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2019 (1) TMI 1522
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....lity 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, inserted with effect from 1st April 2009, states as f....
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....le 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 such in the matches conducted by the Association. 5. To select teams to represent ....
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....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 of the objects of the Board. 27. To start, assist, encourage or promote for training Cricketers and to provide for such amenities and facilities, usually provided in boarding schools. 28. To appoint Committee or....
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.... 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 may be decided upon from time to time. (l) To train umpires and to form a panel of umpires. (m) To collect all the cricket statistics of different players and clubs so as to give guidance in the selection of players for important matches. (n) To do any other acts in furtherance of the above objects not inconsistent there with. 8. The posit....
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....t 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 select teams to represent Saurashtra in Ranji Matches played in Saurashtra and Kutch and other States and to select such other teams as the Association may decide from time to time. (p) To start and maintain a library of books, periodicals and museum on Sports in general and cricket in particular and to start journal or Journals on cricket. (q) Generally to do all such other acts and things as may seem to the Association to be convenient and/or conducive to....
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....ife. 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 acceptable since it is under subject of physical education and it is not of scholastic instruction. Therefore, the submission of the assessee that it imparts education is not acceptable since the very essence of "education" is absent in the activity of the assessee. 10. The Assessing Officer also noted that the assessee has mainly earned income from the sale of advertising and ticket sales- a fact that clearly demonstrates that main income of the assessee is from entertainment of pu....
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....ent 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 the case of Entertainment Society of Goa Vs CIT [(2013) 43 taxmann.com 210 (Panaji). The Assessing Officer thus, so far as assessment year 2012-13 in the hands of Gujarat Cricket Association is concerned, as follows: In view of the above facts and the legal provisions, the assessee is held to be carrying on the activity of advancement of other objects of general public utility and which is in the nature of business, trade and commerce and not in the nature of education as claimed by the assessee. Therefore the assessee is covered by th....
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....vity 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, news agency, SAARC Fund, securitisation trust etc. were given blanket exemption from the taxable income. As can be seen from variety of organisations and sectors covered, the consideration for such exemption u/s 10 of the Act had never been that these institutions are undertaking charitable activities. 6.4 The major change in the law came through Finance Act, 2002, w.e.f. 1/4/2003. Vide this Act the provision of Sec.10(20), 10(20A), 10(23), 10(29) underwent major change. Sec. 10(20A), 10(23) and 10(29) were omitted by Finance Act, 2002. Prior to omission Sec-10(23) w....
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.... 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 support of the Government through tax exemption route. Such de-recognition of the principle in respect of said institutions could be because of reasons such as need for higher revenue etc. over the indirect support like tax exemption. 6.9 At the same time, as earlier blanket exemption u/s.10(23) does not make these institutions or associations as entities undertaking activities for charitable purposes nor does omission of sec. 10(23) prohibit them in getting registered u/s. 11/12 of the Act as per the laid down procedure under the said sections. Though, it was never provided for or stated in any policy documents that these institutions/associ....
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....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 such activity." (Emphasis supplied) 6.11 Further, the Parliament added the second proviso vide Finance Act, 2010, with retrospective effect from, 1/4/2009 which stated that first proviso shall not apply if the receipts from such activities, did not exceed Rs. 10 lakhs in the previous year. The Parliament, vide Finance Act, 2011, decided to revise this threshold in the second proviso to section 2(15) from Rs. 10 lakhs to Rs. 25 lakhs w.e.f. 01/04/2012. 6.12 The Parliament made its intention further clear and obvious by amending the IT Act vide Finance Act, 2012 but with effect from 1/4/2009. A new section i.e. Sec-13(8) was inserted to the Act. By this amendment it was provided tha....
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....ivity 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 the proviso. These words cannot be ignored. This provision mandates that the institution need not actually be carrying on trade, commerce or business but the activity carried on by him is similar to trade, commerce or business. The profit motive is required while an institution is carrying on trade, commerce or business. The use of words "carrying on of any activity in the nature of trade, commerce or business" in our opinion will mean that there need not be profit motive in carrying on the activity by the institution..... The legislature is fully aware of that an institution which is incorporated for charitable purpose cannot have profit motive." (Emphasis supplied) 6.14 No contrary decision on this inte....
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....efinition 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 ......... 3.2 In the final analysis, however, whether the assesses 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 o....
