Little Master scores big in I-T tribunal dispute

MUMBAI: The

little master

, Sachin Tendulkar, has scored big in an appeal before the

Income-tax Appellate Tribunal

(ITAT), which adjudicates tax disputes. The ITAT upheld that income from sale of shares would be taxable as capital gains, and not as business income, in Tendulkar's hands.

I-T is assessed under various heads such as salary income, capital gains or income from business. Long term capital gains are exempt from tax whereas short term gains in some cases - such as on sale of equities or equity mutual funds - are taxed at a lower rate of 15%. As against this, income from business is taxed at a maximum basic rate of 30% plus surcharge and cess, but after allowing for expenses incurred in connection with such income. Tendulkar had opted to treat income earned on sale of shares as capital gains in his I-T return for 2009-10. However, the I-T officer sought to treat Rs 1.36 crore as income from business.

The I-T officer took this position as Tendulkar had availed the services of portfolio managers for making investments and paid them a fee of Rs 52 lakh. This, according to the I-T officer, "was not an ordinary thing for a normal investor." As Commissioner of I-T (Appeals) ruled in favour of the cricketer, the I-T department filed an appeal with the ITAT. The tribunal of members Mahavir Singh and Ashwani Taneja noted that the major income arising in Tendulkar's hands was from sports endorsements. The investment in shares was made from a long term point of view, mainly to earn dividend and maximise wealth from appreciation in value of shares. Besides, he had not borrowed money for the purpose.

Further, investment in shares via portfolio managers was only 4.86% of total investment portfolio. Tendulkar had always treated his investments as capital assets.