TaxTMI 
TaxTMI 
2019 (1) TMI 1522
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Having regard to fair degree of commonality of core facts, central issue in appeal and the legal arguments, it is only appropriate that these appeals are disposed of by a common order. That's the reason that we are taking up all these appeals, for orders, together. 2. With the consent of the parties, rather at the request of the parties, we will begin by taking up the central issue in these appeals, i.e. whether or not the entitlement to exemption under section 11 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), in the case of these cricket associations, is hit by the proviso to Section 2(15). The issue before us: 3. As we proceed to set on record facts of the case and rival contentions of the parties, it is only appropriate that we take a quick look at the relevant legal provision and identify the legal issue in dispute. Section 2(15), as it stood prior to the insertion of proviso thereto with effect from 1st April 2009, was a relatively simple section which stated that "charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility". The proviso to this sub section, inserte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt levels, in identified areas of the State of Gujarat. While these associations have different areas assigned to them under their respective memorandums of associations, the objects are similar. In the case of Gujarat Cricket Associations, the objects, as noted in the memorandum of association, are as follows: 1. To control, supervise, regulate or encourage, promote and develop the game of cricket in the area under the jurisdiction of the Association. The Association can also undertake any other and all activities which may be beneficial to the Association. 2. To create, foster and maintain friendly and cordial relationship through sports tournaments and competitions connected therewith and to create a healthy spirit through the medium of sports in general and cricket in particular. 3. To instill the spirit of sportsmanship in students attending schools, colleges and members of other institutions and other citizens and to foster the spirit of sportsmanship and instill the ideal of cricket and educate them in the same. 4. To maintain a panel of approved Umpires who qualify themselves by passing the prescribed tests for purpose of officiating as s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to stage a match fc benefit of the Cricketers or persons who may have rendered service game of cricket or for their families or to denote towards the develop promotion of the game. 22. To appoint representative or representatives on the Cricket conference and other conferences, seminars, talent events, symposiums connected with the game of cricket. 23. To invest moneys and funds of the Association in such a manner as may be decided upon by the Managing Committee of the Association capable of being conveniently carried on in connection with objects of the Association. 24. To carry on any other activity which may seem to the Association capable of being conveniently carried on in connection with objects of the Association. 25. To carry on any other activity for promoting the objects of the Association which are calculated directly or indirectly, to protect and/or to enhance the value of its properties or its rights and is conductive to the objects of the Association. 26. To acquire movable and immovable property and to apply both the capital and income thereof and the proceeds of the sale or mortgage thereof, for or towards, ail or any o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... clubs within its jurisdiction. (c) To directly control and manage all cricket activities within its jurisdiction. (d) To pay special attention and are to the development of cricket at all levels within its jurisdiction. (e) To arrange for good cricket grounds and maintain the pitch for practice and matches arranged by the Association. (f) To popularize the game of cricket within its jurisdiction/by organising and/or conducting and/or controlling tournaments and matches. (g) To select teams to represent the Association in any tournament Championship or fixture local or otherwise. (h) To start or sponsor and/or to subscribe to funds or to stage a match for the benefit of cricketers or persons who have rendered services to the game of cricket or for their families or to donate to a sporting cause or institution. (i) To borrow or raise money which may be required for the purpose of the Association. (j) To collect funds and to utilise the same in such manner as may be considered fit for the fulfillment of the objects of the Association. (k) To invest moneys and funds of the Association in such manner as ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Association conducive to the promotion of the game of Cricket (ii) the benefit of a cricketer or his widow or children as the Association may deem fit (iii) any other person who has served cricket or his widow or his children as the Association may consider fit. (j) To organise matches for the achievements of the objects of the Association and utilise the net proceeds thereof towards the implementation of the object set therein. (k) To lay out any ground for playing the game and for other purpose and to provide pavilion, canteen and other conveniences and amenities in connection therewith. (l) To impart physical education through the medium of cricket and take all steps to assist the citizens to develop their physique. (m) To appoint committees from time to time to organise matches for the achievement of the objects of the Association and to utilise the net proceeds thereof towards the implementation of the objects set out herein. (n) To take such action as may be necessary to co-ordinate the activities of affiliated Associations, institutions and their Members in relation to the Association and amongst themselves. (o) To s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Department's circular and Hon'ble Finance Minister's speech to establish its case as an educational institute. The issue in hand is to decide whether activity of imparting education to persons/ students the game of cricket is education as defined in section 2(15) of the Income Tax Act. Hence, it is necessary to understand the scope of the term 'education'. "Education" is normally understood as the process of imparting knowledge and preparing oneself intellectually for a mature life. It means systematic instructions, training given to prepare a young person for work of life through systemic schooling. Thus the very essence of the term education is to impart knowledge through the mean of systemic schooling. In the instant case, the assessee is only coaching students/ potential persons in the game of cricket through coaching camps etc. The coaching is given to the persons who are interested in the game and who have already reached certain level of competence in the game. This is not the normal schooling as envisaged by various Courts. Further, the assessee has submitted that cricket is a subject as per the curriculum of the State of Gujarat. The submission of the assessee is not ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....carries out the activity of hosting matches at national/international at regular intervals which is clear from its income & expenditure statement of the year under consideration and of the earlier years. Therefore, the submission of the assessee that it is not carrying on any business activity is not acceptable. The assessee has relied on various decisions to explain its stand that the said activity of conducting cricket matches is not a business activity. The same have been considered and the facts of the instant case are quite different from the decisions cited by the assessee and are hence distinguishable. 11. The Assessing Officer has also referred to, and relied upon, Hon'ble Calcutta High Court's judgment in the case of Cricket Association of Bengal Vs CIT [(1959) 37 ITR 277 (Cal)] in support of the proposition that a club formed for the development and promotion of cricket cannot be treated as a charitable institution. A reference was then also made to a decision of Chennai Bench of the Tribunal in the case of Tamilnadu Cricket Association Vs DIT Exemptions [(2013) 32 taxmann.com 50 (Chennai)]. A reference was also made to the decision of Panaji bench of this Tribunal in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l perspective of policy changes in section 2(15) as well as section 10 that deals with blanket exemption. This would help in understanding the position of GCA in respect to applicability of first proviso to section 2(15) to it. 6.2 The law makers have always believed that trade, commerce and business cannot be mixed with charity and they cannot go together. Hence, the definition of 'charitable purpose' in Sec-2(15) as originally enacted was limited by the expression 'any other object of general public utility not involving carrying on any activity or profit'. However, the phrase that not involving 'the carrying on any activity for profit' was omitted by Finance Act, 1983 with effect from 1/4/1984, but with this, restrictions was imposed on business activities by way of introducing Section-11 (4A) of the Act at the same time. 6.3 Earlier u/s.10 of the Act income of certain bodies/organizations/ authorities/instrumentalities of the State such as Urban Development Authorities, Housing Board, Institutions/Organisations controlling/ supervising/regulating/ encouraging games of cricket, hockey etc., Coffee Board, Tea Board, research associations, new....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Municipal Committees/District Boards and Cantonment Boards. The said explanation is as follows: "Explanation:- For the purpose of this clause, the expression Local Authority' means- (i) Panchayat as referred to in clause(d) of article 243 of the Constitution; or (ii) Municipality as referred to in clause (e) of article 243P of the Constitution; or (iii) Municipal committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; or (iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924)". 6.7 By means of introducing an exhaustive definition of local authority, which was hitherto not there, the Parliament denied exemption to any other Authority beyond those mentioned in Explanation. 6.8 By these amendments the law makers categorically derecognized the principle that associations like GCA, should enjoy blanket exemption. GCA will have to stand to the test of the Income Tax Act and especially of section 2(15) of the Act. Hence, legislative intent was clear that such authorities were not to get indirect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o be a charitable purpose within the meaning of section 2(15). The CBDT categorically held that promotion, control, supervision etc. of sports and games would fall under the clause 'advancement of any other object of general public utility' because this clause deals with any object beneficial to the public or section of the public as distinguished from an individual or group of individuals. Thus the activities of GCA are under the clause of general public utility i.e. beneficial to the public or section of the public as distinguished from an individual or group of individuals and no other clause. 6.10 The Parliament intervened again and introduced proviso to sec-2(15) by Finance Act, 2008 w.e.f. 1/4/2009. The first proviso reads as follows:- "Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity 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, irrespective of the nature of use or application, or retention, of the income from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th no alternate but to invoke section 13(8) and deny exemption claimed u/s 11 or 12 of the Act. 6.13 The Hon'ble ITAT, Panaji Bench, in the case of Entertainment Society of Goa [2013] 34 Taxmann.com 210 (Panaji Tribunal) has observed on the issue of 'in the nature of trade, commerce or business' as under: "This proviso in the last sentence further states that nature of use of application or retention of the income by the institution from such activity will not be a relevant consideration. In view of the this specific provision, we are not concerned to look into how an institution has used, applied or retained its income, if the said has been received by the institution from any activity carried out in the nature of trade, commerce or business or from any activity of rendering any service in relation to trade, commerce or business. The words used in the proviso are "carrying on of any activity in the nature of trade, commerce or business" not the words 'carrying on trade, commerce or business'. Using of the words 'any activity in the nature of prior to trade, commerce or business' in our opinion has a specific meaning while interpreting ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Each assessment year being the unit and what is decided in one year may not apply in the following year. Especially, when there have been changes in the provisions of concerned sections of the I.T. Act. Further the Hon'ble Supreme Court in the case of A Distributors (Baroda) Pvt. Ltd. vs Union of India and Others 155 ITR 120 has held that to perpetuate an error is not heroism, to rectify it, is the compulsion of the judicial conscience. 8.1 The CBDT had issued a circular No. 11 of 2008 dated 19/12/2008 wherein it has mentioned as follows :- "3. The newly inserted proviso to section 2 (15) will apply only to entities whose purpose is ' advancement of any other object of general public utility' i.e. the fourth limb of the definition of 'charitable purpose' contained in section 2 (15). Hence, such entities will not be eligible for exemption under section 11 or under section 10 (23C) of the Act if they carry on commercial activities. Whether such an entity is carrying on any activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 3.1 ......