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....Y 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 cricket which may be referred to it by any member association in India; (b) To encourage the formation of state, regional other cricket association and the organisation of Inter-sate and other tournaments etc. 9.3 The working committee is the committee to whom the management of the affairs of the Board is entrusted with. There are three kinds of members of BCCI:- (a) Full Members (b) Associate Members and (c) Affiliated members. Every full member and chairman of meeting has one vote. The associated member or affiliated member have no vote but are eligible to attend and participate in the meetings of the Board, nor they would be eligible to be elected as a Member of the working committee or as an office bearer or Vice President of the Board. Thus the decisions of the Working Committee are the de....
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....CI-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 study conducted by the International renowned SPORTSPRO magazine. It is mentioned in the annual report that the IPL, the vision of BCCI Jt. President Lalit Modi has only been in existence for two tournaments but has already revolutionized cricket. The Broadcast rights were sold for $1.026 billion equivalent to $1.71 million per game. Title sponsorship rights were sold for $50 million over five years. Annual Report 2009-10 9.6.3 The treasurer has mentioned that the overall income of BCCI excluding IPL and CLT rose to Rs. 847 crores as against Rs. 711 crores during the year 2008-09. The IPL suffered a loss of Rs. 41.90 crores because of increase in expenses due to its shifting to South Africa. However, the CLT 20 was able to generate profit of Rs. 39.27 crores. The treasurer has informed its members that the loss of IPL has been calculated after pr....
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....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 tournaments such as the World Cup. 2. BCCI has 30 members out of whom 25 are state cricket associations, 2 are private clubs and 3 are Central Government Institutions. BCCI does not own or manage the infrastructure and facilities that are required for cricket. It encourages and oversees the various state associations to promote the game, build the required infrastructure organize tournaments, leagues, coaching camps etc. in their respective states. Whenever a foreign team visits India, the international matches such as Test and ODI are allotted by BCCI to the State Cricket Associations by a rotation policy. The matches are conducted and managed by the respective state associations and over time, arrangements have evolved about the respective responsibilities, rights, shares of revenue etc. These have evolved in order to promote co-operation and unity among the member associations and by applying the principles....
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....sociations, 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 for the entire country to optimize the income under this head. It was further decided that out of the receipts from the sale of media rights 70% of the gross revenue less production cost would belong to the state associations. Every year, BCCI has paid out exactly 70% of its receipts from media rights (less- production cost) to the state associations. This amount has been utilized by the respective associations to build infrastructure and promote cricket, making the game more popular, nurturing and encouraging cricket talent, and leading to higher revenues from media rights. (Emphasis supplied) Financial Year Come from sale of Media Rights (Nett) Payments to State Associations % Paid 2001-02 46,00,00,000 32,20,00,000 70% 2002-03 46,00,00,000 32,20,00,000 70% 2003-04 46,00,00,000 32,20,00,000 70% 2004-05 143,48,76,209 100,44,13,347 70% 2005-06 320,72,29,934 224,50,60,954 70% 2006-07 296,16,61,646 211,5....
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....monstrates that the payments are not distribution of profits. We request you to consider these submissions." (Emphasis supplied) 9.7.4 The A.O in response to reply of BCCI has held as follows:- "13.3 The reply of the assesses is considered but the same is not acceptable during the course of re-assessment proceedings, in the expenditure side of the income and expenditure account it is noticed that huge amounts were given to state association as subsidy. BCCI itself has not developed any infrastructure nor did it or construct any stadium or other amenities regarding provision for infrastructure Subsidy Scheme to Member Associations. The payments made to State Cricket Associations is utilized for the development of game of cricket in their respective states, for development of infrastructure faculties, facilities for spectators, conducting coaching camps, conducting local tournaments etc. 13.5 Thus, major part of the revenue is diverted as grants to state cricket associations. The amount distributed in this year Rs. 381,50,46,232/- as T.V. Subventions to Associations + Rs. 202,60,80,000/- as T.V. Subventions to Associations from IPL + Rs. 1,284,534,159/- infrastructure subsidy....
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....he receipts from sale of media right are purely the receipts from commercial business activity (also refer to Annual Report 2007-08 at para 9.6.1 above). During FY 2008-09, there had been a major controversy with regard to the allocation of TV/Media rights by the BCCI. There was a search & survey proceedings on World Sports Group (WSG) and Multi Screen Media (MSM) Pvt. Ltd. by the IT Department. The allotment of Media rights was not a non-controversial process. In the end, BCCI & MSM had restructured their Media Right Agreement and MSM had agreed to pay Rs. 425 crores to BCCI as facilitation fees etc. However, in the instant proceedings, no conclusions are drawn based on the said controversy that had engulfed BCCI and Media Rights. It only be inferred that the BCCI remained powerful in its negotiations on media rights mainly for the reason that all its full Members or SCAs had authorized BCCI to negotiate on their behalf. This is apparent from the submission of BCCI to its AO. This had helped BCCI to negotiate from the position of strength. What was at stake was large quantum of share of revenue that the SCAs had started getting as TV subsidy due to the negotiations by BCCI on thei....
