TaxTMI 
TaxTMI 
2015 (8) TMI 761
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....n. According to the Ld. representative, the main object of the assessee-society is to promote the sport of cricket in the State of Tamil Nadu and in the Union Territory of Puducherry. The Ld. representative submitted that the assessee-society conducts cricket tournaments including inter-university, inter-school, inter-association and inter-district tournaments. Apart from that, the Ld. representative clarified that the assessee-society is also providing coaching for the benefit of cricketers. According to the Ld. representative, the members of the assessee-society are the district associations and the cricket clubs in the city of Chennai. 3. The Ld. representative for the assessee further submitted that the assessee-society is a member of the national body, Board of Control for Cricket in India (BCCI), which regulates and promotes the sport of cricket in India. In turn, BCCI is the member of the International Cricket Council (ICC). According to the Ld. representative, other cricket associations / societies are also members of BCCI. 4. The Ld. representative for the assessee further submitted that BCCI holds test matches with visiting foreign teams and oneday international mat....
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....sment years 2009-10 and 2010-11, the assessee claimed exemption under Section 11 of the Act in respect of its entire income. However, the Assessing Officer found that promoting cricket may be charity provided it does not involve any activity which is in the nature of commercial. Referring to subscription fee received from the members of the assessee-society, the Ld. representative submitted that the Assessing Officer came to a conclusion that subscriptions are in the nature of commercial receipt for providing service to the members of the assessee-society. The Assessing Officer has also found that the assessee earns surplus profit on conducting test matches between India and England. Referring to Section 2(15) of the Act, the Ld. representative submitted that with effect from 01.04.1984, "charitable purpose" includes relief of poor, education, medical relief and advancement of any other object of general public utility. Referring to the circular issued by the CBDT in Circular No.395 dated 24.09.1984, the Ld. representative submitted that promoting sport was considered to be a charitable purpose by the CBDT. According to the Ld. representative, advancement of any object beneficial t....
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....f the Act. Referring to the order of the Tribunal in the assessee's own case for assessment year 2007-08 in I.T. A. No.1851/Mds/201(1) dated 10.04.2012, the Ld. representative submitted that in the assessee's own case for assessment year 2007-08, this Tribunal granted depreciation after following its earlier order in Sri Mariamman Educational Health and Charitable Trust v. ACIT in I.T. A. Nos.142 to 144/Mds/2010 dated 02.02.2011. Therefore, according to the Ld. representative, the Assessing Officer is not justified in rejecting the claim of depreciation for assessment year 2008-09. 6. Coming to the assessment years 2009-10 and 2010-11, the Ld. representative submitted that the Assessing Officer found that the activity of the assessee-society falls within the purview of business. Referring to Indian Premier League, the Ld. representative submitted that the Assessing Officer estimated the television audience more than 200 millions in India and Indian Premier League match has a global reach in respect of the advertisement pertaining to new production launch. Therefore, the Assessing Officer found that it is a commercial venture. According to the Ld. representative, the Asse....
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....alue commercial ventures, the players are sold on auction publicly, the individual players are sold in a heavy price tag. According to the Ld. D.R., Indian Premier League matches are in the nature of entertainment industry. Therefore, the characteristic of the activity of the assessee-society is totally changed into a commercial venture. 9. According to the Ld. D.R., the assessee has received Rs. 14,27,16,192/- in the assessment year 2010-11 from TV subsidy. TV subsidy admittedly is a share received from BCCI on account of audit revenues arising from telecast of test matches. The Ld. D.R. further submitted that assessee-society was expected to host test matches, one-day matches, T-20 matches and Indian Premier League matches. According to the Ld. D.R., the share received by the assessee from BCCI in the form of subsidy / grant is nothing but a share of profit collected from BCCI from advertisements. BCCI in fact earns huge money on account of phenomenal advertisement. Though the assessee claims it to be a TV subsidy, it is obviously a misnomer. According to the Ld. D.R., the assessee is not eligible for deduction under Section 11 of the Act in view of proviso to Section 2(15) of....
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.... section 42: Provided further that where any asset referred to in clause (i) 6or clause (ii) or clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this subsection in respect of such asset shall be restricted to fifty per cent. of the amount calculated at the percentage prescribed for an asset under clause (i) 6or clause (ii) or clause (iia), as the case may be: Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999, and is put to use before the 1st day of April, 1999, for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be prescribed. Explanation - For the purposes of this proviso,-- (a) the expression "commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle" and "medium passenger motor vehicle" bu....
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....r improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation - 2. For the purposes of this sub-section "written down value of the block of assets" shall have the same meaning as in clause (c) of sub-section (6) of section 43; Explanation - 3. For the purposes of this sub-section, 10the expressions "assets" shall mean-- (a) tangible assets, being buildings, machinery, plant or furniture ; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature. Explanation - 4. For the purposes of this sub-section, the expression "know-how" means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil-well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto) ; Explanation - 5. For the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in res....
