Controversy over tax exemption of Sachin and Sunny

May 15: Dark clouds still loom over the cricket in India but now countryâ??s cricket legends find themselves in another controversy. Sachin Tendulkar and Sunil Gavaskar are in the middle of a fresh controversy of tax exemptions.

In a report tabled in Parliament on Monday, the Comptroller and Auditor General has pulled up the income tax department for illegal income tax exemption of Rs 4.42 crore, together to Sachin Tendulkar and Sunil Gavaskar.

As per the reports Tendulkarâ??s foreign exchange earnings from brand endorsements for financial year 1998-99 to 2004-05 were found to be Rs 16.33 crore.

Sachin was granted income tax exemption under Section 80 RR of the Income Tax Act on these remittances, ranging between 15 to 75 per cent of the total amount, resulting in a total exemption of Rs 8.87 crore. Had these exemptions not been granted, Tendulkar would have had to pay Rs 3.62 crore more in tax, including interest.

"The departmentâ??s argument that the assessee had derived it in the capacity of an artist was not acceptable as the assessee had received this income in the capacity of a model, which cannot be construed as an artist for purpose of this section," the report stated.

CAG clarified Sachin was not entitled to such exemptions because he earned the money as a â??modelâ??, not as a cricketer, which allowed the exemptions.

On the other hand Gavaskar didnâ??t paid tax with an exemption of Rs 80.34 lakh, because his income was also wrongly placed by I-T department under section 80RR. The exemptions were granted for foreign remittances received as a commentator between 2000 and 2003, which the CAG said he was not entitled to.

Section 80RR states as, a portion of the income derived by authors, playwrights, artists, musicians, actors or sportsmen from a foreign source is treated as tax-free if it is earned in the exercise of their profession. Evidently both of them donâ??t become licensed for the concessions.

Sachin earned Rs 2.82 crore in 1998-99, Rs 2.06 crore in 1999-2000, Rs 92.86 lakh in 2000-01, Rs 5.59 crore in 2001-02, 2.37 crore in 2002-03 and Rs 2.55 crore in 2004-05 in foreign exchange through endorsement deals.

Meanwhile IT department has â??reopenedâ?? Tendulkarâ??s assessments for three years beginning 2000-01, while that of 2004-05 has been selected for scrutiny. The CAGâ??s observations would be â??kept in mindâ?? while finalizing the assessments.

Similarly, master batsman Sunil Gavaskarâ??s accounts will also be scrutinized once again to calculate the amount he owes to exchequer as tax.