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....tions - Share of staging associations based on Test, ODI - Three day matches - staging associations 9.8.2 AGM for F.Y.2005-06 At item No.4 of the minutes it is stated as follows:- "Mr Bindra observed that since the last two years the entire income from TV Subsidy rights has been reflected as the income of the Board in the accounts and that this was wrong presentation. According to him 70% of the income from the sale of TV rights belongs to the affiliated units and only 30% of the TV rights revenue belongs to the Board. The members unanimously endorsed the views expressed by Mr. I.S. Bindra and it was unanimously resolved that 70% of the sale of TV rights belongs to affiliated units and the balance 30% is only available for the calculation for the gross revenue share to the players from the year 2005-06. The definition of gross revenue for the purpose of arriving at 20% distribution to player is as follows :- * Sale of Sponsorship rights, excluding agents, if any. * Sale of Media rights including TV (net of production cost) radio, internet, middle media and other mechanism designated to utilise digital technology excluding the agents fees, if any, and share of S....
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.... Subvention Total money available for subvention Rs. 429.08 crores Equal distribution to all eligible associations Rs. 17.16 crores each. He also informed the members that as per the past practice, on submission of audited annual accounts for the year 2010-11 from associations, the subsidies will be distributed. 9.9 (D) Treatment by Baroda Cricket Association, Saurashtra Cricket Association and GCA in respect of funds received from BCCI 9.9.1 It is noticed that based on the same Annual Report, same minutes of the AGMs of the BCCI, the receipts from BCCI to SCAs have been reflected differently in their financial statements by at least three SCAs that have presence in the state of Gujarat viz. Baroda Cricket Association, Saurashtra Cricket Association and the appellant. The treatment given by the appellant is already under consideration. Baroda Cricket Association (BCA) for A.Y.2012-13 and Saurashtra Cricket Association for A.Y.2012-13 have filed appeals before me. During the appellate proceedings this issue was also discussed with the AR of GCA. It was observed that Baroda Cricket Association has treated the TV Subsidy received from BCCI as corpus and has treated IPL Subven....
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....s. This is evident from the para above. However, this does not mean that the nature of receipt, changes, even if the three SCAs in Gujarat are giving separate treatment to these receipts as per their convenience or understanding. Thus, I hereby hold that the TV subsidy and IPL subvention is the revenue receipt of the appellant. The activity of selling of media rights by the BCCI & SCAs and the activity of conducting the IPL are the activities that are in the nature of trade, commerce or business within the meaning of proviso to section 2(15) of the Act. 10.1 From Para 9.2 to Para 9.9 the relevant information with regard to the receipt of funds from BCCI to SCAs has been reproduced. BCCI and SCAs on the issues of their management, BCCI & its relationship with SCAs, controversies on venues of matches, unfortunate incidents of match fixing etc. have been in the center of controversies. Otherwise there had been no reason for the intervention from the Hon'ble Apex Court to order a very intrusive mandate to the Lodha Committee set up by it. There is no doubt that BCCI is managed by the Full Members. The decisions taken by the Working Committee are the decisions which are endorsed ....
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.... the BCCI from holding match at its venue for the reason of expectation of revenue. Logistics of the full members is always available with BCCI for the IPL activities which are purely commercial in nature. 10.4 From the assessment order passed by the AO in the case of BCCI, the relevant part which is mentioned above, it is discernible that the BCCI and SCAs jointly hold all the cricketing activities in the country. For a smooth conduct of the activities the full members have developed a 'Rotation Policy' in the BCCI. The existence of Rotation Policy is admitted by the BCCI. According to BCCI the arrangements of conducting cricketing activities have evolved over time and are based on the cooperation and unity amongst the SCAs. 10.5 The basis for transfer of funds on account of TV subsidy and the IPL subvention from BCCI to SCAs is same. The BCCI, itself has not treated that these funds belong to it. BCCI has mentioned in Annual Report for 2007-08 that Rs. 203 crores of IPL subventions being 70% of franchisee fees was proposed to be given as subvention to SCAs. This is apparent from submissions made by the BCCI to its AO as well as from the decision taken during the ....
