Section 4 of the Income-tax Act, 1961 - Income TAX - Charge of - Clarification as to Whether Awards Received by A Sportman, WHO Is NOT A Professional, Will BE Liable to TAX in HIS Hand When It Would NOT BE in Nature of Income
Circular No. 447 was issued by the Central Board of Direct Taxes on 22 January 1986. Its subject is Section 4 of the Income-tax Act, 1961 - Income TAX - Charge of - Clarification as to Whether Awards Received by A Sportman, WHO Is NOT A Professional, Will BE Liable to TAX in HIS Hand When It Would NOT BE in Nature of Income.
This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.
Distinguishes professional from amateur sportsmen for taxing awards. Where the sportsman is a professional, an award received by him is a benefit received in the exercise of his profession and is taxable. Where he is not a professional, the award is in the nature of a gift or personal testimonial and, not being income, is not taxable in his hands. Whether a sportsman is a professional is a question of fact to be decided by the Assessing Officer on the facts and circumstances of each case. Where the receipt is in the nature of a gift, chargeability to gift-tax is to be considered separately.
The Board had occasion to consider whether an award received by a sportsman who is not a professional is taxable in his hands.
| Under the 1961 Act | Now |
|---|---|
| s.4 | s.4 |
SECTION 4 OF THE INCOME-TAX ACT, 1961 - INCOME TAX - CHARGE OF - CLARIFICATION AS TO WHETHER AWARDS RECEIVED BY A SPORTMAN, WHO IS NOT A PROFESSIONAL, WILL BE LIABLE TO TAX IN HIS HAND WHEN IT WOULD NOT BE IN NATURE OF INCOME
CIRCULAR NO. 447 [F.NO.199/1/86-IT(A-I)], DATED 22-1-1986
[SUPERSEDED BY CIRCULAR NO. 2/2014 [F.NO.199/01/2014-ITA.I], DATED 20-1-2014]
33. Whether award received by an amateur sportsman is taxable as his income in his hands
1. The Central Board of Direct Taxes had occasion to consider the question whether the award received by a sportsman, who is not a professional, will be taxable in his hands or not. In the case of a sportsman, who is a professional, the award received by him will be in the nature of a benefit in exercise of his profession and, therefore, will be liable to tax under the provisions of the Income-tax Act. However, in the case of a non-professional, the award received by him will be in the nature of a gift and/or personal testimonial. In view of this, it is clarified, that such awards in the case of a sportsman, who is not a professional, will not be liable to tax in his hands as it would not be in the nature of income. The question whether a sportsman is a professional or not will depend upon the facts and circumstances of each case to be decided by the Assessing Officer.
2. In cases where such receipt is in the nature of gift, the chargeability to gift-tax will be considered separately.
In an assessment where a sportsman's award or purse is brought to tax and his professional status is in issue.
It mentions. Circular No. 2/2014
Source: the Income Tax Department’s own published text — its page for this instrument.