An income tax case relating to Parthiv Patel took an interesting turn after assessing officers (AO) were asked to look into the matter concerning the returns claimed by the cricketer. Patel had claimed he had incurred certain expenses during assessment years 2009-10 and 2012-13.
The Income Tax Appellate Tribunal (ITAT) has received no clarity from the assessing officers or the commissioner of appeal, who remain divided on the issue. The moot question in the case is whether Patel's expenses are related to the income earned from his profession as a sportsperson. The case has been sent back to the assessing officers for further examination.
Patel had claimed return for a deduction of Rs 31,73,928 for the 2009-10 assessment year, while for the 2012-13 period he had claimed Rs 45,88,255.
According to the AO, Patel's income sources included endorsement contracts with the BCCI and GCA. These were declared to as 'income from business & profession'. It was, however, clarified that personal expenses including the cost incurred in conveyance, legal procedure and maintaining physical fitness of the sportsperson were beyond the purview of assessment.
The AO further contended the claim saying that the assessee had been deriving match fee and retainership from various cricket bodies. These did not involve any business or professional activity, said the AO while adding that playing cricket was not like a trading, manufacturing or service activity. Such expenses, thus, cannot be termed as business expenditure, it was concluded.
CIT, however, termed the AO's findings "illogical" as any expenditure incurred for earning an income is an allowable expenditure as per the provisions of the Income Tax Act. It argued further that Patel is a well-known cricketer and tax deductions were made on receipts that were made to him as a cricket player.