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.... years the entire income from TV Subsidy rights has been reflected as the income of the Board in the accounts and that this was wrong presentation. According to him 70% of the income from the sale of TV rights belongs to the affiliated units and only 30% of the TV rights revenue belongs to the Board. The members unanimously endorsed the views expressed by Mr I. S. Bindra and it was unanimously resolved that 70% of the sale of TV rights belongs to affiliated units and the balance 30% is only available for the calculation for the gross revenue share to the players from the year 2005-06." (Emphasis supplied) 10.7 From above minutes the position becomes clear in respect of to whom these receipts belong to 70% is that of SCAs and 30% is that of BCCI. As the receipts from the sale of media rights were that of BCCI as well as SCAs, similarly the income from the commercial activity of IPL is the joint income of BCCI and SCA/full/eligible members. It is discernible from the minutes of various AGMs that distribution of the revenue from media rights as well as IPL subvention are part of the same agenda item. The only difference is that the net media rights revenue, is shared by all S....
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.... rendering any service in relation to any trade, commerce or business for a cess, fees or any other consideration". Essentially, therefore, the emphasis is on the nature of activity and nothing else. The question to be considered by us, therefore, really is whether or not the activities of the cricket associations before us involve trade, commerce or business. In this backdrop, we were taken to the object clauses of the cricket associations. An effort was made to demonstrate that each and every activity pursued by the cricket associations before us was for promotion of cricket. It is submitted that there is not even a single object of the association which does not deal with promotion of cricket. Learned counsel then invited our attention to the fact that all the cricket matches under the Indian Premier League as indeed the other cricket matches, such as one day international matches and the international test matches, are organized by the Board of Cricket Control of India (BCCI) and not by the cricket associations before us. He submits that the entire case of the revenue authorities is that these test matches are organized on the commercial lines, and, for this reason, the cricket....
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....play since these activities are not in the nature of business, trade or commerce. Learned counsel reiterates that trigger for invoking proviso to Section 2(15) can only be activity of the assessee and not of anyone other than the assessee. He then reemphasizes that all the activities of the assessee cricket associations are for promotion of cricket and not for any trade, commerce or business and not even organizing the matches with commercial considerations as is the case of the revenue authorities. 15. Learned counsel the touches a different chord. He submits that the expression "education", in the context of section 2(15), is required to be interpreted in a broader sense rather than confining it to the formal education in pure arts and humanities or science and commerce in schools and colleges. He submits that we are living in a world in which the connotations of "education" extend to the skills that can earn livelihood, and rightly so, since keeping the education confined to traditional subjects will be contrary to the values of the contemporary society. It is submitted that cricket, as a career, has more potential than perhaps any other traditional subject or even any other fi....
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....ons) vs. Rajasthan Cricket Association [2018] 98 taxmann.com 425 (Rajasthan), order of ITAT Jaipur Bench in the case of Rajasthan Cricket Association vs. Addl. Commissioner of Income Tax, Range-2(3), Jaipur - [2017] 79 taxmann.com 464 (Jaipur) [2017] 164 ITD 212 (Jaipur.), order of ITAT Pune Bench 'A' in the case of Maharashtra Cricket Association vs. Commissioner of Income Tax-1, Pune [2015] 152 ITD 1 (Pune - Trib.), order of ITAT Rajkot Bench in the case of Saurashtra Cricket Association vs. Commissioner of Income Tax, Rajkot [2014] 148 ITD 58 (Rjt) order of ITAT Delhi Bench 'A' in the case of Deputy Director of Income Tax vs. All India Football Federation [2015] 62 taxmann.com 362 (Delhi - Trib.) [2015] 43 ITR(T) 656 (Del), and order of ITAT Mumbai Bench 'SMC' in the case of Dahisar Sports Foundation vs. Income Tax Officer (Exemptions)-(1), Mumbai [2017] 167 ITD 710 (Mum). The common thread in all these decisions, according to the learned counsel, is that despite the fact that a case was made out in all these cases for denial of exemption under section 2(15) by invoking the proviso to the said sub section and by alleging that the activity of the assessee cricket associations was....
