TaxTMI 
TaxTMI 
2017 (11) TMI 673
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....ssee also obtained grant of approval under section 10(23C)(iv) of the Act vide proceedings of Chief Commissioner of Income Tax-III, Hyderabad [CCIT-III/Tech/10(23C)(iv)/18/08-09, dated 27/02/2009]. The assessee has filed its return of income by declaring total loss of Rs. 1,91,29,098/- after claiming exemption under section 11 and 10(23C)(iv) of the Act. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, the assessee‟s case was selected for scrutiny and notice under section 143(2) was issued and after following due procedure, assessment is completed under section 143(3) of the Act. In the assessment order, the Assessing Officer has noted that the assessee allegedly receiving grants from the Board of Control for Cricket in India (BCCI) partly, as reimbursement for various tournaments conducted by the assessee. The assessee has already constructed a stadium at Visakhapatnam for conducting „test matches‟. During the year under consideration, the assessee has also commenced construction of stadiums at various places like Mangalagiri, Kurnool & Kadapa. During the year, it has also acquired land at Nellore for the purpose....
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....s between India and other leading foreign countries so as to develop goodwill and better understanding between India and other countries. (o) To regulate and control sports in general and the game of cricket in particular (o) To regulate and control the game of cricket (q) To encourage the formation of zonal clubs in the area This object is totally removed and serial numbers of other objects have been changed. (t) To promote and to contribute to any enterprise conducted by individuals or associations in conformity with the objects of the Association. (s) To promote and to contribute to any enterprise conducted by individuals, clubs, organizations or associations in conformity with the objects of the Association (u) To organize a proper coaching scheme for the benefit of cricketers in the area, under the supervision of coaches from India or abroad This object is totally removed. (v) To collect funds for the purpose of the association and to utilize such funds in such manner as the Executive Committee may consider desirable for the ulfilment of the objects of the Association (t) To collect funds for the purpose of the association an....
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...., ceased to exist as per the judgment of the Allahabad High Court in the case of Allahabad Agricultural Institute & another Vs. Union of India & others (291 ITR 116). The Assessing Officer also noted that the activities carried out by the assessee are totally commercial and there is no element of any charity in the conduct of ACA. Therefore, on this count also, the Assessing Officer denied exemption under section 11 of the Act. 6. On appeal, ld. CIT(A) directed the Assessing Officer to grant exemption under section 11 of the Act by observing as under:- "5. I have gone through the facts of the case, assessment order and written submissions filled by the appellant. The Assessing Officer mainly concluded that these amendments to the Rules and Bye-laws to the Original Memorandum and Articles of Association were in the absence of prior approval of the Commissioner of Income Tax for making the amendments thereby not eligible for exemption claimed by the appellant u/s.11 and proceeded to assess the society as business concern and computed the total income at Rs. 14,91,89,110/-. Further in the amendment to rules the AO observed that the activities of the appellant have become' to....
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....as submitted a detailed representation to the Commissioner on 10/03/2014. By considering the same, the Commissioner has dropped the proceedings initiated for cancellation of registration under section 12A of the Act. 12. Learned counsel for the assessee has further submitted that once assessee is enjoying registration under section 12A, the duty of the Assessing Officer is to see whether assessee‟s income is exempt under section 11 of the Act or not. The Assessing Officer without giving any reasons, simply rejected the exemption under section 11 of the Act on the ground that assessee amended the objects. It is further submitted that the learned CCIT has already granted approval to the assessee under section 10(23C)(iv) of the Act. The Assessing Officer without considering the same, rejected the claim of exemption made by the assessee. Learned counsel for the assessee has further submitted that the objects of the assessee-association, originally framed and filed before the learned Commissioner and subsequently, the some changes by way of amendments were made without effecting the character of the original objects. Therefore, the Assessing Officer is not justified in rejecting....
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....oner has observed that even after amendments made by the assessee, learned CCIT granted approval on 27/02/2009. Therefore, assessee is eligible for exemption under section 10(23C)(iv) of the Act which is effective from Assessment Year 2008-09 onwards, thereby exemption under section 11 has to be granted to the assessee association. 15. So far as amendments are concerned, we have considered the original objects and subsequent amendments and found that there are no major changes, which are also not affected to the objects of the assessee. The Assessing Officer is also not able to point out which activity of the assessee is converted from charity to commerciality by virtue of subsequent amendments made by the assessee. We also observe that once the assessee is enjoying registration under section 12A as well as 10(23C)(iv), it is the duty of the Assessing Officer to see whether claim of exemption made by the assessee under section 11 or 10(23C)(iv) is eligible or not, if not, the assessee has to give reasons why the assessee‟s case is not considered for exemption under section 11 otherwise section 10(23C)(iv) of the Act. In the present case, the Assessing Officer has not given a....
