2024 (9) TMI 212 - AT - Income Tax

Tribunal Upholds Non-Profit Status for Sports Org, Dismisses Revenue's Appeal; Exemption Under Sec. 11/12 Confirmed.

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision that the assessee's activities, related to sports and supported by ... Exemption u/s 11 - activities of assessee as hit by proviso to Sec.2(15) or not? - assessee is an organization registered under the Societies Registration Act, 1860 and is also registered u/s 12A, an apex sports body in India representing the country and is a member of International Olympic Association. HELD THAT:- We are of the considered view that there is apparent error in the perception of comparing the activities of BCCI and that of the present assessee. The working model of BCCI cannot at all be equated with the present assessee which is representing the country under the aegis of the Government in amateur international sports events. CIT(A) has specifically observed on facts of the case that in regard to participation in Rio Olympics games in 2016 the expenditure incurred is more than the sponsorship amounts received. The sponsorship agreements are not long-term contracts and there was no bidding process. Arranging these sponsorship contracts is in itself a great task for the assessee as the sponsors are paying out of their profits for motivating the assessee and the sportspersons of the country in participating in international events. Neither the sponsor nor the assessee can be attributed any profit motive from the outcome of these sponsorship agreements. No error in the findings of the ld.CIT(A) and there was no requirement of setting aside the matter to the file of the AO. The judgement of the Hon’ble Supreme Court in the case of ACIT vs. Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] was, thus, not applicable to the assessee. Decided against revenue. Issues:1. Interpretation of proviso to Sec.2(15) of the Income Tax Act.2. Eligibility for exemption u/s 11/12 of the Act.3. Comparison of activities of different organizations.4. Application of Hon'ble Supreme Court judgment in ACIT vs. Ahmedabad Urban Development Authority.5. Assessment of income and deduction u/s 11 of the Act.Analysis:1. The appeal involved a dispute regarding the interpretation of the proviso to Sec.2(15) of the Income Tax Act, concerning the activities of the assessee organization. The Revenue contended that the activities fell under the proviso and should not be eligible for exemption u/s 11/12 of the Act.2. The assessee, registered under the Societies Registration Act and u/s 12A of the Act, claimed exemption u/s 11/12 for its activities related to sports under the Ministry of Youth Affairs and Sports, Government of India, and the International Olympic Association. The Revenue argued that the sponsorship agreements constituted a business venture, exceeding 20% of gross receipts, and thus, the assessee was not eligible for the exemption.3. The CIT(A) considered previous decisions and observed that the activities of the assessee were distinct from those of other organizations like BCCI. The CIT(A) noted that the sponsorship agreements were not profit-driven, with sponsors paying out of their profits to support the participation of the assessee in international events. The Tribunal concurred with the CIT(A)'s findings, emphasizing the non-profit nature of the sponsorship agreements.4. The Revenue argued that the CIT(A) should have considered the Hon'ble Supreme Court judgment in ACIT vs. Ahmedabad Urban Development Authority. However, the Tribunal found that the judgment was not applicable to the present case, as the activities and motives of the assessee were different from those considered in the Supreme Court case.5. Ultimately, the Tribunal dismissed the Revenue's appeal, concluding that the grounds lacked substance. The Tribunal upheld the CIT(A)'s decision, emphasizing the non-profit motive behind the sponsorship agreements and the distinct nature of the assessee's activities compared to other organizations.