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of AGMs of BCCI wherein decisions on TV subsidy or IPL subvention to State Cricket Associations (hereinafter referred to as SCAs) were taken, (D) the accounting of these receipts by the appellant as well as other SCAs in their books etc. It is also important to see the decision making process at BCCI. All these are vital pieces of information in order to understand the correct nature of receipts from BCCI to SCAs. These sources that would help to understand the nature of receipts from BCCI are discussed below. It would be pertinent to mention here that the proceedings of BCCI before the AO of BCCI referred in the order were available with the appellant. Secondly the appellant itself had submitted the minutes of AGMs of BCCI during the appellate proceedings of the appellant for AY 2011-12. Thirdly the Annual reports of the BCCI are public documents and are available on its website. In short all the document referred herein under were available with the appellant. Especially during the appellate proceedings for AY 2011-12. 9.2 BCCI: The main object of the BCCI is (a) to control the game of cricket in India and give its decision on all matters including women cric....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at Rs. 203 crores being 70% of Franchisee Fees is proposed to be given as subvention to the State Association for the year 2008-09. Further on IPL and its media rights the annual report has mentioned that leading sports broadcasters Sony Max and World Sports Group backed the DLF IPL Global Media rights for 10 years (2008- 17). The report further states that the DLF IPL has thus set new standard in entertainment, in stadium and on the TV. Annual Report 2008-09 9.6.2 During the year, BCCI earned Media Rights amounting to Rs. 466 crores. The IPL contributed Rs. 662 crores to its income. The treasurer has mentioned under the heading 'T.V Subvention' that there is a remarkable increase in the payment of T.V Subsidy. IPL subvention, Infrastructure Subsidy through members association from Rs. 456 crores to Rs. 624 crores on which BCCI-IPL had also contributed in distribution of Rs. 202 crores as IPL Subvention during the year 2008-09 which is about 37% increase over the last year. The annual report also throws light on the Indian Premier League which has been emerged as cricket as most valuable property and the 6th more powerful property in the world as per the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t during the assessment proceedings. The main finding of the AO in the order is "payment of various Subsidies tantamount to distribution of profits of the assessee to its member state associations and therefore is ineligible business expenditure. The payments made to member cricket associations are utilized in their respective states and not by the assessee and therefore cannot be considered as expenditure incurred by the assessee on cricketing activities. " 9.7.2 The AO of BCCI, based on the communication of DIT(E), Mumbai, has not granted benefit of section 11 & 12 of the Act to BCCI. The stand taken by BCCI during its assessment proceedings is mentioned below. The BCCI vide its submission dated 03/12/2012 to the AO has explained its relationship with State Cricket Association as follows:- "1. BCCI is society registered under the Tamil Nadu Societies Registration Act. It was formed in the year 1929 with the object of promotion and development of cricket in India and is a member of the International Cricket Council (ICC) the regulatory body for world cricket. As a member of ICC, BCCI represents India in bilateral tours between member countries and in ICC tourname....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c. of BCCI and the state associations. The state association is entitled to the ticket revenue and ground sponsorship revenues. Expenses on account of security for players and spectators, temporary stands, operation of floodlights, Score Boards, management of crowd. Insurance for the match, electricity charges, catering etc are met by the state associations. On the other had expenditure on transportation of players and other match officials, boarding and lodging, expenses on food for players and officials, tour fee, match fee, etc are met by BCCI and revenues from sponsorship belong to BCCI. In respect of revenues from sale of media rights, an arrangement has evolved over time. Until 1991-92 the income from media rights was meager. With the growth in income from media rights, it became necessary to optimize the arrangement for sale of media rights. For a Test series or ODI series conducted in multiple centers and organised by BCCI and multiple state associations, it was found that if each state association were to negotiate the sale of rights to events in its centre, its negotiating strength would be low. It was, therefore, agreed that BCCI would negotiate the sale of media rights ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Associations has been that 70% of the revenue would belong to the State Associations. As shown, this has been the arrangement between the parties for the twenty years. The State Associations are entitled by virtue of established practice to 70% of the media right fee. It is in expectation of this revenue that the various state associations take an active part and cooperate in the conduct of the matches. This payment is therefore made only with a view to earn the income from media rights. These payments do not represent distribution of profits to members, since the payment is at a percentage of the gross revenues and had been paid even in those years where BCCI had incurred a loss: besides, the amount was not paid to all members but only to the state associations. In other words, the payment is not made to the three private clubs or the government institutions, but only to state associations. Distribution of profits would always be to all the members and the fact that these other members have acquiesced in these payments demonstrates that the payments are not distribution of profits. We request you to consider these submissions." (Emphasis supplied) 9.7.4 The A.O in resp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s subsidy/staging subsidy given by the assessee is not actually spent by the assessee it has simply been given to state Association, as such these are not allowable herewith as expenditure which is incurred wholly and exclusively for business purposes. Even if the exemption would have granted by any Authority to the assessee, the T. V. Subvention and subsidy/staging subsidy given to the Member Association cannot be allowed as application as the same is given as subsidy to associations and not spent by assessee for its objects." 9.7.5 With regard to launching of IPL and allowing private entities to share revenue the A.O has observed as follows :- "The BCCI has entered into this venture simply to earn profit. Promotion of cricket is no where concern of the BCCI. BCCI is already cash surplus. Therefore it cannot be said that it launched IPL in the interest of the game. Assessee had presented the IPL as business to investors. The franchisee owners were explained about the ROI i.e. return of Investment. This shows that the entire IPL was marketed as a business." 9.7.6 The receipts from sale of media right are purely the receipts from commercial business activi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... AGM approved all these decisions. It was the Chairman who suggested that, as already decided in the working committee, henceforth the TV Subsidies should be sent towards 'corpus funds' and this decision can also be approved by the members of this meeting. Thereafter the members unanimously approved that henceforth the TV Subsidies should be sent by the Board to the member associations towards 'Corpus Fund' instead of 'Subsidy Fund'. In the same AGM at item No. 12 the decision taken by the working committee on 25/08/2001 was approved unanimously. The decision was in respect of discontinuance of the policy of withholding 50% of TV Subsidy and about the decision to release 100% TV Subsidy to Members and increasing the limit for infrastructure subvention from Rs. 2 crores to Rs. 4 crores. Further the AGM also took the decision as per the submission of Hony. Treasurer that the total TV Subsidies received is Rs. 46 crores out of which the amount available for distribution among the members is Rs. 32 crores representing 70% which would be distributed on the following basis: - Share of non staging associations - Share of staging associations based on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ged both ODI and test match. The total subsidy on account of IPL was Rs. 202 crores. Hony. Treasurer informed that in 2009 as the IPL matches were played in South Africa all the affiliated units will get the same share of Rs. 8,10,43,200/-. 9.8.5 AGM for F.Y.2009-10 The Hony. Secretary announced that TV Subsidy is distributed as follows :- All the eligible members would get equal shares of Rs. 13.09 crores each and in addition the members who staged international matches would receive additional subsidy as under :- * ODI each Rs. 2.47 crores * Test Match each Rs. 3.30 crores * T-20 International Rs. 1.65 crores The Hony. Treasurer further announced that IPL subsidy for the year would be distributed amongst the eligible members and the amount is Rs. 8,10,43,2007- each. (Eligible association are the full time members of BCCI i.e. 25 in number). 9.8.6 AGMforF.Y.2010-11 Mr. M.P Pandove then placed before the house the proposed amounts of TV Subsidy and IPL Subvention payable lo eligible associations. TV Subsidy Equal to eligible association Rs. 8.14 crores each Additional subsidy....