MUMBAI: Sachin Tendulkar has emerged as the man of the match in a tax dispute. The Income-Tax Appellate Tribunal (ITAT) has ordered deletion of notional rental income of around Rs 1.3 lakh that would have otherwise been taxable in the cricketer’s hands. The ITAT bench took umbrage that the I-T department had doubted the cricketer’s stand of undertaking reasonable efforts in finding a tenant.

Under the I-T Act, if an individual owns more than one house, he can treat any one of his residential properties as self-occupied and exempt from tax. The other properties, even if not given out on rent, are assumed to have been let out. Notional rent, which is the rent that such vacant property would ordinarily fetch, has to be offered for tax.

Tendulkar owned two flats in Pune, a flat in Sapphire Park and another in Treasure Park costing Rs 60.6 lakh and 82.8 lakh, respectively. The flat in the latter building was let out on rent for nine months at Rs 15,000 per month and the rent was offered to tax. As the cricketer was unable to find a suitable tenant for the second flat, he declared a nil income.

The I-T officer rejected the cricketer’s stand that he had every intention of letting out the second flat and had taken steps to find a tenant. In addition, the I-T officer also held the rental income of the let out flat to be very low. He estimated the deemed rental income to be 6% of the value of both flats, which worked out to Rs 8.6 lakh.

This sum was taxable in Tendulkar’s hands. Disputing this order, the cricketer approached the commissioner of income-tax (appeals) who upheld the I-T officer’s action to charge rental income from the vacant flat. The appellate commissioner was not satisfied with the efforts undertaken by the cricketer to find a tenant.

He observed that while copies of “purported” letters written on plain paper that were sent to the builder for finding a tenant were produced, there was no evidence that these letters had been dispatched. Further, no response from the builder to such letters was available. However, based on the rental values shown in the property portal Magicbricks , the appellate commissioner restricted the notional rental income for the vacant flat to Rs 1.3 lakh.

In its order, the ITAT has come down heavily on the I-T department for doubting the master blaster’s stand that reasonable efforts were made by him to find a tenant. The ITAT pointed out that Tendulkar was a renowned cricketer who had declared an income of Rs 61.2 crore in his I-T returns for the financial year 2011-12, as opposed to a mere Rs. 1.3 lakh, which was the disputed amount.

“When the same builder has helped him to find a tenant for another flat, why his letters to the same builder to help him identify one more tenant can be considered fake, defies logic” stated the ITAT. Expectations of the I-T authorities that the cricketer should have approached real estate agents or maintained a dispatch register for the letters and got stamped receipts from the builder acknowledging these letters were termed by the ITAT as an “equally quixotic proposition”.

