TaxTMI 
TaxTMI 
2012 (8) TMI 369
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....(City as well as Suburbs) and Navi Mumbai. It conducts various National & International cricket tournaments, First class and local tournaments for men as well as women. Various sports associations / clubs which participate in cricket tournaments organized in Mumbai are the Association's members. (3) It was the intention of the Association to promote / develop a world-class cricket training and practice facility where top-level cricketers would be facilitated in improving the technical aspects of the game. Such facilities were available internationally, but nowhere in India till that date. Creation of such facilities however required significant investment of funds. The proposal for putting up an Indoor Cricket School was first mooted in the 90's and a space earmarked for the same at the Association's premises at Churchgate. However, due to non-availability of finance, the project which was started had to be abandoned after proceeding up to plinth level. (4) It was during this time that the Appellant Association, as a means to raise funds for construction of Indoor Cricket Academy, let out, vacant land earmarked for the construction of an Indoor Cricket School, and....
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....nominal sum of Rs. 10,000 per Associate. The Association has already made nomination for nearly 800 Associates, who have been admitted to the ICA Facility in the year in which facilities became operational i.e. from 11th April 2009. (9) Based on the proposal forwarded to the office of the Respondent by Addl. DIT (E), Range -1, a show cause notice for withdrawal of registration u/s 12A was served in person to legal representative of the appellant on 21-12-2010. The DIT, vide order dated 31.12.2010, cancelled the registration, as per the provisions of section 12AA(3) of the Act, holding- "Assessee has stated that the object of the assessee is charitable and its activities are also charitable however when the activities planned in the concession agreement entered between Mumbai Cricket Association and M/s Shirke Infrastructure dated 12.12.2005 are analyzed the picture is different. In the said agreement it is mentioned that M/s Shirke Infrastructure will be constructing indoor cricket academy and facilities centre. The plan for the said project has been prepared at the advise of the MCA. It is observed that what is referred as facility centre is referred as MCA Recreati....
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....ity. The concept of associate membership at such a huge price tag itself speak commerciality being involved in it rather than a charitable cause being undertaken by the assessee. Further M/s Shirke Infrastructure to receive the amount of fee so collected from the first 3000 associate member and if that itself is taken into account, the amount of profit being shared by M/s. Shirke Infrastructure under the agreement clearly spells out the commerciality and transaction the assessee being involved in it. 7. It has been argued by the assessee that even if the registration is cancelled it will be prospective. This argument is also not acceptable. Normally return of income is filed after completion of the Thus if it is presumed that this office doesn't have authority to confer registration for the purpose of the activities which had already taken place, then the income tax department doesn't have any authority to cancel. This is a far-fetched argument. No registration can be a permanent feature even if the activities are not genuine. It is obvious that the department has power to cancel the registration for the year when carried out in accordance with the objects of the tru....
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....n agreement with M/s Shirke Infrastructure, MCA has actually sub-leased its rights to M/s Shirke Infrastructure. This is violation of the agreement clause of MMRDA. It is also observed no stamp duty has been paid on the said concession agreement between MCA and M/s. Shirke Infrastructure. This is violation of stamp act. If no organization which is violating the government act is allowed exemption by allowing registration, it will be against public policy. 3. The issue before us is whether the cancellation of registration was in accordance with law. 4. In the course of hearing before us, the Authorised Representative submitted that the assessee, Mumbai Cricket Association (MCA), vide a "Concession Agreement" dated 12-12-2005, granted rights to construct Indoor Cricket Academy (ICA) and ICA Facility, to M/s Shirke Infrastructure (SI), according to which SI shall construct ICA within two years and hand over the ICA project to MCA. SI shall also construct the ICA Facilities, on the vacant land and shall utilise the same for further 15 years, and at the end of 17 years (2 years and 15 years), SI shall hand over the Facilities to MCA. According to the agreement, SI shall pay to MCA....
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.... the entire project has been shown in the books and on the website of SI. The AR thus, pleaded that the conception of the idea to develop ICA Facilities were to utilise the vacant lands and to generate funds for the construction and sustenance of MCA and ICA for the future time to come. 6. The AR objecting to the cancellation of registration, vehemently submitted that, a future take over of the facilities should not be allowed to be the reason for cancellation of Registration, now, and specially, from the date of signing of the agreement. He reiterated the submissions made before the DIT that - (1) The Appellant, Mumbai Cricket Association (Association) is registered under 7 Societies Registration Act 1860 and Bombay Public Trust Act, 1950 under reg. No.BOM/300/74 GBBSD dtd. 21st October 1974 and No. F 3451- (Mum) dtd. 30th November 1974 respectively. The Association was registered u/s 12A of the Income Tax Act, 1961 w.e.f. 14-03-1975. (2) The Association is a public charitable trust and is engaged in the activity of promoting and regulating the game of Cricket in Mumbai. It also has jurisdiction over the Cricket tournaments conducted in Thane District, Mumbai ....