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Nadu Cricket Association is silent on corpus issue (referred later). BCCI has also not bothered to find out whether the treatment given by the various cricket associations in their audited accounts is right or wrong. In its AGMs, BCCI have resolved again and again to send the funds under the TV Subsidy or IPL Subvention to SCAs only when the audited accounts of SCAs would reach the BCCI. So it cannot be said that BCCI was unaware that differential treatment was given by various Cricket Associations to these receipts. It can be seen from the various Annual Reports of BCCI, minutes of AGMs of BCCI as well as the submissions of BCCI in its own assessment proceedings that there has been a consistency in the stand taken by BCCI. The consistency has been on the matter that 70% of the receipts from sale of media rights and IPL activities belong to SCAs and not to BCCI. The consistency is on the matter that both the receipts have emerged out of combined efforts of BCCI & SCAs. The consistency is on the issue that both the receipts are from commercial activities and finally the consistency on the issue that both the receipts are simply transferred to SCAs as TV subsidy and IPL subvention.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tional and domestic cricketing activities. The scheme is of financial assistance by way of reimbursement of expenditure incurred by State Association on infrastructure development. It is a well documented scheme and the items of expenditures that are reimbursable have been listed by BCCI for the SCAs. The subsidy available under the scheme is 50% of the expenditure actually incurred. The extent to which such expenditure can be incurred has varied from year to year based on the decision of the full members of BCCI. The Infrastructure subsidy scheme is based on the principle of reimbursement of expenses up to 50% incurred by the said Cricket Association. 10.3 Various Annual Reports throw a light on how the revenue from media rights have gone up substantively. The facts and figures have already been mentioned above. In FY 2010-11 the BCCI had earned revenue from media rights that comprised of more than 50% of its gross income. As far as IPL is concerned, BCCI has always accepted in its Annual Reports that it is one of the most successful commercial product/venture/model launched by it. SCAs are also equal partner in the said activity. For this precise reason BCCI has always e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cost) to the state associations." 10.6 It can be seen from the submissions of BCCI as mentioned above that in the process of conducting matches such as Test/ODI and including IPL the SCAs incur expenses. Further, the BCCI has also admitted that there is need to have fair and equitable sharing of revenues and the arrangements have evolved over time. The share in media rights pertains to time period and not to a particular match. The matches are never played in isolation but are always in a Test/ODI series. It is joint organisation of an event over a time by BCCI and the SCAs. BCCI has admitted that the SCAs are entitled to these revenue receipts. Further the BCCI has also admitted that it was agreed amongst all the SCAs that BCCI would be negotiating the media rights on their behalf to optimise the revenue and the BCCI has also stated that it was decided with the SCAs that 70% of net revenue would belong to the SCAs. According to BCCI, in expectation of these revenue receipts the SCAs actively participate in the cricketing activities. Thus, it is apparent that arrangements have been evolved to share the revenue from the joint activity of sale of media rights on 70:30 basis.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not mean that the nature of receipt changes. 10.8 Therefore, I am of the considered opinion that "receipts from BCCI on account of sale of media rights as well as the receipts from IPL activities are in the nature of revenue income of the GCA/Appellant". These receipts represent 70% of share of the net income. There is no doubt that the receipts are from the activities that are purely in the nature of trade, commerce and business or from activities of rendering any service in relation to any trade, commerce or business, for a cess or fee. 13. On materially similar lines, the appeals of the two other cricket associations before us, i.e. Baroda Cricket Association and Saurashtra Cricket Associations, were also dismissed by the CIT(A). The assessees are not satisfied by the consistent stand so taken by the CIT(A)s and are in appeal before us. Rival contentions: 14. Shri S N Soparkar, learned Sr Advocate, opened the arguments for the cricket associations. Learned counsel begins by inviting our attention to the wordings of Section 2 (15), and pointing out that the so far as residuary clause in the definition of 'charitable institution', i.e. "any other object of gener....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns of the BCCI cannot vitiate the assessments of its affiliates. There is no provision under the statute which could enable the assessment of an entity being influenced by the actions or inactions of another group entity. Learned counsel then invited our attention to the nature of expenses incurred by the assessee, as noted by the Assessing Officer himself in the assessment orders. He points out that the expenses incurred are on account of local cricket tournaments, district cricket expenses for promotion of cricket in the districts assigned to the respective association, seminar, training, meeting, exhibition etc for coaches, umpires, trainers, physiotherapists, scorers and other supporting staff, junior cricket expenses for youngsters below the age of below 12 years, below 14 years, below 16 years and below 19 years play in various tournaments organized by the cricket associations, senior cricketing expenses incurred in participation in matches organized by the associations and by the BCCI, sports material, prize distribution, women's cricket, ground maintenance expenses, fees paid to professionals whose services were used by the associations, and all other establishment and othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppropriate means to reach them to the recipients". Learned counsel then invites our attention to the judgment of Hon'ble jurisdictional High Court's judgment in the case of DIT Vs Ahmedabad Management Association [(2014) 366 ITR 85 (Guj)], on the same lines, wherein it is held that conducting continuing education diploma and certificate program, management development program, public talk, seminars and conferences etc are educational activities. It is thus contended that development of cricket is an educational activity, and, as it is an educational activity, proviso to Section 2(15) has no application in the matter. The whole case of the revenue authorities is thus ill conceived. 16. It is then contended that whether or not cricket associations can be allowed the benefits of Section 11, and whether section 2(15) will come into play in respect of the same, is no longer res integra. There are large number of decisions of the coordinate benches, as also from certain non-jurisdictional High Courts as well. Learned counsel refers to the judgment of Hon'ble Madras High Court in the case of Tamil Nadu Cricket Association vs. Director of Income Tax (Exemptions) [2014] 360 ITR 633 (Mad)....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., commerce or business, proviso to Section 2(15) cannot be invoked. Our attention was also invited to Hon'ble Punjab & Haryana High Court's judgment in the case of Tribune Trist Vs CIT [(2017) 390 ITR 547 (Guj)] on the same lines and wherein a series of decisions by the coordinate benches of this Tribunal, holding that section 2(15) cannot be invoked in the cases of city improvement trusts even though there is a sale of developed plots and such other activities by these trusts. It is contended that just because the sale is on the basis of ground realities and is not subsidized it cannot be said that the assessee is in business, trade or commerce. Learned counsel further submits that merely because a surplus is generated by the assessee, the fact of generating surplus would not convert a charitable activity into a non-charitable activity. In support of this proposition, learned counsel relied upon Hon'ble jurisdictional High Court's judgment in the case of DIT Vs Sabarmati Gaushala Trust [(2014) 362 ITR 539 (Guj)]. 18. Learned counsel then refers to the judicial precedents relied upon, by the authorities below, to support the case of the revenue authorities. As regards the coordi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n related activities. It is pointed out that the appellant employed various coaches, doctors, physio trainers, pitch curators, renowned players and umpires for the purposes of imparting knowledge and skills to budding players, and that these coaches/ trainers are paid fees for imparting the practical aspects of the game. It is also pointed out that the assessee conducts various classes for audio visual teaching, mental toughness, yoga, motivation, fitness etc. There are various object clauses in the memorandum of association of the appellant which demonstrate that the appellant was engaged in educational activities. The appellant also conducts various matches like under 23, under 19, under 16, under 14, women cricket etc which are at own cost and free for viewers and no tickets are sold for the same. The assessee also supports and bears the expenses of 8 districts across the State of Gujarat and similar Academy is run by all the Districts. In the present case, the appellant is engaged in the development of the game of cricket. It is submitted that his game is not merely a pleasure game today and that the ever growing popularity of cricket in India has changed the scenario completel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l then submits, without prejudice to his basic stand