Assessee granted section 10(17A) exemption for BCCI award money after rectification under section 154

The ITAT Delhi allowed the assessee's appeal regarding rectification under section 154 for award money received from BCCI. The assessee had initially declared the BCCI award as taxable income from other sources, but later sought exemption under section 10(17A). The tribunal held that since the assessee was not a professional cricketer and received the award in capacity as a sportsman, the amount qualified for tax exemption per CBDT circular 2/2014 and circular 447. The tribunal treated the initial declaration as taxable income as a bonafide mistake, following precedent in Chanrkant Gulabrao Borde case, and set aside the CIT(A)'s order.

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Issues Involved:
1. Applicability of Section 154 of the Income Tax Act, 1961 for rectification of mistakes.
2. Exemption of award money received from BCCI under Section 10(17A) of the Income Tax Act, 1961.
3. The procedural fairness in the handling of the assessee's claim by the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)].
4. Legal precedents supporting the exemption of awards and rewards for sportsmen.

Issue-wise Detailed Analysis:

1. Applicability of Section 154 of the Income Tax Act, 1961 for rectification of mistakes:
The assessee filed an application under Section 154 of the Income Tax Act, 1961, seeking rectification of a bonafide mistake where a sum of Rs. 30 lacs received as an award from BCCI, which was exempted under Section 10(17A), was mistakenly declared as taxable income. The AO rejected the application, stating that the mistake was not apparent from the record within the scope of Section 154. The CIT(A) upheld this decision, asserting that the issue was debatable since the assessee initially declared the amount as taxable. However, the Tribunal noted that if an income is not taxable under the law, the AO is duty-bound to correct it, irrespective of how it was initially reported by the assessee.

2. Exemption of award money received from BCCI under Section 10(17A) of the Income Tax Act, 1961:
The Tribunal emphasized that the award money received by the assessee from BCCI was exempt under Section 10(17A) as per CBDT Circular No. 2/2014. The Tribunal remitted the matter back to the AO to re-examine the claim in light of the provisions of law and the CBDT Circular, which is binding on Revenue Authorities. Upon re-examination, the AO again rejected the claim, which led to the present appeal.

3. The procedural fairness in the handling of the assessee's claim by the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)]:
The assessee argued that the AO did not provide a proper opportunity to present his case during the re-examination following the Tribunal's earlier order. The Tribunal found merit in this contention, noting that procedural fairness was not adequately observed by the AO.

4. Legal precedents supporting the exemption of awards and rewards for sportsmen:
The assessee cited several legal precedents to support his claim for exemption:
- CIT vs. JG Gopinath (231 ITR 229): The Madras High Court held that no specific mode of approval is required for such exemptions.
- GR Vishwanath vs. ITO (29 ITD 142): The ITAT Bangalore held that amounts given to a non-professional cricketer as a token of appreciation are not taxable.
- ACIT vs. Kapil Dev (157 TTJ 886): The ITAT Delhi held that award money is exempt as per CBDT Circular No. 447.
- Abhinav Bindra vs. DCIT (28 ITR (T) 376): The ITAT Delhi held that awards to non-professional sportsmen are exempt.
- Mr. Chanrkant Gulabrao Borde vs. ITO (ITA No. 104/Pun/2018): The ITAT Pune held that awards received by non-professional sportsmen are exempt from tax.

Conclusion:
The Tribunal concluded that the assessee is not a professional cricketer and the award received was in the capacity of a sportsman, thus exempt under Section 10(17A) as per CBDT Circular No. 447. The initial declaration of the amount as taxable was a bonafide mistake. The Tribunal allowed the appeal, reversing the order of the CIT(A), and directed that the award amount be treated as exempt income.

Order:
The appeal of the assessee is allowed. The order was pronounced in the Open Court on 14.08.2024.

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