Parthiv Patel's I-T case sent back to assessing officer

A case relating to the income tax of cricketer Parthiv Patel has an interesting legal issue. The issue involved is whether Patel can claim income tax deduction on his expenses for the assessment years 2009-10 and 2012-13. 

While the assessing officer (AO) did not think so, the commissioner of appeal (income tax) did not agree to the officer’s arguments. However, the Income Tax Appellate Tribunal (ITAT) found that both — AO and CIT— did not answer the moot question in the case— whether expenses shown to be incurred by Patel are in proportion with his professional income. As such, he referred the case back to the assessing officer to examine it in the light of this point. 

Explaining the case, Naveen Wadhwa of Taxmann said various sorts of deductions are allowed under the Income Tax Act under section 32 to 36. Those not coming under these sections could be claimed under section 37 (1) as general deductions. However, to claim these deductions, one has to prove that the expenses incurred and the income earned are in proportion, he said. Patel had claimed deduction of Rs 31,73,928 in the 2009-10 assessment year and Rs 45,88,255 in the 2012-13 assessment year against earning of income from playing cricket. AO pleaded that Patel received various incomes from endorsement contract executed with BCCI, GCA, as declared under the head ‘income from business & profession’. He sought to clarify that the expenditure in question was to overlook his personal and professional aspects like conveyancing, legal matters, liaising and physical fitness in order to remain professionally fit to play cricket.  

AO declined to accept the same on the ground that since the assessee had been deriving match fee and retainership from various cricket bodies, they did not involve any business or professional activity. 

He further said Patel’s cricket playing was not akin to a trading or manufacturing or any service activity. As such, AO concluded that the expenditure in question is not attributable to any business or profession so as to be termed as business expenditure allowable under the provisions of the Act. However, CIT (A) did not find AO’s arguments logical. He said the findings of the AO that expenditure is not allowable, is not logical for the simple reason that any expenditure incurred for earning that income is an allowable expenditure according to the provision of the Income Tax Act. He said Patel is a well known cricketer and had to incur some expenditure to earn his income. Playing cricket is the profession of the appellant and TDS was also deducted considering the receipts of the appellant as professional receipts, he said. 

However, he also disallowed certain expenditures incurred by Patel — Rs 81,127 in the year 2009-10 — as those were incurred for personal purposes. ITAT found that neither AO nor CIT (A) has sought to establish a sync between assessees professional income from playing cricket along with his expenditure.