that as promoting cricket is an educational activity, proviso to Section 2(15) cannot be invoked at all, it is engaged in the activity that is to be treated as "advancement of objects of general public utility". The appellant is covered within the last limb of the definition of charitable purpose under section 2(15) which include advancement of any other object of general public utility. Though promotion of games like cricket may not be advantageous to the entire mankind, the promotion of cricket is advantageous to a section of the society which plays, follows and enjoys it. This has been statutorily acknowledged by Circular No.395 dated 24.9.1984 issued by the Central Board of Direct Taxes. It is contended that this aspect is not disputed by the Assessing Officer who has concurred that the appellant is covered within the last limb of the definition in section 2(15) and that the dispute is confined to the question whether the appellant is covered within the gamut of first proviso to section 2(15) which reads as "Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le etc). The appellant is thus concluded to be engaged in the business of entertainment of public at large by arranging national and international tournaments. b) The decisions relied upon by the assessee to substantiate that activity of conducting cricket matches is not a business activity was distinguished on facts. c) Reliance has been placed on the Calcutta High Court decision in the case of Cricket Association of Bengal v CIT (1959) 37 ITR 277 (Cal) Role of the appellant In this regard, the appellant wishes to submit that the impugned 'Match income' arises from international matches and matches allotted under Indian Premier League ("IPL"). The appellant has no role to play in fixing the match, much less the players, the opponent country, dates of match, umpires and other related logistics. All these are within the control of Board of Control for Cricket in India ("BCCI"). The appellant is an affiliate of BCCI which is the national governing body for cricket in India. It is one of the organizations which may get the privilege of hosting a cricket test or one day internationals. The international matches are allotted to the appellant by the BC....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the purpose tested by the obligation created to spend the money exclusively or essentially on "charity". If that obligation is there, the income becomes entitled to exemption. That, in our opinion, is the most reliable test." The Supreme Court has held that the acid test is whether, on an overall view of the matter, the object is to make profit. The Court held that if after meeting the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes, since the object is not one to make profit. [Aditanar Educational Institution v. Addl CIT [1997] 224 ITR 310 (SC)]. It is inevitable that in carrying on the activities, certain surplus may ensue. The earning of surplus itself would not mean that the appellant existed for profit. 'Profits' means that surplus over which the owners of the entity have a right to withdraw for any purpose including the personal purpose. Profit making would therefore means private profit. Profit making would not mean the surplus that results from certain activities for which the organisation is devoted is ploughed bac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uch a situation, the nature, use or application, or retention of income from such activities would not be relevant. Under the circumstances, the important elements of application of proviso are that the entity should be involved in carrying on the activities of any trade, commerce or business or any activities of rendering service in relation to any trade, commerce or business, for a cess or fee or any other consideration. Such statutory amendment was explained by the Finance Minister's speech in the Parliament. Relevant portion of which reads as under:- "I once again assure the House that genuine charitable organizations will not in any way be affected. The CBDT will, following the usual practice, issue an explanatory circular containing guidelines for determining whether any entity is carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business. Whether the purpose is a charitable purpose will depend on the totality of the facts of the case. Ordinarily, Chambers of Commerce and similar organizations rendering services to their members would not be affected by the amendmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....R 85 (Gujarat)] It is further submitted that since the terms trade, commerce or business is not defined under the scheme of the Act, general or dictionary meaning has to be resorted to. In order to determine whether an activity is in the nature of trade, commerce or business OR charitable, the determining factor is profit motive. The nature of activities may remain the same. However, if they are carried out for profit motive, the same are to be characterized as trade, commerce or business. Conversely, if the profit motive is absent, these very activities become charitable. Viewed thus, the activities of the assessee cannot be said to be commercial activities. Learned counsel further submits that it has been observed by the lower authorities that the Assessee - 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, and therefore, such activities are in the nature of trade, commerce or business in view of first proviso to S.2(15). He submits that the entire issue has to be seen from two limbs of the provisions of S.2(15) of the Act viz.: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ken a view that 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 : (a) CIT v. Gujarat industrial Development Corporation [2017] 83 taxmann.com 366 (Gujarat) (b) Director of Income-tax (Exemption) v. Ahmedabad Management Association [2014] 366 ITR 85 (Gujarat) (c) Sabarmati Ashram Gaushala Trust vs. ADIT (Exemption) [2014] 362 ITR 539 (Gujarat) (d) Institute of Chartered Accountants of India vs. DGIT reported in 347 ITR 99 (Delhi) (e) ACIT vs Delhi & District Cricket Association (ITA No. 361/Del/2016 for AY 2010-11, dated 19/09/2018) 26. Learned counsel further submits that in the present case, the main object of the Trust is to promote and encourage the game of cricket in Saurashtra and Kutch by organizing coaching schemes, tournaments, exhibition matches and other matches etc. The attention is further invited to the clause 3(j) of MOA which provides "to organize matches for the achievements of the objects of the Association and uti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... commercial interests. It is submitted that cricket as it is pursued by the BCCI and its affiliates is pure entertainment, and these are the dictates of its entertainment value that decides the form and presentation of cricket. If it is a noble activity of education in a gentleman's sport, where is the need of auctioning of the players. The commerce is glaring in each facet of cricket today. He also submits that even imparting cricket coaching is a big business rather than a selfless education. As regards parity with the Improvement Trusts and Ahmedabad Urban Development Authority, learned Commissioner points out that these bodies are creatures of law for noble purposes. That's is quite unlike the pure entertainment generation by the activities of these associations and the BCCI. What is being pursued by these associations, according to the learned Commissioner, is pure commercial exploitation of cricket and that is the reason that the profits of these associations needs to be brought to tax. The financial relationship between the assessees and the BCCI cannot be without quid pro quo between the BCCI and these cricket associations, or else why would anyone share such huge amounts w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e activities of the BCCI cannot be subject matter of debate of this forum nor any conclusions can be drawn in respect of the same without even hearing the BCCI. In any case, even if it is assumed that BCCI is engaged in commercial activities, that would impact on taxability in the hands of the BCCI and not in the hands of the local cricket associations. It is submitted that these state cricket associations and the BCCI are distinct taxable units and must be treated as such, as there is no provision in the law that a member body can be held liable for taxation on account of activities of the apex body. Quite to the contrary, according to the learned counsel, in case BCCI is held to be involved in carrying out commercial activities, which is what the case of the revenue authorities is, the profits are taxable in the hands of the BCCI and the disbursements of these profits to the cricket associations, as is alleged during the arguments, cannot be taxed again in the hands of the cricket associations. It is again urged that the trigger for denial of Section 2(15) benefit, or for the proviso to Section 2 (15) being invoked, is activity of the assessee and not an outsider. Learned counsel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e out an exception from the exception itself. In essence, the effect of these provisos was that even when an assessee was pursuing 'a charitable purpose' in the event of advancement of any other object of public utility' it would cease to be for charitable purposes if it involves (a) carrying on an activity in the nature of trade, commerce or business; or (b) rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of nature of use or application or retention of the income from such activity. However, these provisions are not to apply when the activities are such a modest scale that the value of receipts in respect of the same are less than Rs. 25 lakhs. These two provisos, as they stand now, are as follows: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity 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, irrespective of the nature of use or application, or retention....