2006 (3) TMI 547 - AT - Income Tax

ITAT Ruling: Exemption for Cricket Mementos Distribution Upheld

Baroda Cricket Association Versus Income-tax Officer, Ward 5(1) Baroda

Baroda Cricket Association Versus Income-tax Officer, Ward 5(1) Baroda - [2006] 8 SOT 735 (AHD.) Issues:Eligibility for exemption of expenditure on distribution of mementos by an assessee-Association for the promotion of cricket.Analysis:The judgment by the Appellate Tribunal ITAT Ahmedabad dealt with the issue of whether an expenditure of Rs. 2.40 lakhs on distributing mementos by an assessee-Association for the promotion of cricket qualified for exemption. The Assessing Officer and the Commissioner of Income-tax (Appeals) had disallowed the expenditure, stating it did not fulfill the charitable purpose criteria under section 11(1)(a) of the Income-tax Act, 1961. The assessee argued that the expenditure was a proper charge to the Profit and Loss Account and should be considered as an expense incurred in the regular course of business. The Tribunal considered whether the distribution of mementos was in line with the Association's objective of promoting cricket, which is considered a charitable purpose. The Tribunal examined the Memorandum of Association, which clearly stated the promotion of cricket as one of the objectives. The Tribunal noted that the mementos were given as a part of the Diamond Jubilee celebration to acknowledge the members' contributions towards the association's cause. It was concluded that there was a direct link between the distribution of mementos and the promotion of cricket, thereby allowing the assessee's claim for exemption. The judgment emphasized the importance of maintaining a sense of proportion in such cases and highlighted that the benefit received by members through mementos was only incidental and not the primary purpose. The Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and allowed the assessee's appeal, ruling in favor of the assessee-Association.