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....agreement, the concessionaire was to construct the Indoor Cricket Academy (ICA) and Facilities therein at its own cost. ICA was to be handed over immediately upon completion of its construction for exclusive use, administration and maintenance by the Association. The Academy is equipped with the best sporting facilities and trained professionals. With ultra modern setup to practice under, the MCA adds a scientific touch to the game of Cricket. The Academy is created with the finest equipment and training facilities, indoor nets equipped with video cameras to facilitate coaching, viewing gallery for coaches etc. (7) In order to enable the Concessionaire to recoup its cost the Association granted him a 'concession' to operate / run certain facilities (known as ICA Facilities ) in the constructed premises by admitting 7000 Associates to the facility who will be permitted to make use of such facilities on payment of charges to the Concessionaire. (8) The Association has right to determine and retain the Associateship fees in respect of 1000 Associates comprising of former India/Mumbai Players, cricket umpires, and such persons nominated by its member clubs etc. at a n....
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....and other recitals of the Association (MCA), then keeping in view the above cited decisions and the decision in the case of the assessee, by the co-ordinate Bench wherein, also, the issue for commercial utilisation of vacant land had been considered, in favour of the assessee, the cancellation of registration, granted under section 12A, that too, from a retrospective date, is neither in accordance with law or through judicial interpretation and appreciation. 9. The Department, being represented by Special Counsel, Mr. G.C. Srivastva, on the other hand, very strongly supported the order passed by the DIT, Mumbai, cancelling the registration granted to the assessee. He submitted that, at the out set, the assessee violated the usage of clause of the letter for allotment of land in favour of MCA, for the purpose of ICA, dated 26-05-2001, wherein, the first clause said, "(a) This plot shall not be used for commercial purposes". He further pointed out that President of MCA had requested MMRDA for allotment of land for "Cricket Academy" and the allotment was made with a specific clause in the lease agreement, which said "(m) To use the demised premises for the purpose of ICA in a....
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....ts of 7000 memberships, only 300 were under the discretion of MCA. Whereas, SI shall also have the right to recommend honorary associates. The DR also pointed to clause 20.4(ii) wherein SI shall determine the Associateship Fee for the 6000 members. 11. The DR pointing to all these clauses, within the Agreement, suggest, that, in fact what was conceived, and what has been given the shape of, is an ultra modern and high class club, for higher echelons of the society. He concluded that construction and running of the ICA Facilities were, in clear violations of the allotment of land from MMRDA. Even from the point of view, that ICA Facilities, occupied more space in the land allotted to MCA by the MMRDA. The entire idea to garner funds, for the running of ICA and its authorized usage, has ultimately formed an illegal application of the land, allotted to MCA. He therefore submitted that the cancelling of Registration u/s 12AA(3) of the Act, was a correct decision, taken by the DIT. 12. In the rejoinder, the AR submitted that the role of the Managing Committee was two fold, i.e. having full control over the premises and managing the ICA. He also submitted that till the end of the s....
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....condition for usage, which stipulated, "(m) To use the demised premises for the purpose of ICA ......, and for no other purpose". 16. Clause 8 stipulated that the demised plot shall not be used for commercial purposes. In sub clause (b), "the permissible are shall be utilised for ICA, Gym, Library, Hostel and catering facilities for students of the academy...", being the basic stand points. 17. On the 2nd agreement, i.e. between MCA and SI, it was agreed that SI being SPV, on behalf of Shirke group shall utilise its affiliates and experience to build and hand over the ICA to MCA within two years from the date of signing of the agreement and shall retain ICA Facilities for the next 15 years, wherein, it shall have multifarious sporting facilities, health and recreational facilities, cafeterias, conference facilities for relaxation, leisure, entertainment, health and fitness, located at the project site. 18. We find, that so far as building and developing of ICA was concerned there was no dispute, the dispute arose with the development and functioning of ICA Facilities, i.e. whether the ICA Facilities conform to the basic idea of an Association/Trust/Society, where the profi....
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....ng elect one amongst themselves as the Chairman of the Managing Committee and such Chairman shall preside over the meetings of the Managing Committee. d. The post of the Chairman shall be held by the nominees of Concessioning Authority who will preside over the meetings of Management Committee and the Chairman will have the casting vote. e. The Managing Committee shall meet at least two times during every three months and prior written notice of such meeting shall be given by the Convener to be appointed for this purpose to each Party at least eight days before such meeting. f. The quorum required for any meeting of the Managing Committee to be held valid and shall be the presence of five Associates of the Managing Committee and such quorum must include at least one Associate nominated by the Concessionaire. g. Any decisions taken during the meetings of the Managing Committee with the requisite quorum shall be valid and binding on the Parties subject to the ........ These clauses, clearly show, that despite the fact that the costs, running development, repairs shall be borne by the SI, till the concession agreement is i....