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....es and source of income which clearly fall in the definition of business. It is also evident that the major income arises not from the game of cricket but from the business of cricket". 18. In this context, it is necessary to examine what are the receipts of the assessee and how assessee has been incurred towards the objects. The assessee is receiving grants from BCCI partly as reimbursements for various tournaments conducted by the assessee. The assessee has already constructed a stadium at Visakhapatnam suitable for conducting „test matches‟. During the year under consideration, the assessee has also commenced construction of stadiums at various places like Mangalagiri, Kurnool & Kadapa. During the year, it has also acquired land at Nellore for the purpose of constructing a stadium. The assessee has admitted the incomes under the major heads such as BCCI reimbursements of Rs. 20,64,17,339/- and interest of Rs. 1,26,10,435/- on FDR‟s & SB accounts. Out of these receipts, the assessee incurred expenditure towards conducting various tournaments, grants to District associations for conducting league tournaments and development of game and other heads su....
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....n to the facts of the present case. In view of the above, the appeal filed by the revenue is dismissed. ITA Nos. 241/VIZ/2015 & 01/VIZ/2016 21. So far as Assessment Years 2011-12 & 2012-13 are concerned, both the parties have submitted that the facts involved in Assessment Year 2010-11 are similar to the facts of the Assessment Years 2011-12 & 2012-13. 22. The Assessing Officer, in the Assessment Years 2011-12 & 2012-13, has expressed a view that the activities carried out by the assessee are commercial in nature, though assessee having a registration under section 12A as well as 10(23C)(iv) of the Act, therefore, he denied exemption for both the years. But, the Assessing Officer is not able to establish that the activities carried out are contrary to the objectives of the assessee-association. We find that the activities carried out by the assessee for these two assessment years are same to the Assessment Year 2010-11. We also find that all the activities carried out by the assessee in connection with the sports of the cricket. The assessee has got registration under section 12A as well as 10(23C)(iv) in connection with the sport of the cricket. The activities carried out by th....
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....' as observed from the income and expenditure. 6.3 Page 8 para 2 "It is seen that through the object of the trust of promotion of sports' is charitable, however, its activities-The ACA element of profiteering. Therefore, it cannot be held eligible for the benefits of section 11 of the I.T. Act, 1961 even otherwise as its activities are not in conformity with the objects of the trust." 6.4 Page 9 para2 "From the discussion, it is clear that the ACA is not acting as a charitable organization. The entire character and focus of ACA has become totally commercial. There is generation of huge profits year after year, a part of which is used, to enhance the investment and income earning infrastructure and apparatus, of ACA." 6.5 As per para 3 "Further, it is clear that entire character and focus of The ACA has become totally commercial with eye on huge profits and it is no more charitable organisation as discussed supra. Therefore, even with Registration allowed to the ACA u/s. 12A of the I.T Act, since its activities are being carried on commercial lines and not in conformity with the objects of the assessee, it is not eligible for Exemption u/s. 11(1) and 11(2) of the I.T....
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....e Chief Commissioner has granted the approval for exemption u/s 10(23C)(iv) subsequently on 27-2-2009. The amendments alleged to have been done on 24-6-2001, 25-6-2011 and 17-8-2012 as stated in the assessment order were not actually passed by the appellant Association and therefore it is surprising how this observation was made. 6.7 it Is submitted that there is no statutory requirement of intimating the amendments/changes to the bye-laws to the Income Tax' Department. The requirement of intimation is mentioned only in the form No. 10A and even in the form No. 10 A there is no time limit prescribed. The appellant has already intimated the amendments to the Commissioner of Income-tax, Guntur on 26-04-2013 (copy of letter dt.26-04-2013 with ackmnt. enclosed) and therefore there is no violation on the part of the appellant. Therefore the appellant cannot be declared ineligible for exemption on the ground that the very foundation on the basis of which the appellant was registered stands removed and ceased to be operative. The important point that was missed by the A.O was that the learned CCIT granted registration u/s 10(23C) (iv) after examining these amendments, so the depart....
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....ce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. In the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purpose. Thus, while we uphold the Constitutional validity of the proviso to section 2(15) of the said Act, it has to be read down in the manner indicated by us. As a consequence, the imp....
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....e context of section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other of general public utility and that exception is limited to activities in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. In the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desir....
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....wed to sell tickets to the cricket viewers. No doubt, the players of Indian Premier League are sold in public auction for very huge amount. But the question is who is conducting and who is auctioning, whether the assessee- society of BCCI? In fact, BCCI conducts the public auction for selling premier players at a huge premium rate. In fact, the BCCI collects money. The role of the assessee-society is only to provide stadium for conducting matches. Other than that, the assessee - society has no role in conducting the international matches and Indian Premier League matches. 16. The other activity of the assessee-society is to conduct training programmes, coaching classes for college students at district level in the State of Tamil Nadu and in the Union Territory of Puducherry. The assessee is also conducting inter-university, inter-school and Inter-association matches. Expenditures involved in such activities were met out of surplus funds remaining with the assessee-society. The Assessing Officer got confused himself with the activity carried on by the BCCI as that of the activity carried on by the assessee-society. The material available on record shows that one-day matches, T-20 ....