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proviso to s. 2(15). 3.2 In the final analysis, whether the assessee has for its object 'the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in connection to trade, commerce or business, it would not be entitled to claim that its object is for charitable purposes. In such a case, the object of 'general public utility' will only be a mask or a device to hide the true purpose which is trade, commerce, or business or rendering of any service in relation to trade, commerce or business. Each case would, therefore, have to be decided on its own facts, and generalizations are not possible. An assessee who claims that their object is 'charitable purpose' within the meaning of s. 2(15) would be well advised to eschew any activity which is in the nature of trade, commerce or business or rendering of any service in relation to any trade, commerce or business. 14. As the above CBDT circular, which is binding on the CIT under s. 119(1)(a) of the Act, aptly puts it, whether the assessee has, as its object, advancement of any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent. of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year 18. It may be noted that while the earlier proviso simply stated that exclusion from 'charitable purposes' will come into play "if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business", the requirement of exclusion clause extends even to situations "in which such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility". In other words, the exclusion clause, by proviso to Section 2 (15), was earlier triggered by "involvement in any activity in the nature of trade, commerce or business etc" but, post Finance Act 2015 amendment, it will be triggered even if "such....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied. Whether such a statutory provision stands the legal scrutiny or not is another aspect of the matter, and that is none of our concern at present anyway, it is beyond doubt that the new proviso, with effect from 1st April 2016, seeks to exclude, from the scope of section 2(15), the situations in which even in the course of pursuing advancement of any objects of general public utility when any activities in the nature of trade, commerce or business etc "is undertaken in the course of actual carrying out of such advancement of any other object of general public utility", unless, of course, the activity level remains within the threshold limit i.e. receipts from such activities are less than twenty percent of total receipts of that year. 21. As the above provisions, which, in our humble understanding, seeks to restrict the scope of Section 2(15) is effective from the assessment year 2016- 17, in our considered view, these provisions are only prospective in effect. As a corollary to this legal position, in our considered view, even if the activities in the nature of trade, commerce or business etc are undertaken in the course of actual carrying out of advancement of any obj....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ocess ensures transparency in the functioning of the trusts and therefore, it does not make the bidding process a commercial venture. Further the bids are invited only in the context of commercial units. Under the Rules there is a formula on the basis of which the price is worked out. The revenue did not deny the same but alleged that the profit motive is embedded in this formula as shown by the adjustments for various charges. 72. The Tribunal rightly rejected the contention that to fall within the ambit of the words "advancement of any other object of general public utility" the trust must necessarily be involved only in implementing poverty alleviation programs or doing other acts of charity. It is sufficient if it does precisely what the last category in Section 2(15) states namely being involved in activities for the advancement of an object of general public utility. They include a proper systematic development of certain areas. These activities are by virtue of the PTI Act undertaken by this assessee. 73. The Tribunal also rightly held that an object of general public utility does not necessarily require the activities to be funded or subsidized by the Stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....application of the proviso, what is necessary is that the entity should be involved in carrying on activities in the nature of trade, commerce or business, or any activity of rendering services in relation to any trade, commerce or business, for a cess or fee or any other consideration. In such a situation, the nature, use or application, or retention of income from such activities would not be relevant. Under the circumstances, the important elements of application of proviso are that the entity should be involved in carrying on the activities of any trade, commerce or business or any activities of rendering service in relation to any trade, commerce or business, for a cess or fee or any other consideration. Such statutory amendment was explained by the Finance Minister's speech in the Parliament. Relevant portion of which reads as under :- 'I once again assure the House that genuine charitable organizations will not in any way be affected. The CBDT will, following the usual practice, issue an explanatory circular containing guidelines for determining whether any entity is carrying on any activity in the nature of trade, commerce or business or any activity of ren....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onal conditions stipulated in the proviso to section 2 (15). 3.2 In the final analysis, however, whether the assessee has for its object ' the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of ' general public utility' will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is ' charitable purpose' within the meaning of section 2(15), would be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business." 8. What thus emerges from the statutory provisions, as explained in the speech of Finance Minister and the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so to open schools and hostels for imparting eduction in cow keeping and agriculture having regard to the trust objects. 12. All these were the objects of the general public utility and would squarely fall under section 2 (15) of the Act. Profit making was neither the aim nor object of the Trust. It was not the principal activity. Merely because while carrying out the activities for the purpose of achieving the objects of the Trust, certain incidental surpluses were generated, would not render the activity in the nature of trade, commerce or business. As clarified by the CBDT in its Circular No. 11/2008 dated 19th December 2008 the proviso aims to attract those activities which are truly in the nature of trade, commerce or business but are carried out under the guise of activities in the nature of ' public utility'. 34. What essentially follows from the above discussions is that, even after the 2008 amendment and insertion of proviso to Section 2(15), so far as 'any other object of general public utility is concerned, as long as profit earning is not the predominant purpose of the activity of the assessee, the benefit of Section 2(15) cannot be declined. In othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o to Section 2(15) is being invoked on account of activities of an entity other than the assessees- something which law does not permit. We are not really concerned, at this stage, whether the allegations about commercialization of cricket by the BCCI are correct or not, because that aspect of the matter would be relevant only for the purpose of proviso to Section 2(15) being invoked in the hands of the BCCI. We donot wish to deal with that aspect of the matter or to make any observations which would prejudge the case of the BCCI. Suffice to say that the very foundation of revenue's case is devoid of legally sustainable basis for the short reason that the commercialization of cricket by the BCCI, even if that be so, cannot be reason enough to invoke the proviso to Section 2(15). We are alive o learned Commissioner (DR)'s suggestion that the cricket associations cannot be seen on standalone basis as the BCCI is nothing but an apex body of these cricket associations at a collective level and whatever BCCI does is at the behest of or with the connivance of the local cricket associations, and that it is not the case that anyone can become a Member of the BCCI because only a recognized ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y. 36. Cricket is indeed an immensely popular game in this part of the world, and anything to do with cricket results in mass involvement of public at large. The sheer strength of these numbers results in higher visibility of cricketing activities and the scale of operations on which the work for development of cricket is to be carried out. These facts, by itself, and without the assessees before us deviating from their objects or venturing into trade, commerce or business, cannot require the activities to be treated as commercial activities. When a cricket stadium is to be built, it has to accommodate a very large number of persons but the size of the stadium would not mean that the activity is for anything other than promotion of cricket.. When the numbers are large, the scale of operations is large, and when scale of operations are larger, even the surplus or deficit could be large, but then the scale of operations may be a scale on which commercial activities could be carried out but that fact cannot convert an object of general public utility into a commercial activity. We have carefully analysed the annual reports and the annual financial statements of the assessee, and we....