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....ereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso ; (2) "sold" includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is 8an Indian company or in a scheme of amalgamation of a banking company, as referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), with a banking institution as referred to in sub-section (15) of section 45 of the said Act, sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of that Act, of any asset by the banking company to the banking institution. (2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or ga....
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....le purpose-Instructions regarding. In Board's Circular No. 2-P(LXX-5) of 1963, dated the 15th May, 1963, it was explained that a religious or charitable trust claiming exemption under section 11(1) of the Income- tax Act, 1961, must spend at least 75 per cent of its total income, for religious or charitable purposes. In other words, it was not permitted to accumulate more than 25 per cent of its total income. The question has been reconsidered by the Board and the correct legal position is explained below. 2. Section 11(1) provides that subject to the provisions of sections 60 to 63 "the following income shall not be included in the total income of the previous year . . . ". The reference in sub-section (a) is invariably to "income" and not to "total income". The expression "total income" has been specifically defined in section 2(45) of the Act as "the total amount of income . . . computed in the manner laid down in this Act". It would accordingly be incorrect to assign to the word "income" used in section 11(1)(a), the same meaning as has been specifically assigned to the expression "total income" vide section 2(45). 3. In the case of a business undertaking held unde....
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....for a charitable institution to generate income outside the books in this fashion and there would be violation of section 11(1)(a). It was for the assessee to write back the depreciation and if that was done, the Assessing Officer would modify the assessment determining higher income and allow recomputed income with the depreciation written back by the assessee to be carried forward for subsequent years for application for charitable purposes." Further Hon'ble Calcutta High Court has held in the case DCIT VS. Girdharilal Shewnarain Tantia Trust reported in [1993] 199 ITR 15(Cal.) that "The "income" contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable. Respectfully following the decision of the Hon'ble Kerala High Court and taking cue from the decision of the Hon'ble Calcutta High Court, we do not find any hesitation to confirm the order of the Ld. CIT(A) and also the views expressed by him in his order. Accordingly this appeal is held in favour of the Revenue." 12. Apart from that, when the assessee claims the cost of the capital expenditure as exemption under Section 11 of the Act, then the cost of the capital asset bec....
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....ty ; Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year ;" Advancement of any other object of general public utility is also one of the charitable purposes included in Section 2(15) of the Act. However, proviso to Section 2(15) of the Act clarifies that if the assessee involves in carrying on any activity in the nature of trade, commerce or business, or rendering any activity in relation to trade, commerce or business, the same shall not be treated as charitable purpose. The question arises for consideration is whether the assessee involves itself in any activity in the nature of trade, commerce or business or its activity would amount to rendering any service in relation to trade, commerce or business. We have carefully gone through the object of the assessee-society, a copy of which is available at pages 62 to 65 of the paper-book. For the purpose of convenience, we are reproducing the object:- (a) To take over on registration under the Societies Registration Act XXI of 1860 and assume the affairs and activities of the Madras Cricket....
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....on, the establishment or promotion of which may be beneficial to the Association and in particular to subscribe to, finance, give or lend money to, and guarantee the contracts of the Board of Control for Cricket in India or any other body for the time being controlling the game in India or any part thereof and any state or Regional Association recognized by such body. (i) To create, foster and maintain friendly relations with and among the population of the area under its control through sports, tournaments and competitions connected therewith, to create, develop and foster a healthy spirit of sportsmanship and a broad and generous outlook devoid of all prejudices and to mould the character of citizen through the medium of sports in general and cricket in particular. (j) To impart physical education through the medium of cricket and take all steps to assist the citizens to develop their physique and have a healthy mind and healthy body. (k) To spread the ideals of cricket and all that it stands for throughout the length and breadth of its area by arranging schools for coaching, lectures, tournaments and run international matches between India and other leading foreign coun....
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....al or otherwise charged upon all or any of the Association's property both or future and to purchase, redeem or payoff any such securities and to utilize such funds in such manner as the General Body may consider desirable for the fulfillment of the objects of the Association. (w) To invest monies and funds of the Association as per Section 11(5) of the Income-tax Act, 1961 and to reconvert in such manner as may be decided upon by the General Body of the Members of the Association from time to time. (x) To carry out any other business or activity which may seem to the committee capable of being conveniently carried out in connection with and in conformity to the objects of the Association and which is connected directly or indirectly to enhance the value of or render more profitable any of the objects, rights or properties of the Association. (y) To maintain a panel of approved cricket umpires and to do such acts as may be necessary for this purpose including holding of prescribed periodical tests with a view to enable them to qualify themselves as first class umpires. (z) To add, delete, alter, maintain and enforce rules and regulations for the control and governance o....