assessee that the assessee need not go out of India and earn income from outside India as opined by the Assessing Officer. According to him, these were the requirements of section 80RR of the Act and that the assessee is entitled to claim exemption under section 80RR in exercise of his profession even in India. The exemption is available only to authors, playwrights, artists, musicians and actors and derives an income through the source outside India in convertible foreign exchange and brings such foreign exchange in the manner laid down by section 80RR of the Act. It was contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and elicit response from the participant. To make the programme interesting to the audience the appellant used his skill as an anchor but there was hardly any element of imaginative, creative or innovative skill required on the part of the appellant in the KBC programme. Though the appellant is one of the finest actors of Indian cinema but that would not change the role of the appellant in the KBC programme as an anchor. Since, the appellant was conducting the programme it was his responsibility to make the show interesting and to that extent he might have used his acting skill but the role expected of him in the KBC programme was that of an anchor or a host. Though the appellant was technically quite competent to make the show highly interesting for the public but he cannot be treated as an artist or an actor in his role of an anchor for the KBC programme. The contention of the appellant that in the KBC programme, he was engaged as an artist to give a public entertainment programme and his performance in the said show had been in that capacity does not hold much water. In this regard, one cannot categorise an anchor as an artist even if he is a film actor. A person can have du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ughal to British Raj ( ii ) Geography of India - Rivers, seas, coastal towns, weather ( iii ) Mahabharat Ramayan ( iv ) Constitution of India, e.g. who can participate in debate in Parliament, Solicitor General or Advocate General. It was pointed out that on this question, Shri Navathe won Rs. 1 crore prize in the said programme. ( v ) Indian Agriculture, horticulture and animal kingdom ( vi ) Mythology All these activities were designed to encourage successful artiste like Shri Amitabh Bachchan to project these activities to viewers outside India with a view to contributing to greater understanding of the country i.e., India and its culture abroad, though his Karishma , articulation and imagination. It is submitted by the assessee that the entire programme was relayed throughout the world. Not only were the above conditions satisfied by the programme. KBC by aforesaid attributes of the programme, but under clause 3.3 of the Agreement the assessee was also required under the tripartite agreement to render services abroad by attending six international functions as directed by M/s. EEL and by providing voiceovers for other international television channels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atic performance amusing capacity that stood out. In the case of Harsha Bhogle ( supra ), who is only a TV commentator for cricket matches and to make his programme interesting, he collects information about the city in which the match is being played and passes the same to the audience through the media of TV. He was neither professing any profession or art in which the conception and execution were governed by imagination and tact nor he was skilful performer or entertainer. But in the case of the assessee, who is predominantly engaged and has mastery in the field of creative activity or an art called as acting. The assessee is the biggest actor and he symbolizes the whole Indian Film Industry . The role of the assessee was not of a quiz-master. The programme was full of entertainment. The participant was a great celebrity; the show became highly dramatic, amusing and entertaining solely due to assessee s skills as an artist/actor s performance involved in it. Further the Assessing Officer was not justified in rejecting the assessee s contention that the assessee is entitled to deduction under section 80RR on the ground that the entire game show was shot in India in a studio i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the programme as set out by the Quiz Master. The submission made by the assessee, according to the learned Departmental Representative, does not entitle for any claim of relief under section 80RR of the Act. 15. We have carefully considered the rival submissions and have gone through the materials available on record as also the discussions in the two impugned orders. Before embarking upon the details, we feel it is better to start with section 80RR of the Act which gives the deduction as it exists after the amendment by the Finance Act, 2000, which reads as under : Where the gross total income of an individual resident in India, being an author, playwright, artist [musician, actor or sportsman (including an athlete)] includes any income derived by him in the exercise of his profession from the Government of a foreign State or any person not resident in India, there shall be allowed in computing the total income of the individual, a deduction from such income of an amount equal to ( i ) Sixty per cent of such income or an assessment year beginning on 1st day of April, 2001; ( ii ) Forty-five per cent of such income for an assessment year beginning on 1st day of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Legislature intended to give the benefit over the years can be better understood by getting into the legislative history of the provisions of section 80RR. For the first time by the Finance Act, 1969 (14 of 1969) the provisions of section 80RR was inserted. The provisions as inserted and the purpose of insertion as explained by the Board Circular 22 of 1969 are reproduced for the sake of understanding what went into the minds of the Legislature in granting the relief which was not there till the assessment year 1969-70. 