Deduction under section 80RR to 'Actor' Tendulkar!

Why such a hue and cry for allowing deduction under section 80RR to 'Actor' Tendulkar?
CA. Siddharth Ranjan

Source: http://articles.timesofindia.indiatimes.com/2011-05-23/off-the-field/29573690_1_deductions-cricketer-taxable-income

MUMBAI: An Income Tax tribunal has allowed ace cricketer Sachin Tendulkar to claim deductions from his taxable income pertaining to earnings from modeling in advertisements.
The two-member tribunal, which gave its order on May 20, 2011, upheld the cricket legend's argument that he was an 'actor' while appearing in commercials.
Asha Vijayaraghavan, judicial member of the tribunal, and RK Panda, accountant member, gave the ruling on four appeals filed by the batting maestro against the verdict of chief commissioner of Income Tax (Appeals) for assessment years 2001-02 to 2004-2005.

Facts of the case:
Tendulkar had claimed deduction u/s 80 RR amounting to Rs 2,08,59,707 on account of receipt of Rs 5,92,31,211. He claimed deductions under Section 80 RR of I-T Act, on the ground that he was an 'actor' while appearing in advertisements.
The CIT (A) held that he was not an actor as cricket was his principal profession and disallowed this deduction.
Tendulkar contested this and submitted that the CIT (A) had wrongly held that he was not an actor as cricket was his principal profession.
The tribunal saw the reasonableness behind the claim of the batting maestro and opined:
"No doubt, being a successful cricketer, it has added to his brand value as a model. But the fact remains that the assessee has to use his own skills, imagination and creativity. Every person, or for that matter every sportsman, do not possess that degree of talent or skill or creativity and face the lights and camera etc."
"We are of the considered opinion that the income received by the assessee from modelling and appearing in TV commercials and similar activities can be termed as income derived from the profession of an artist."
"We accordingly hold that the amount of Rs 5,92,31,211 received by the assessee amounts to income derived by the assessee in the exercise of his profession as an artist and therefore entitled to deduction u/s 80RR of the Act."
The tribunal noted that Tendulkar had received an amount of Rs 19,92,27,085 as gross receipts from sports sponsorship and advertisements, which included an amount of Rs 5,92,31,211 received in convertible foreign exchange from ESPN Star Sports, Pepsico Inc and VISA.

Now let’s look at the statutory provisions to better appreciate this decision:
SECTION 80RR  PROFESSIONAL INCOME FROM FOREIGN SOURCES IN CERTAIN CASES
Under Section 80RR, a resident individual, being an author, playwright, artist, musician or actor who derives income, in exercise of his profession, from foreign sources and receives such income in India and brings it into the country in foreign exchange in accordance with the Foreign Exchange Regulation Act, 1947, is entitled to deduct a certain percentage of the income so received or brought, in the computation of his total income.
Source: http://law.incometaxindia.gov.in/Directtaxlaws/act2005/sec_080rr.htm
(Alas the government site has been compromised after handing over the management of the contents to Taxmann and hence we can not view and refer to the up to date Act!)

Finance Act 2000 did away with the higher level of deduction (75%) and replaced that with the following limits:
Quantum of deduction................... For AY beginning on 1 April
Sixty percent.............................2001
Forty-five percent........................2002
thirty percent............................2003
Fifteen percent...........................2004

Rationale behind such concessions:
It’s evident; it encouraged such income earners to disclose those incomes and bring those incomes into India in convertible foreign currency.

Last words/Even if Tendulkar is not acclaimed as a great actor:
The intent of the law makers was not be partial to actors. The real motive was to channel foreign currencies into the country so there is no gainsaying that how can such concessions be granted to a person who is primarily a cricketer. So this verdict has set right the anomaly created by the decision of the CIT (A) and should be welcomed!