X X X X Extracts X X X X
X X X X Extracts X X X X
....paid for and which is availed of by only such members of the public as can or wish to pay for it can in any sense be a purpose of a charity. It is true that charity in the income-tax sense need not have any eleemosynary element in it and that an object of general public utility is under the income-tax law a charitable object. Indeed, if the objects professed by the Association are to be treated as charitable objects at all, they can be so treated only if they can be regarded as objects of general public utility. I find it impossible to hold that there is any general public utility, so as to amount to a charity, in arranging for cricket matches which the public can see on payment 38. The revenue thus does not derive any advantage from Cricket Association of Bengal's case (supra). The reliance of the Assessing Officer, on this judicial precedent, is wholly misplaced and in fact contrary to the stand of the CBDT on this issue. The CBDT circular No. 395 [F. No. 181(5) 82/IT(A-I)], dated 24-9-1984, accepts the positions that a cricket association, being a society for promotion for sports, has its objects as "advancement of object of general public utility", and, for this reason, it f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....invoking the proviso to Section 2(15) and thus in declining the benefit of Section 11 and 12 to the appellant cricket associations. To this extent, plea of the appellants must be upheld. We uphold the plea. Individual appeals 43. Let us now take up each appeal and each ground of appeal individually. ITA No 1257/ Ahd/ 2013 44. This appeal is directed against the order dated 5th March 2013 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2009-10. 45. In ground nos. 1 and 2, the grievances raised by the appellant are as follows: (1) The learned CIT(A) has erred in law and on facts in denying the applicability of Sec. 11 including 11(1)(b) and holding that the assessee is not carrying on charitable activity. (2) (a) The learned CIT(A) has erred in law and on facts in not accepting the claim of the assessee that the assessee is carrying on 'Educational Activity', and hence the amendment to Section 2(15) w.e.f 01-04-2009, vis-a-vis "business" is not applicable to assessee. (b) The learned CIT(A) has erred in law and on facts in holding that on the facts of case of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed the matter further, it was explained by the assessee that nomenclature of the receipt apart, what has been received by the assessee is a corpus donation and the assessee did not have any right to get the said money from the BCCI, under a contract or otherwise. It was also explained that similar amounts received in the earlier years have been treated all along as corpus donations, and, therefore, the corpus donation received by the assessee, though termed as TV Rights, is not taxable. The Assessing Officer noted this contention as also the fact that under section 11(1)(d), what cannot be included as total income of the assessee is "income by way of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or the institution". The Assessing Officer was of the view that what has been paid to the assessee is a share out of earnings by the BCCI, out of proceeds of sale of TV rights, and is, as such, taxable as income of the assessee. It was observed that it cannot be said to be voluntary contribution by the BCCI. The Assessing Officer also shows that as accepted by the auditor of the company the amount is relatable to the TV rights an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be "by way of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or the institution", we are of the considered view that any payments made by the BCCI, without a legal obligation and with a specific direction that it shall be for corpus fund- as admittedly the present receipt is, is required to be treated as corpus donation not includible in total income. We are unable to find any legal support for learned CIT(A)'s stand that each donation must be accompanied by a separate written document. The contribution has to be voluntary and it has to be with specific direction that it will form corpus of the trust'. These conditions are clearly satisfied. Any payment which the assessee is not under an obligation to make, whatever be the mode of its computation, is a voluntary payment, and, any payment which is with a specific direction that it for corpus fund is a corpus donation. In our considered view, even without the two specific confirmations filed by the assessee, in the light of the BCCI resolution under which the payment is made and in the light of the payment not being under any legal obligation, the conditions under section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was also contended that it was an infrastructure subsidy, in the nature of corpus donation, and, therefore, outside the ambit of taxable income. The appeal to the CIT(A) did not yield any success to the assessee. The assessee is now in second appeal before us. 54. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 55. On a perusal of the BCCI Infrastructure Subsidy rules, we find that what is given to the assessee as infrastructure subsidy is reimbursement of 50% of costs in respect of certain expenditure on infrastructure which is inherently in the capital field. The mere fact that it is not a reimbursement to an outside party, such as a district cricket association, does not really matter. As long as the subsidy is relatable to a capital asset created by the assessee on his own or by an eligible district cricket association, as the present subsidy undisputedly is, it is outside the ambit of revenue receipt and taxable income. The very foundation of the stand of the Assessing Officer is thus devoid of legally sustainable merits. As such, there can hardly be an occasion, in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is a matter of record that all the assessees are charitable institutions registered under Section 12A of the Income Tax Act (hereinafter referred to as 'Act'). For this reason, in the previous year to the year with which we are concerned and in which year the depreciation was claimed, the entire expenditure incurred for acquisition of capital assets was treated as application of income for charitable purposes under Section 11(1)(a) of the Act. The view taken by the Assessing Officer in disallowing the depreciation which was claimed under Section 32 of the Act was that once the capital expenditure is treated as application of income for charitable purposes, the assessees had virtually enjoyed a 100 per cent write off of the cost of assets and, therefore, the grant of depreciation would amount to giving double benefit to the assessee. Though it appears that in most of these cases, the CIT (Appeals) had affirmed the view, but the ITAT reversed the same and the High Courts have accepted the decision of the ITAT thereby dismissing the appeals of the Income Tax Department. From the judgments of the High Courts, it can be discerned that the High Courts have primarily followed the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee on general principles or under section 11(1)(a) of the Income-tax Act. The Court rejected the argument on behalf of the revenue that section 32 of the Income-tax Act was the only section granting benefit of deduction on account of depreciation. It was held that income of a Charitable Trust derived from building, plant and machinery and furniture was liable to be computed in normal commercial manner although the Trust may not be carrying on any business and the assets in respect whereof depreciation is claimed may not be business assets. In all such cases, section 32 of the Income-tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust. In view of the aforesatated judgment of the Bombay High Court, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the Department. 4. Question No. 2 herein is identical to the question which was raised before the Bombay High Cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the depreciation as well. 63. Respectfully following the esteemed views of Hon'ble Supreme Court, we uphold the plea of the assessee and direct the Assessing Officer to grant the depreciation even upon full cost of the asset being allowed. The assessee gets the relief accordingly. 64. Ground no. 6 is thus allowed. 65. In ground no. 7 to 11, the assessee has raised the following grievances: (7) The learned CIT(A) has erred in law and on facts in not allowing the set off of bro ught forward losses and unabsorbed depreciation which claim is supported by Jurisdictional High Court and other High Courts' decisions (Amount as may be determined in pursuance to Appellate Orders from A.Y. 2004-05 to 2008-09). (8) The learned CIT(A) has erred in law and on facts denying the deduction of capital expenditure of Rs. 4,61,70,970/- as allowable. (9) Alternatively, the learned CIT(A) has erred in law and on fact in not granting deduction of expenditure including depreciation and B/F deficit and unabsorbed depreciation after considering the assessee's income as business income. (10) Alternatively, the learned CIT(A) has erred in law and o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in law and on facts in rejecting the assessee's claim that it is engaged in "Education" and hence the provision of proviso to section 2(15) and section 13(8) are not applicable. 74. As we have held that the assessee was not engaged in any activity in the nature of trade, commerce or business, we see no need to deal with this alternative plea of the assessee. The grievance of the assessee is thus dismissed as infructuous. 75. Ground no. 2 is dismissed as infructuous. 76. In ground nos. 3 and 4, which we will take up together, the assessee has raised the following grievance: 3. (i) The learned A.O. and Hon'ble CIT( Appeals) have erred in law and in facts in rejecting the assessee's claim that various amounts received from BCCI, viz. T.V. Subsidy, IPL subvention etc are corpus donations which have been credited as capital receipts and holding that it is an income received from BCCI. (ii) The learned A.O. and Hon'ble CIT(Appeals) have erred in law and on facts in rejecting the above claim of corpus donations even though the learned A.O. in the case of BCCI has held that the amounts paid to various State Cricket Associations in the form of T.