Kapil Dev Exempted From Income Tax On Rs. 1.5 Crore Granted By BCCI: ITAT

Post By 24law
March 31, 2025

Pranav B Prem

In a significant ruling, the Income Tax Appellate Tribunal (ITAT) has held that the one-time benefit of Rs. 1.5 crore granted to legendary cricketer Kapil Dev by the Board of Control for Cricket in India (BCCI) is exempt from income tax under Section 56(2)(vii) of the Income Tax Act, 1961. The ITAT bench, comprising Judicial Member Madhumita Roy and Accountant Member M. Balaganesh, observed that the amount received was in recognition of his services to Indian cricket and was eligible for exemption as BCCI is a trust or institution registered under Section 12AA of the Act.

Background of the Case

Kapil Dev, the 1983 World Cup-winning captain and one of India's greatest cricketers, had filed his income tax return for the assessment year 2013-14 on 30th September 2013, declaring taxable income of Rs. 4,66,28,830. Subsequently, a revised return was filed on 27th December 2013, declaring an income of Rs. 4,26,28,830. The revised return included the sum of Rs. 1.5 crore received from BCCI as a one-time benefit, which was offered to tax.

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The assessment was completed under Section 143(3) of the Act on 21st January 2016, where the income was further enhanced under the head of income from house property by Rs. 36,51,115, making the assessed income Rs. 4,62,79,940. Notably, no appeal was preferred by Kapil Dev against this assessment order at the time, as he accepted the addition made by the Assessing Officer (AO).

Subsequent Appeal and ITAT Ruling

Later, upon legal advice and in light of various tribunal decisions supporting the exemption of such receipts, Kapil Dev filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] with a delay of 1993 days. In his appeal, he contended that the Rs. 1.5 crore received from BCCI in recognition of his past services to Indian cricket was exempt under Section 56(2)(vii) of the Act. He also submitted an affidavit detailing the reasons for the delay in filing the appeal.

However, the CIT(A) dismissed the appeal solely on the grounds of delay, without considering the merits of the case. Subsequently, Kapil Dev approached the ITAT. The ITAT, while allowing the appeal, emphasized that tax should be collected in accordance with the law and observed: "Article 265 of the Constitution provides that no tax could be collected except by an authority of law. When a statute specifically provides a particular exemption of a particular receipt from tax, the said receipt cannot be brought to tax merely because the assessee had offered it erroneously in the return of income."

The tribunal further held: "Ultimately, income is to be determined in accordance with the provisions of the Act and revenue cannot take advantage of ignorance of the assessee while determining the taxable income."

Legal Interpretation and Analysis

The ITAT ruled that BCCI, being a trust registered under Section 12AA of the Income Tax Act, falls within the scope of Section 56(2)(vii), which exempts receipts from such entities when given in recognition of contributions or services. Since Kapil Dev’s grant from BCCI was purely in recognition of his illustrious career and contributions to cricket, it could not be treated as taxable income.

The tribunal also acknowledged the principle that taxpayers should not be penalized for errors in filing their returns when they are legally entitled to exemptions."It is a settled law that an assessee cannot be denied a statutory benefit merely on procedural grounds," the tribunal remarked.

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Key Takeaways from the Judgment

The Rs. 1.5 crore granted to Kapil Dev by BCCI as a one-time benefit is exempt under Section 56(2)(vii) of the Income Tax Act.

BCCI is registered under Section 12AA, making it an eligible entity under the exemption provisions.

The ITAT reaffirmed the constitutional principle that no tax can be collected unless authorized by law.

Ignorance of an assessee in offering taxable income cannot be exploited by revenue authorities if the statute explicitly provides for exemption.

Procedural delays in filing appeals should not be grounds to deny legitimate tax exemptions.