Abhinav Bindra strikes gold in I-T appeal as well; being an amateur sportsperson awards received by him not taxable

IT : Awards, rewards, prizes received by amateur sportsperson are not "income" as per CBDT Circular No.447 and hence free from income-tax. These cannot be taxed by invoking the provisions of section 56(2)(v)/(vi)/(vii)

Facts

• In 2008, Assessee- Shri Abhinav Bindra became the first person in the history of independent India to have won the Olympic Gold Medal.

• He was given awards/rewards/prizes mainly by various governments, local authorities, trusts and institutions and of course some corporate/individuals.

• Assessee claimed that he was an amateur sportsperson and hence gifts/awards and prizes won by him are not income in terms of CBDT Circular No.447 dated 22-1-1986.

• AO held that Circular No.447 was inapplicable in view of amendment in section 10(17A) and insertion of section 56(2)(v). However, he allowed exemption in respect of rewards/prizes/gifts from the government, local authorities and trusts/funds recognized under section 10(23C) or registered under section 12AA. He taxed gifts etc received from others-eg corporates, individuals etc by invoking section 56(2)(v).

• CIT(A) enhanced income by adding awards etc received from various governments.

• Aggrieved by CIT(A)'s order, assessee filed instant appeal before ITAT.

Held

• Revenue had not controverted the assessee's contention that he was as amateur sportsman and not a professional sportsman.

• Even after the amendment in section 10(17A) and the insertion of section 56(2)(v), CBDT Circular No.447 has not been withdrawn. The fact that it has not been withdrawn was not controverted.

• As per Circular No.447, in the case of a non-professional sportsman, the award received by him will be in the nature of a gift and/or personal testimonial which will not be liable to tax in his hands as it would not be in the nature of income.

• Question of exemption under section 10(17A) and distinction made by CIT(A) between "award" and "reward" is relevant only when receipt in question is income.

• Also question of taxing a receipt under section 56(2)(v) as income arises only when it has the character of income.

• As Circular No.447 excludes the awards etc received by amateur sportsperson from ambit of "income" in section 2(24), question of considering exemption under section 10(17A) or taxability under section 56(2)(v) does not arise.

• In the result, assessee's appeal allowed.

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