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 81. Ground no. 5 is allowed in the terms indicated above. 82. In ground no. 6, the assessee has raised the following grievance: The learned A.O. has erred in law and on facts in not allowing the claim of mutuality vis-a-vis the income of members' club activity as claimed by the assessee and Hon'ble CIT(appeals) has erred in law and on facts in not accepts claim of assessee. 83. Learned counsel submits that as there was no adjudication on this grievance raised before the CIT(A), the matter may be restored to the file of the CIT(A) for adjudication on merits. This plea is not opposed by the learned DR. 84. With the consent of the parties, and in the light of the above discussions, the matter is restored to the file of the CIT(A) for adjudication on merits. 85. Ground no. 6 is thus allowed for statistical purposes. 86. In the result, ITA No. 3303/Ahd/16 i.e. appeal of the assessee for the assessment year 2010-11 is partly allowed in the terms indicated above. ITA No. 3304/Ahd/ 2016 87. We now take up appeal filed by the Gujarat Cricket Association for 2011-12. 88. In ground nos. 1 the assessee has raised the following grievances: Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IT(Appeals) have erred in law and on facts in rejecting the claim of assessee that when Exemption u/s 11 and 12, is not granted to assessee by applying Proviso to section 2(15) and section 13(8), the amounts paid by BCCI being non contractual payments i.e. voluntary payment, these receipts are not income as defined in section 2(24) of Income Tax Act, 1961. 4. The learned A.O. has erred in law and on facts in not allowing the capital expenditure as an expenditure towards objects of trust which is supported by various decisions of Honourable High Courts and Hon. CIT(A) has erred in law and on facts in not accepting the said claim of the assessee. 95. We find that identical issues came up for our adjudication for the assessment year 2009-10 and we have allowed the plea of the assessee in the terms indicated earlier in this order while dealing with the assessment year 2009-10. We see no reasons to take any other view of the matter for this assessment year. Respectfully following the stand taken for the assessment year 2009-10, we uphold the plea to that extent. As regards allowing the capital expenditure towards object of trust, that issue is infructuous at this stage and w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt year 2011-12 is partly allowed in the terms indicated above. ITA No. 408/Ahd/17 108. We now take up appeal filed by the Gujarat Cricket Association for the assessment year 2012-13. 109. In ground nos. 1 the assessee has raised the following grievances: The learned A.O. has erred in law and on facts in applying Proviso to section 2(15) that assessee is engaged in activity in the nature of business and consequently section 13(8) of Income Tax Act, 1961 and there by rejecting the applicability of section 11 and 12 claimed by the assesses and the Hon'ble CIT(Appeals) has erred in confirming the decision of learned A.O. 110. We have, in our detailed analysis earlier in this order, held that the proviso to Section 2(15) does not come into play on the facts of these cases. Accordingly, we uphold the plea of the assessee to this extent. The assessee is thus held to be carrying out 'charitable activity' within the meanings of that expression under section 2(15) and, accordingly, the assessee is entitled to relief under section 11. 111. Ground no. 1 is thus allowed. 112. In ground no. 2, the assessee has raised the following grievance: The learned A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o take any other view of the matter for this assessment year. Respectfully following the stand taken for the assessment year 2009-10, we uphold the plea to that extent. As regards allowing the capital expenditure towards object of trust, that issue is infructuous at this stage and will come up for consideration before the Assessing Officer while giving effect to this order and computing income in terms of the Section 11. The AO shall deal with the same by way of a speaking order. 117. Ground nos. 3 and 4 are allowed in the terms indicated above. 118. In ground no. 5, the assessee has raised the following grievance: The learned A.O. has erred in law and on facts in not allowing the amount invested Rs. 10,50,00,000/- u/s 11(2) as claimed by the assessee and Hon. CIT(A) has erred in law and on facts in not accepting the claim of the assessee. 119. On this ground also, no specific adjudication at this stage. It is consequential in nature inasmuch as it will come up for consideration before the Assessing Officer while giving effect to this order and computing income in terms of the Section 11. The AO shall deal with the same by way of a speaking order 120. Ground no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dings. However, learned counsel for the assessee submits that he does not wish to press these grounds of appeal. Accordingly, these three grounds of appeal are summarily dismissed for want of prosecution. 132. Ground nos. 1 to 3 are dismissed. 133. In ground nos 4 to 9, the assessee has raised grievance against the CIT(A) upholding proviso to Section 2(15) being invoked, against the income from cricketing activities being treated as business income, against resultant denial of exemption under section 11(1)(a), and against CIT(A) upholding the view of the AO of taxing interest income earned from corpus funds, surplus funds as non-charitable income. The dispute before us also involves the treatment of Rs. 7,21,22,353 received on account of corpus donation described as TV subsidy. 134. In view of our findings on the core issue in these appeals before us, as set out earlier in this order at pages 2 to 55 and in view of our decision above in the case of Gujarat Cricket Association on the issue of TV subsidy- as set out at pages 56 to 58 earlier in this order, the assessee must succeed on these points. Learned representatives fairly agree that whatever we decide in the case of G....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arat Cricket Association, the same will equally apply in this case as well. We, therefore, uphold the plea of the assessee and allow these grounds of appeal to that extent in principle. There is, however, a rider. In this case, there is also a reference to the assessee organizing a one day international match, on commercial scale, for fund raising. That issue is dealt with in a separate ground of appeal. In case, it is held that the said one day international match is in the nature of commercial adventure, it will have the impact on section 2(15) being invoked. That ground is separately being remitted to the file of the CIT(A) for fresh adjudication, and the eventual decision on the same will also have the impact on these issues. We, therefore, remit the matter to the file of the CITI(A) for fresh adjudication in the light of our observations in the case of Gujarat Cricket Association (supra) and the findings on the said aspect of the matter. 143. Ground nos. 1,4,5 and 7 are allowed in the terms indicated above. 144. In ground no. 2, the assessee has raised the following grievance: 2. The C.I.T. (Appeals) erred in withdrawing exemption u/s 11(1)(d) of the Income Tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. It was pointed out to the CIT(A) that the BCCI has passed a specific resolution that the amount computed as TV subsidy is given to the Member associations as corpus donation. The CIT(A), identified the core issue for adjudication as follows: "the fundamental question which now arises is whether the specific direction once issued is sufficient for the purpose of section 11(1)(d) or specific direction is required for each year individually". He then proceeded to answer this question by observing as follows: As per section 11(1)(d), a written specific direction is necessary to claim it as corpus donation. For a donation as a corpus donation, a written document with specific direction from the donor should be obtained and should accompany the donation from the donor. In absence of written direction, for a donation in a given assessment year, a donation would not be considered as a corpus donation and the organization (in this case, GCA) would not be entitled to claim full exemption. To add, donation covered by a written document but without any specific direction cannot be cla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng Officer to treat the TV subsidy of Rs. 4,00,00,000 received from the BCCI as a corpus donation. The assessee gets the relief accordingly. 147. Ground no. 2 is allowed in the terms indicated above. 148. In ground no. 3, the assessee has raised the following grievance: 3. The C.I.T. (Appeals) erred in withdrawing exemption u/s 11(1)(d) of the Income Tax Act, 1961 of Rs. 30,53,888/- received in the form of Corpus donation in form of Infrastructure Subsidy. 149. Learned representatives fairly agree that this issue is also covered by our decision in the case of Gujarat Cricket Association, and whatever we decide in the said case will equally apply in the present case as well. 150. Vide our decision earlier in this order, we have upheld similar claim of Gujarat Cricket Association and observed, inter alia, as follows: 51. On a perusal of the BCCI Infrastructure Subsidy rules, we find that what is given to the assessee as infrastructure subsidy is reimbursement of 50% of costs in respect of certain expenditure on infrastructure which is inherently in the capital field. The mere fact that it is not a reimbursement to an outside party, such as a district cri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellant cricket association on its own, rather than under arrangements and planning by the BCCI, that this could be put against the assessee as an adventure in the nature of trade, commerce or business. 155. Ground no. 6 is thus allowed for statistical purposes in the above terms. 