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....egards the decision of coordinate bench in the case of Tamilnadu Cricket Association Vs DIT [2013] 32 taxcmann.com 50 (Chennai), learned counsel submits that this decision was also reversed by the respective High Court i.e. Hon'ble Madras High Court in the case of Tamilnadu Cricket Association Vs CIT [(2014) 360 ITR 633 (Mad)]. Learned counsel submits that the decision of Madras Sports Club Vs DIT [(2013) 30 taxmann.com 130 (Chennai)] is not applicable to the facts of this case as the dispute in that case was confined to the quantum of receipts for the purpose of Section 2(45) rather than application of Section 2(15). On the Entertainment Society of Goa vs. CIT [2013] 34 taxmann.com 210 (Panaji), learned counsel points out that this decision has been distinguished by another coordinate bench decision in the case of Rajasthan Cricket Association (supra). Similarly, as regards Punjab Seed Certification Authority Vs CIT [(2013) 37 taxmann.com 81 (Chandigarh)], our attention was invited to the fact that this judicial precedent is distinguished by Hon'ble Delhi High Court in the case of Bureau of Indian Standards Vs DGIT [(2013) 358 ITR 78 (Del)]. On the strength of these submissions, l....
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....dividuals who wish pursue this game as their 'profession' or 'career'. It is in this context that the learned counsel seeks to rely on Hon'ble jurisdictional High Court's judgment in the case of Gujarat State Cooperative Union v. CIT (1992) 195 ITR 279 (GUJ) the Jurisdictional High Court has held, inter alia, that "the changing time and the ever widening horizons of knowledge may bring in changes in the methodology of teaching and a shift for the better in the institutional setup. Advancement of knowledge bring within its fold suitable methods of its dissemination and though the primary method of sitting in a class-room may remain ideal for most of the initial education, it may become necessary to have a different outlook for further education. It is not necessary to nail down the concept of education to a particular formula or to flow it only through a defined channel. Its progress lies in acceptance of new ideas and development of appropriate means to reach them to the recipients." A reference is then made to Hon'ble jurisdictional High Court decision in the case of Director of Income Tax (Exemptions) v. Ahmedabad Management Association 366 ITR 85(Guj) wherein Their Lordships hav....
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....on, or retention, of the income from such activity". Learned counsel contends that the aforesaid proviso was inserted by Finance Act 2008. The proviso aims to reduce the scope of section 2(15) by narrowing down the objects falling thereunder, It seeks to provide that the objects for advancement of general public utility involving commercial activity will not be charitable any longer. The proviso is therefore restricted only to the fourth limb of section 2(15). The first three limbs are unaffected by the proviso. This has been clarified by the CBDT circular No. 11 of 2008 dated 19.12.2009; the relevant portion of which reads as under: "2.1 The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of section 2(15) i.e. relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute charitable purpose, even if it incidentally involves the carrying on of commercial activities." 21. It is submitted that the appellant is involved in cricket coaching and promotion which is a form of 'education' and thereby qualifying itself as a 'charit....
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....iated to the BCCI has to make available the stadium at the instance of BCCI and it has no decision making authority as to the schedule / conduct of these matches. The frequency of the matches is very low. Except for International Matches, in case of all other matches there are no fees or charges collected from the spectators. Apart from the International matches, the appellant has conducted many matches at state level. No fees have been charged in such matches. The main object of the appellant is to promote and develop the game of cricket in the State of Gujarat. None of the objects of the appellant are commercial or in the nature of business or trade and all the activities are undertaken with a sole view to promote cricket and not to carry on any activity in the nature of trade, commerce or business. Meaning of profit generating activity The learned officer observed that the appellant is engaged in 'profit generating activity' and therefore ineligible to be termed as 'charitable organisation' The object of general public utility to be regarded as 'charitable' in nature was not to involve the carrying on of any activity of profit. In other words, profit making is a p....
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....objects of appellant are to promote the game of cricket in Gujarat. The surplus, if any, arising from the activities are solely utilized for the achievement of its objects and no portion is utilized for distribution of any income or profits. The activities of appellant are therefore charitable in nature. Further, for the reasons given above, the requirements of proviso to section 2(15) would also not be satisfied. Accordingly, the contention of the assessing officer that the appellant is ineligible for exemption due to its profit making activity is bad in law and is not tenable. Being an assessee which has always been held to be charitable cannot be jettisoned on certain interpretation and inferences. The objective of the association, conduct and documentation sufficiently spell out that the appellant is a charitable organisation striving towards welfare and promotion of the game of cricket. We draw Your Honour's kind attention to the recent Gujarat High Court decision in the case of Director of Income Tax (Exemption) Vs. Sabarmati Ashram Gaushala Trust (2014) 362 ITR 539 (Guj). We reproduce here below the relevant paragraphs from the said decision: "6. The legal controver....
