2006 (11) TMI 360 - AT - Income Tax

ITAT Rules on Income Diversion, Versa Car Inclusion, and Section 80RR Deduction Eligibility for Artistic Work.

The ITAT determined that only 30% of the Rs. 50.92 crores received from EEL should be included in the assessee's income, acknowledging the valid diversion ... Grant relief for Deduction u/s 80RR - Income by way of performing his skills as an artist or as an actor - addition on receipt of Versa car from Maruti Udyog Ltd. - services for sale promotion of the company’s new product ‘Versa Car’ - HELD THAT:- The assessee in this case has not provided any particulars when exactly the car was delivered. Therefore, the Assessing Officer has relied on the insurance certificate to bring the value of the car at Rs. 6,34,734 as part of his professional income. In our view the Assessing Officer is perfectly justified in bringing the same to tax as his professional income in the year in question as the assessee has not acknowledged the receipt 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. 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 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 are clearly distinguishable to that of a television presenter and T.V. commentator of Cricket matches as was held in the case of Harsha Bhogle. The assessee has produced before us some of the literatures on KBC programme which we have already reproduced elsewhere in our order. We are, therefore, of the opinion that the assessee is an artist while he received the disputed income within the meaning of section 80RR of the Act. We, therefore, direct the Assessing Officer to grant relief of deduction u/s 80RR of the Act. In the result, the appeal filed by the assessee is partly allowed while the appeal filed by the revenue is dismissed. Issues Involved:1. Taxability of the payment received by the assessee from E-Entertainment Limited (EEL).2. Inclusion of the value of a Versa car received from Maruti Udyog Ltd. in the assessee's income.3. Eligibility for deduction under section 80RR of the Income-tax Act, 1961.Detailed Analysis:1. Taxability of the Payment Received from E-Entertainment Limited (EEL):The assessee, a celebrity artist, received Rs. 50.92 crores from E-Entertainment Limited (EEL) for anchoring a television show 'Kaun Banega Crorepati' (KBC). The assessee claimed that 70% of this amount was transferred to M/s. Amitabh Bachchan Corporation (M/s. ABCL) based on agreements from 1995 and an Arbitration Award from 2002. The Assessing Officer rejected this claim and taxed the entire amount. However, the Commissioner of Income-tax (Appeals) [CIT(A)] and the Income-tax Appellate Tribunal (ITAT) found that:- The agreements from 1995 were genuine.- The arbitration resolved the dispute validly under the Arbitration Act, 1940.- The appellant's obligation towards ABCL was not negated by the tripartite agreement with EEL and Star India Ltd.- The diversion of income to ABCL was valid before its accrual in the appellant's hands.- The department had previously accepted similar agreements with other entities like ICICI, Pepsi, and Luxor.Thus, only 30% of the Rs. 50.92 crores was to be included in the assessee's income for the assessment year 2002-03.2. Inclusion of the Value of a Versa Car Received from Maruti Udyog Ltd.:The assessee and his son entered into an agreement with Maruti Udyog Ltd. (MUL) for promoting the Versa car, receiving Rs. 4.02 crores and one Versa car. The assessee did not include the car's value in his income for the assessment year 2002-03, claiming it was registered in the next year. The Assessing Officer, finding no evidence of the actual receipt date, included the car's value (Rs. 6,34,734) in the assessee's professional income for 2002-03. The ITAT upheld this, stating that the car was likely received during the year in question and the assessee failed to provide contrary evidence.3. Eligibility for Deduction under Section 80RR:The assessee claimed a deduction under section 80RR for income received from EEL. The Assessing Officer denied the claim, arguing that the income was earned in India and the assessee did not go abroad to earn it, referencing the case of Harsha Bhogle. The CIT(A) upheld this view, stating the assessee's role in KBC was as an anchor, not an artist or actor, which section 80RR requires.However, the ITAT found that:- The assessee's role in KBC involved significant artistic skills, making the program successful.- The definitions of 'artist' in various dictionaries and Board circulars include skilled performers like the assessee.- The KBC program contributed to the understanding of Indian culture abroad, unlike Harsha Bhogle's commentary work.Thus, the ITAT concluded that the assessee was indeed an artist under section 80RR and directed the Assessing Officer to grant the deduction.Conclusion:The ITAT ruled that:- Only 30% of the Rs. 50.92 crores received from EEL should be included in the assessee's income.- The value of the Versa car should be included in the assessee's income for the year 2002-03.- The assessee is entitled to a deduction under section 80RR for the income received from EEL.