TaxTMI 
TaxTMI 
2013 (10) TMI 1384
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....the trust has arranged one day international matches of cricket and in turn has received TV subsidy/subvention income i.e. sharing of TV broadcasting right income from BCCI and advertisement sales income. Therefore, the ld CIT is of the view that the assessee-trust had carried out the activities in the nature of trade, commerce or business in view of the first proviso to section 2(15) of the Income-tax Act and therefore, the object of the assessee-trust are no longer of charitable in nature. Aggrieved with this impugned order dated 28.01.2013 of CIT, Rajkot-2, Rajkot, the assessee-trust is now in appeal before this Tribunal, on the following grounds:- "1. The ld. CIT has erred both in law and on the facts of the case in cancelling registration of trust u/s 12AA(3) of the Act after holding that the activities carried out by the Appellant-Trust are in the nature of trade, commerce or business and in view of amended provisions of S 2(15) of the Act. 2. The ld. CIT has erred both in law and on the facts of the case in not appreciating the scheme of the Act whereby he is empowered to cancel registration of trust only under provisions of S. 12AA(3) of the Act and that also after reco....
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....nstituted in as much as genuineness of the activities have never been questioned and doubted. He also pointed out that merely because of insertion of first proviso to Section 2(15) of the Act, the activities of the assessee-trust cannot be treated as non-genuine. To sum-up, the ld counsel of the assessee submitted that nowhere in the impugned order u/s 12AA(3) the ld CIT judiciously satisfied that any of the two conditions to cancel the registration fulfilled and therefore the action of the ld CIT in cancelling the registration is beyond his jurisdiction. 5. Continuing his argument, the ld counsel of the assessee, pointed out that the controversy involved in this appeal is directly covered by the decision of the Coordinate Bench of Ahmedabad Tribunal in the case of Gujarat Cricket Association v. DIT (Exemption) (copy of the same placed on records), wherein also the registration was cancelled in view of first proviso to Section 2(15) of the Act by the Commissioner. Reliance was also placed on the decision of ITAT, Nagpur Bench in the case of Vidarbha Cricket Association v. CIT [IT Appeal No. 3 (Nag.) of 2010, dated 30-5-2011] (relevant extract of which is reproduced in the order of....
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....tivity for the profit and (ii) if the "object" of the trust or institution is to carry out object of general public utility and this is the primary or dominant purpose and not carrying on any activity for profit, the same would satisfy the requirements of Section 2(15) of the Act. 7. It was further submitted by the ld counsel of the assessee that the first proviso to section 2(15) of the act should not generalized to each and every facts of the case where there is a surplus over the expenditure in respect of the activities or objects carried out by the trust which are in any case of the charitable purpose. He also submitted that the cardinal principle is the predominant object of the trust and if the predominant object of the Trust is of charitable nature and with no-profit motive, the said activities cannot be treated as trade, commerce or business merely because some surplus has remained left over the expenditure to carry out such activities. The ld counsel of the assessee also pointed that even after the insertion of proviso to Section 2(15) of the Act, the following authorities, after following the law laid down by Apex Court in Surat Art Silk Cloth Manufacturers Association (....
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....assessee-trust; on the contrary, the assessee-trust carries out all the activities in accordance with the objects of the assessee-trust only. Therefore, he pointed out that, the ratio laid down by the ITAT, Mumbai Bench in the case of Mumbai Cricket Association (supra) is not applicable in the present case. 10. On the other hand, Dr. M.L. Meena, DR appeared on behalf of the Revenue vehemently supported the order of ld CIT in cancelling the Registration u/s 12AA(3) of the Income-tax Act. The ld Departmental Representative relied upon on the of ITAT, Chennai Bench 'B' dated 22.02.2013 in the case of Tamil Nadu Cricket Association v. DIT (Exemptions) [2013] 57 SOT 439 and contended that by Finance Act, 2012 w.e.f. 01.04.2009, the Legislature made a specific provision by inserting sub-section (8) to section 13 of the Income-tax Act, 1961 that wherever the first proviso to the section 2(15) of the Income-tax Act, 1961 is applicable, the trust does not become liable for exemption of its income u/s 11 and 12 of the Income-tax Act, 1961. Since in the case of the trust, the first proviso is clearly applicable, the trust is not liable for exemption u/s 11 and 12 of the Income-tax Ac....
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....two, the law stated in the proviso will be defeated. So also, the law stated in section 12AA(3) will be defeated. Therefore, when the assessee is hit by the proviso to section 2(15), its consequential reflection is automatic on section 12AA(3), which prima facie establishes that the activities carried on by the assessee are not genuine, in as much as it is not for advancement of any object of public utility. The two conditions laid down in section 12AA(3) cannot be read and understood in disregard to the proviso to section 2(15)." 13. In the end, ld Departmental Representative concluded that the two conditions stated in section 12AA(3) have reference to the de facto nature of the activities carried on by the assessee. He submitted that the assessee-trust was given registration under section 12AA on the ground that it is a charitable institution in as much as it is engaged in the advancement of an object of general public utility in the form of developing and promoting the game of cricket in Tamilnadu and Puducherry. But, now it is seen that its activities are oriented towards generating income and revenue by converting the sport of cricket into a celebrated industry, which means, ....