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....ly the same as pointed out by Shri Soparkar. His defence on the judicial precedents relied upon by the authorities below is also materially similar to that by Shri Soparkar. Therefore, for the sake of brevity, we see no need to again reproduce these arguments. On the strength of these submissions, we are once again urged to uphold the plea of the assessee. 24. Shri Tushar Hemani, learned counsel for Saurashtra Cricket Association, also adopts the arguments advanced by his learned predecessors and submits that in his case, CIT(A) has simply followed his decision in the case of Gujarat Cricket Association. Whatever, therefore, is decided in the case of Gujarat Cricket Association must mutatis mutandis follow in this case as well. Learned counsel submits that the arguments put forward by his predecessors hardly leave any area uncovered, and that he has little to add. Having said that learned counsel adds that there is no commercial activity which is pursued by the association and yet all that has been put against the assessee is that the assessee is carrying on business, trade and commerce in the name of promoting cricket. Learned counsel submits that cricket is a game of masses in t....
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....s the first limb as mentioned in (a) above is concerned, attention is invited to the Circular No. 395 [F. No. 181(5) 82/IT(A-I)], dated 24-9-1984, wherein the Board has advised that promotion of sports and games is considered to be a charitable purpose within the meaning of section 2(15). As for the second limb i.e first proviso to S.2(15) of the Act as inserted by the Finance Act, 2008 w.e.f 01/04/2009 is concerned, it is submitted that the law is settled by the larger bench of Supreme Court in the case of ACIT vs. Surat Art Silk Cloth Manufacturers Association reported in 121 ITR 1 (SC) that (a) the primary or dominant purpose of the trust or institution has to be examined to determine whether the said trust / institution is involved in carrying out any activity for the profit and (b) if the "object" of the trust or institution is to carry out object of general public utility and this is the primary or dominant purpose and not carrying on any activity for profit, the same would satisfy the requirements of S.2(15) of the Act. It is further submitted that (a) first proviso to S.2(15) of the act should not generalized to each and every facts of the case where there is a surplus over....
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.... to carry out any trade, commerce or business with profit - motive. Such receipts should be strictly confined to the attainment of the objects of the Assessee-Trust and with the intention to carry out any trade, commerce or business. 27. Learned counsel concludes by submitting that it is well settled that while adjudicating upon an appeal, where two views are possible, the view in favour of the assessee should be adopted. In the facts of the present case, there are large numbers of decisions which are in favour of the assessee and therefore, even if the view against the assessee is plausible and probable, the view in favour may kindly be adopted. In support of this proposition, learned counsel for the assessee relies upon a host of judicial precedents including in the cases of Mysore Minerals Ltd. V CIT 239 ITR 775 (SC), Orissa State Warehousing Corporation v CIT 237 ITR 589 (SC), CIT v. Podar Cement Pvt. Ltd. and Others. 226 ITR 625 (SC), CIT v Vegetable Products Ltd. 88 ITR 192 (SC), and CIT v Naga Hills Tea Co. Ltd. 89 ITR 236, 240 (SC). We are thus urged to follow the division bench decisions in the cases of other cricket associations and hold that the assessee is not hit by p....
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....sports have been exploited commercially in the last few decades. He submits that it is an admitted position that the cricket associations were all along treated as involved in "advancement of an object of general public utility" and, effective 1st April 2009, the proviso to Section 2(15) came in force which made it clear that if the activities of such institutions is in the nature of trade, commerce or business or rendition of services, for a cess, fee or any other consideration, to the business entities. The principle, according to the learned Departmental Representatives, is clear. When you are here to make money from such activities on commercial lines, in the garb of pursuing advancement of an object of general public utility, you may as well pay tax on the earnings from such activities. There is no dispute that the cricket is now biggest source of making money and, therefore, the income of the entities organizing cricket events should also be taxed. Learned Departmental Representative then takes us through the orders of the authorities below, and places his vehement reliance on the same. Learned Commissioner then submits that one has to bear in mind the difference between the ....