156. In ground no. 8, the assessee has raised the following grievance: 8. Without prejudice to above the C.I.T. (Appeals) erred in not considering objects of imparting of knowledge about cricket is promotion of education as it is one of the chapter in the Physical Education and it is falls under Educational purpose under Charitable purpose u/s 2(15) of the Income Tax 1961 and therefore it does not attract proviso to section 2(15) of the Act accordingly provisions of section 13(8) of the Income Tax Act, 1961 are not applicable. 157. As we have allowed the main plea of the assessee, as set out in ground nos. 4 to 9, this plea is rendered academic and does not call for our adjudication as on now. 158. Ground no. 8 is dismissed as infructuous. 159. In the result, ITA No 2957/Ahd/14, i.e. assessee's appeal for the assessment year 2010-11 is partly allowed in the terms indicated above. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO of taxing interest income earned from corpus funds/surplus funds as non-charitable income. 165. In view of our findings on the core issue in these appeals before us, as set out earlier in this order at pages 2 to 55 and in view of our decision above in the case of Gujarat Cricket Association on the issue, the assessee must succeed on these points. Learned representatives fairly agree that whatever we decide in the case of Gujarat Cricket Association, the same will equally apply in this case as well. We, therefore, uphold the plea of the assessee and allow these grounds of appeal to that extent in principle. There is, however, a rider. In this case, there is also a reference to the assessee organizing a one day international match, on commercial scale, for fund raising. That issue is dealt with in a separate ground of appeal. In case, it is held that the said one day international match is in the nature of commercial adventure, it will have the impact on section 2(15) being invoked. That ground is separately being remitted to the file of the CIT(A) for fresh adjudication, and the eventual decision on the same will also have the impact on these issues. We, therefore, remit the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as observed that it cannot be said to be voluntary contribution by the BCCI. The Assessing Officer also shows that as accepted by the auditor of the company the amount is relatable to the TV rights and it cannot, therefore, be treated as voluntary contribution in the nature of corpus donations. He also noted that as registration of the assessee, under section 12AA, stands cancelled, the assessee is anyway not eligible for the benefit of Section 11(1)(d). On the basis of this line of reasoning, the Assessing Officer treated the said amount of Rs. 1,58,00,000 as income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. It was pointed out to the CIT(A) that the BCCI has passed a specific resolution that the amount computed as TV subsidy is given to the Member associations as corpus donation. The CIT(A), identified the core issue for adjudication as follows: "the fundamental question which now arises is whether the specific direction once issued is sufficient for the purpose of section 11(1)(d) or specific direction is required for each year individually". He then proceeded to answer this question by observing as follows: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmations filed by the assessee, in the light of the BCCI resolution under which the payment is made and in the light of the payment not being under any legal obligation, the conditions under section 11(1)(d) are satisfied. We, therefore, uphold the plea of the assessee. The Assessing Officer is accordingly directed to delete this addition of Rs. 1,58,00,000 170. We see no reasons to take a different view, in principle, in this case. However, as relevant facts ned to be examined, the matter is remitted to the file of the Assessing Officer for fresh adjudication, in the light of our above observations. We order accordingly. 171. Ground no.5 is thus allowed for statistical purposes in the terms indicated above. 172. In ground no. 6, the assessee has raised the following grievance: The ld. CIT(A) erred in upholding view of ld. AO of withdrawing exemption u/s 11(1)(d) of the Income Tax Act, 1961 of Rs. 1.92 Cr. received in the form of Corpus donation. 173. This amount of Rs. 1.92 crores, as evident from the orders of the authorities below, is in respect of infrastructure subsidy. Learned representatives fairly agree that this issue is also covered by our decision in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. The income from said ODI cannot take colour of commercial activities or income. 178. We find that though there are findings to the above effect in the order of the Assessing Officer, the CIT(A) has dealt with the same in a very causal manner and without specific and categorical discussions on the same. We, therefore, deem it fit and proper to remit the matter to the file of the CIT(A) on this issue. We order so. As we do so, and for the detailed reasons set out earlier while dealing with Gujarat Cricket Associations case, we make it clear that it is only in the event of this event being organized by the appellant cricket association on its own, rather than under arrangements and planning by the BCCI, that this could be put against the assessee as an adventure in the nature of trade, commerce or business. 179. Ground no. 10 is thus allowed for statistical purposes in the above terms. 180. In ground no. 11, the assessee has raised the following alternative plea: Without prejudice to above the appellant states that objects of imparting of knowledge about crickets promotion of education as it is one of the chapter in the Physical Education and it falls under Educat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appeal to that extent. 188. Ground nos. 1, 2 and 3 are thus allowed in the terms indicated above. 189. In ground no. 4, the assessee has raised the following grievance 4. The ld. CIT(A) has erred both in law and on the facts of the case in confirming the action of AO of not allowing exemption of Rs. 4,57,95,448/- claimed u/s.11(1)(d) of the Act. 190. There is no dispute that this amount of Rs. 4,57,95,448 represents infrastructure subsidy. Learned representatives fairly agree that this issue is also covered by our decision in the case of Gujarat Cricket Association and Baroda Cricket Association, and whatever we decide in the said case will equally apply in the present case as well. 191. Vide our decision earlier in this order, we have upheld similar claim of Gujarat Cricket Association and observed, inter alia, as follows: 51. On a perusal of the BCCI Infrastructure Subsidy rules, we find that what is given to the assessee as infrastructure subsidy is reimbursement of 50% of costs in respect of certain expenditure on infrastructure which is inherently in the capital field. The mere fact that it is not a reimbursement to an outside party, such as a district ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the file of the Assessing Officer for granting consequential relief in accordance with the scheme of the law. 196. Ground nos. 5 and 6 are thus allowed for statistical purposes in the above terms. 197. No other grievance of the assessee requires any specific adjudication by us. 198. In the result, ITA No. 2839/Ahd/17, i.e. assessee's appeal for the assessment year 2012-13 is partly allowed in the terms indicated above. ITA No. 2840/Ahd/17 199. By way of this appeal, the assessee appellant has challenged correctness of the order dated 26th October 2017 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2013-14. 200. In ground nos. 1,2 and 3, which we will take up together, the assessee has raised the following grievances: 1. The ld. CIT(A) has erred both in law and on the facts of the case in confirming the action of AO of holding that the appellant is not carrying on charitable activities within the definition of section 2(15) of the Act. 2. The ld. CIT(A) has erred both in law and on the facts of the case in confirming the action of AO of applying the provisions of section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n occasion, in principle, to hold such a subsidy as a revenue receipt or taxable income. There is not even a whisper of a discussion by the Assessing Officer to the effect that infrastructure subsidy is revenue in nature. As a matter of fact, the claim is made for the subsidy only after the expenditure having been incurred. The authorities below have simply brushed aside the case and the submissions of the assessee and proceeded to hold it as an income. Looking to the nature of the subsidy, which is clearly relatable to the capital assets generated, we are unable to hold this receipt in the revenue field. We, therefore, uphold the plea of the assessee on this point as well and delete the addition of Rs. 2,13,34,033. 206. We see no reasons to take a different view, in principle, in this case. However, as relevant facts ned to be examined, the matter is remitted to the file of the Assessing Officer for fresh adjudication, in the light of our above observations. We order accordingly. 207. Ground no. 4 is thus allowed for statistical purposes in the terms indicated above. 208. In ground no. 5 & 6, the assessee has raised the following grievances: 5. The ld. CIT(A) has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n and Baroda Cricket Association on the issue, the assessee must succeed on these points. Learned representatives fairly agree that whatever we decide in the case of Gujarat Cricket Association and Baroda Cricket Association, the same will equally apply in this case as well. We, therefore, uphold the plea of the assessee and allow these grounds of appeal to that extent. 216. Ground nos. 1, 2 and 3 are thus allowed in the terms indicated above. 217. In ground no. 4, the assessee has raised the following grievance 4. The ld. CIT(A) has erred both in law and on the facts of the case in confirming the action of AO of not allowing exemption of Rs. 2,55,45,572/- claimed u/s.11(1)(d) of the Act. 218. There is no dispute that this amount of Rs. 2,55,45,572 represents infrastructure subsidy. Learned representatives fairly agree that this issue is also covered by our decision in the case of Gujarat Cricket Association and Baroda Cricket Association, and whatever we decide in the said case will equally apply in the present case as well. 219. Vide our decision earlier in this order, we have upheld similar claim of Gujarat Cricket Association and observed, inter alia, as fo....