80RR. Deduction in respect of professional income from foreign sources in certain cases. Where the gross total income of an individual resident in India, being an author, playwright, artist, musician or actor, includes any income derived by him in the exercise of his profession from the Government of a foreign State or any person not resident in India and such income is received in, or brought into, India by him or on his behalf in accordance with the Foreign Exchange Regulation Act, 1947 (7 of 1947), and any rules made thereunder, there shall be allowed a deduction from such income of an amount equal to twenty-five per cent of the income so received or bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the income so received or brought into India in computing his total income. This provision is designed to encourage authors, playwrights, artists, musicians and actors in our country to project their activities outside India with a view to contributing to greater understanding of our country and its culture abroad and also for augmenting our foreign exchange resources. With a view to encouraging our sportsmen and athletes to compete in international events, the Finance Act has amended section 80RR to include them in the category of persons entitled to the benefit of that section. 23.2 This amendment has come into force with effect from 1st April, 1980 and will accordingly apply in relation to the assessment year 1980-81 and subsequent years. Although there were amendments in section 80RR by the Finance Act, 1990, Finance (No. 2) Act, 1996, Finance Act, 1999, Finance Act, 2000, they were all in relation to quantum of deductions or in relation to the regulatory provisions relating to bringing convertible foreign exchange within certain periods into India with which we feel may not be relevant. There were questions raised whether the term artist would include photographers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector can be treated as an artist for the purposes of section 80RR of the Act. However, a producer would not be entitled to deduction under section 80RR of the Act, because he does not fall under any of the categories mentioned in the said section. 16. One of the grounds which the Assessing Officer has to make out is in regard to the difference between the phrase received in and brought into . According to the Assessing Officer the term brought into as used in the provision signifies a more active form when some one goes out of India and earns income and then in any channels brings in the results of his services. In contrast to this, the phrase received in shows a passive state where the person while still in India receives the money. Identical issue came up for consideration in the case of Nadeem Akhtar Saifee v. Jt. CIT [2005] 1 SOT 268 (Mum.), which the assessee was an individual who derived professional income from work of music direction of films. He claimed deduction under section 80RR on the royalty income. The question arose the royally income that was received thereafter for the usage of his copyrights by others would not partake the character of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KBC programme as an anchor. Since the assessee was conducting the programme, it was his responsibility to make the show interesting and to that extent he might have used his acting skill but the role expected of him in the KBC programme was that of an anchor or a host. The assessee had definitely hosted/anchored a quiz type programme/game show called KBC, which was associated with prize money. The programme was totally computerized game show and the assessee has used his skill as an anchor or an artist for the purpose of making the show itself interesting. In other words, the assessee claims that his role as an actor or an anchor in conducting the KBC programme cannot be ignored and the assessee claims that the income received from the non-resident for conducting the above programme as an anchor is till an income derived by him in exercise of his profession as an artist or as an actor. According to him it is very difficult to exclude his great qualities as an actor or an artist from making the programme a successful one as compared to programmes conducted on the same lines. After all the word actor or artist have no restrictive function as made out by the Department. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s opposed to a theorist. 5. A follower of a manual art; an artificier, mechanic, craftsman, artisan. 6. In this sense now influenced by 7 and applied to : One who practices a manual art in which there is much room for display of taste; one who makes his craft a fine art . III. One who pursues an art which has as its aim to please 7. One who cultivates one of the fine arts, in which the object is mainly to gratify the aesthetic emotions by perfection of execution, whether in creation or representation. 8. a. One skilled in music b. One skilled in dramatic art; hence extended to any public performer c. Now especially: One who practices the arts of design; one who seeks to express the beautiful in visible form. In this sense sometimes taken to include sculptors, engravers, and architects; but popularly, and in the most usual current acceptation of the word, restricted to: One who cultivates the art of painting as a profession. IV. One who practices artifice. 9. One who practices artifice, stratagem, or cunning contrivance; a schemer, contriver. 10. Usu. Preceded by a defining word: a person, chap , fellow also one devoted to or unusually profici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are made to the sections in order to widen the scope of the persons falling under the relevant section. In the case of Harsha Bhogle v. Assessing Officer [2003] 86 ITD 714 (Mum.) the Tribunal went into the objects and intention of section 80RR of the Act and it was observed in para 23 at page 737 that Harsha Bhogle, mainly performed on television and such activities were not making any contribution to the greater understanding of our country and its culture abroad although it was augmenting the foreign exchange resources of our country but that is not enough to claim tax deduction under section 80RR of the Act, whereas if one were to look into the contents of the KBC programme, the programme itself is so designed wherein actor is required to make the programme very interesting and imaginative and has definitely contributed greater understanding of our country and its culture abroad. The programme of KBC was not only watched in India but all over the globe and mainly dealt with Indian history, its geography, rich cultural heritages, its mythological stories, its constitution and legal system and its rich resources. Even on this account, the activities of Shri Amitabh Bachchan ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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