ITAT Exempts Tax On ₹1.5 Crore Granted By BCCI To Kapil Dev In Recognition Of His Services To Cricket

Noting that the cricketer had offered the amount for tax under ignorance, bench of M. Balaganesh (Accountant Member) and MS Madhumita Roy (Judicial Member) said,

“It is trite law that right amount of tax should be collected from the right person in accordance with law. Article 265 of the Constitution provides that no tax could be collected except by an authority of law. When a statute specifically provides a particular exemption of a particular receipt from tax, the said receipt cannot be brought to tax merely because the assessee had offered erroneously in the return of income.”

The exemption has been allowed under Section 56(2)(vii) of the Income Tax Act, 1961 which deals with gifts received by an individual or entity.

Kapil Dev had filed his return of income for the assessment year 2013-14 declaring taxable income of Rs 4,66,28,830/-. He then filed a revised return declaring taxable income of Rs 4,26,28,830/- and the same was duly processed. This included the Rs. 1.5 crore benefit.

However, later, he was advised that the one-time benefit is exempt under section 56(2)(vii) of the Income Tax Act.

Though he approached the Commissioner of Income Tax (Appeals) seeking exemption of tax on the above income, his appeal came to be dismissed as being time-barred.

Before ITAT too, the Department opposed his case, stating that any valid claim could be entertained only when there is a claim in the return filed by the assessee.

The Tribunal noted that Kapil Dev had indeed filed an affidavit explaining the reasons for the delay and had shown 'sufficient cause'.

“Ultimately, income is to be determined in accordance with the provisions of the Act and revenue cannot take advantage of ignorance of the assessee while determining the taxable income,” it added and granted him relief.