Cricket stars Sachin Tendulkar and Sunil Gavaskar have come under the scanner of Comptroller and Auditor General who has found that they have been given wrong benefit of income deduction as sportsmen, which has resulted in a short levy of over Rs 4.42 crore in tax.

The assessments for the relevant years from 2000-01 to 2002-03 in case of Tendulkar have been reopened and assessment for 2004-05 has been selected for scrutiny.

The report of the CAG, which was tabled in Parliament on Monday, faulted the Income Tax department for giving incorrect allowance of deduction of income for both the stars for their earnings not from the game but from endorsements and commentating.

In the case of Tendulkar, an audit scrutiny of assessment records revealed that aggregate deduction of Rs 8.89 crore was allowed on foreign currency remittance received by him on account of sports endorsement-- advertisements and publicity activities.

As the income was not derived from the profession of sportsman, allowance of deduction was not in order.

The CAG said the department's argument that the assessee had derived it in the capacity of artist was not acceptable as he had received it in the capacity of model which cannot be construed as an artist for this provision.

It was further observed that scrutiny assessment in March 2006 for assessment year 2003-04, deduction under section 80 RR that gives allowance for deduction from sportsmen's earnings was not allowed by the assessing officer on similar grounds.

Thus, the CAG said, incorrect allowance of deduction under section 80 RR for assessment years 1998-99 to 2002-03 and 2004-05 amounting to Rs 8.87 crore (Rs 88.7 million) resulted in short levy of Rs 3.62 crore (Rs 36.2 million).

The department in its reply in December last had said that the assessment in respect of 2000-01, 2001-02 and 2002-03 had been reopened and assessment for 2004-05 had been selected for scrutiny. The department said the audit observation would be kept in mind while finalising the assessment.

In the case of Tendulkar, it was found that the department had short levied a tax of Rs 3.62 crore (Rs 36.2 million), in the case Gavaskar, it was found that the short levy was to the tune of Rs 80.34 lakh on foreign remittances received in the capacity of commentator.

In the case of Tendulkar, the scrutiny of assessment also revealed that he was given incorrect allowances of benefit of indexation of transfer of bonds other than capital indexed bonds to the tune of Rs 23.38 lakh.