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....of this proposition as well. We are thus once again urged to uphold the plea of the assessee to the effect that proviso to Section 2(15) cannot be invoked on the facts of this case. 30. We have conscientiously heard the rival contentions, carefully perused the material on record and duly considered the applicable legal position. Our analysis: 31. As we proceed to deal with the impact of insertion of proviso to Section 2(15), we consider it appropriate to look at a coordinate bench decision, in the case of Hoshiarpur Improvement Trust Vs ACIT [(2015) 155 ITD 570 (Asr)], wherein, speaking through one of us (i.e. the Vice President), the coordinate bench has, inter alia, observed as follows: 14. Before we address ourselves to the facts of this case, let us analyse the relevant legal provisions. Section 2 (15), which defines 'charitable purposes' though in an inclusive rather than an exhaustive manner, had a rather quiet existence, unaffected by the frequent amendments to the Income Tax Act 1961, till 1st April 1984. Vide Finance Act, 2013, and with effect from 1st April 1984, the words 'not involving the carrying on any activity for profit' were deleted from Section 2(15), and, ....
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.... also important to bear in mind that the insertion of proviso to s. 2(15) does not mean that in case an assessee is to receive any payment for anything done for trade, commerce or business, the assessee will be hit by the said proviso. It may be recalled that elaborating the scope of this amendment, CBDT, vide Circular No. 11, dt. 19th Dec., 2008 [(2009) 221 CTR (St) 1], has observed as follows: "3. The newly amended s. 2(15) will apply only to the entities whose purpose is 'advancement of any other object of general public utility' i.e., the fourth limb of definition of 'charitable purpose' contained in s. 2(15). Hence, such entities will not be eligible for exemption under s. 11 or under s. 10(23C) of the Act, if they carry on commercial activities. Whether such an entity is carrying on an 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 activity. 3.1 There are industry and trade associations who claim exemption from tax under s. 11 or on the ground that their objects are for charitable purposes as these are covered under the 'any other object of public utility'. Under the p....
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....end that where an object of general public utility is not merely a mask to hide true purpose or rendering of any service in relation thereto, and where such services are being rendered as purely incidental to or as subservient to the main objective of 'general public utility', the carrying on of bona fide activities in furtherance of such objectives of 'general public utility' will also be hit by the proviso to s. 2(15). 15. As CBDT rightly puts it, sweeping 'generalizations are not possible' and 'each case will have to decided on its facts'. The question then arises whether on the present set of facts it can be said that the assessee was engaged in trade, commerce or business or in rendering of a service to trade, commerce or business. 17. Therefore, as the legal position stands as on now, even after the insertion of the above two provisos, as long as the object of general public utility is not merely a mask to hide true purpose or rendering of any service in relation thereto, and where such services are being rendered as purely incidental to or as subservient to the main objective of 'general public utility', the carrying on of bonafide activities in furtherance of such obj....
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....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" because "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." The advancement of any objects of general public utility and engagement in trade, commerce and business etc. were thus seen as mutually exclusive in the sense that either the assessee was pursuing the objects of general public utility or pursuing trade, commerce or business etc. in the garb of pursing the objects of general public utility. As the CBDT circular itself demonstrates, there could not have been any situation in which the assessee was pursing the objects of general public utility as also engaged in trade, commerce of business etc. In the new proviso, however, even when the assessee is engaged in the activities in the nature of trade, commerce or business etc. and "such activity is undertaken in the course of actual carrying out ....
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.... the authorities was unsustainable as even assuming that all the allegations of the Assessing Officer with respect to the profit motive in the activities of the assessee are correct, the same were carried out with the larger and predominant objective of general public utility. Relying upon the CBDT circular the Tribunal observed that it is only when the Assessing Officer finds that "the income is from any other business which is not incidental to the attainment of the objectives of the trust or institution", that such an income will "not be exempt from tax". The Tribunal noted that there is no finding to that effect by any of the authorities and that it is not even the case of the revenue that the activities of the trusts do not serve the objects of the general public utility. The Tribunal held that the activities of the trust fall within the category "objects of general public utility". It was also held that separate books of account for the business activities were maintained. This was not challenged before us. It is not necessary in these appeals to decide the effect of the amendment to Section 2(15) introduced with effect from 01.04.2016. The Tribunal then dealt with the mai....
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....tional High Court, in the case of Sabarmati Gaushala Trust (supra), has observed as follows: 5. Term "Charitable Trust" is defined in Section 2 (15) of the Act which includes the relief to the poor, education, medical relief, preservation of environment; including watersheds, forests and wildlife and preservation of monuments or places or objections of artistic or historic interest and advancement of any other object of general public utility. Proviso to Section 2 (15) and further proviso whereof inserted by Finance Act 2010 w.e.f 1st April 2009 read, thus - "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 such activity. Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty five lakh rupees or less in the previous year....
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.... to section 2 (15) will apply only to entities whose purpose is ' advancement of any other object of general public utility' ie., 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 There are industry and trade associations who claim exemption from tax under section 11 on the ground that their objects are for charitable purpose as these are covered under ' any other object of general public utility'. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be co....
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....etting off of the cost, for production of such marketable products from the sale consideration, the activity may leave a surplus. The law does not expect the Trust to dispose of its produce at any consideration less than the market value. If there is any surplus generated at the end of the year, that by itself would not be the sole consideration for judging whether any activity is trade, commerce or business - particularly if generating ' surplus' is wholly incidental to the principal activities of the trust; which is otherwise for general public utility, and therefore, of charitable nature. ............... .................................. 11. We are wholly in agreement with the view of the Tribunal. The objects of the Trust clearly establish that the same was for general public utility and where for charitable purposes. The main objectives of the trust are - to breed the cattle and endeavour to improve the quality of the cows and oxen in view of the need of good oxen as India is prominent agricultural country; to produce and sale the cow milk; to hold and cultivate agricultural lands; to keep grazing lands for cattle keeping and breeding; to rehabilitate and assist....
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....t these activities seek to achieve. 35. Let us take a pause here and examine as to what are the activities of the assessee cricket associations so as to be brought within the ambit of trade, commerce or business. We have seen objects of the association, which are reproduced earlier in our order, and it is not even the case of the revenue that these objects have anything to do with any trade, commerce or business; these objects are simply to promote cricket. The trigger for invoking proviso to Section 2(15), as Shri Soparkar rightly contends, has to an activity of the assessee which is in the nature of trade, commerce or business. However, the case of the revenue authorities hinges on the allegation that the way and manner in which cricket matches are being organized, particularly the IPL matches, the activity of organizing cricket matches is nothing but brute commerce. Undoubtedly, it would appear that right from the time Kerry Packer started his World Series Cricket in 1977, there has been no looking back in commercialization of cricket and the impact of this commercialization has not left Indian cricket intact. The Indian Premier League and the rules of the game being governed b....
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....ot the end beneficiaries. Even in such a case the point of taxability of these profits is the BCCI and not the cricket associations, because, even going by learned Commissioner's arguments, these receipts in the hands of the cricket associations is nothing but appropriation of profits. What can be taxed is accrual of profits and not appropriation of profits. In any event, distinction between the cricket associations and the BCCI cannot be ignored for the purposes of tax treatment. There is no dispute that the matches were organized by the BCCI, and the assessee cannot thus be faulted for the commercial considerations said to be inherent in planning the matches. As we make these observations, and as we do not have the benefit of hearing the perspective of the BCCI, we make it clear that these observations will have no bearing on any adjudication in the hands of the BCCI. Suffice to say that so far as the cricket associations are concerned, the allegations of the revenue authorities have no bearing on the denial of the status of 'charitable activities' in the hands of the cricket associations before us- particularly as learned Commissioner has not been able to point out a single obje....
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....stands approved by Hon'ble Punjab & Haryana High Court in the case of Improvement Trust Monga (supra). Tamilandu Cricket Association decision (supra) by the coordinate bench was disapproved by Hon'ble Madras High Court in the judgment reported as Tamilnadu Cricket Association Vs CIT [(2014) 360 ITR 633 (Mad)]. As regards Cricket Association of Bengal judgment (supra), that was a case in which admittedly no training, coaching or assistance was provided to the players or aspiring players and the association was formed only for watching the matches by making payment. It was on these facts that the association was held to be not for any object of general public utility. This case has no relevance in the present context since admittedly even the CBDT circular treats the cricket associations as pursuing objects of general public utility and the dispute is confined to the alleged element of trade, commerce and business in so pursuing the objects of general public utility. As regards peculiarities of Cricket Association of Bengal case (supra), the following observations made by Hon'ble Court are relevant: The facts of the present case are that the assessee Association merely held certain....
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....h uphold the contrary view, this coordinate bench decision does not constitute a binding judicial precedent. 40. We have noted that there are a large number of judicial precedents, in the cases of various other cricket associations- details of which are set out earlier in this order, holding that the proviso to Section 2(15) cannot be invoked in the cases of such similarly placed cricket associations. Respectfully following the same, and also for the detailed reasons set out above, we uphold the plea of the assessee. We are not reproducing extracts from these decisions, for the sake of brevity, but we adopt, and concur with, the reasoning of these decisions. When proviso to Section 2(15) cannot be invoked on the facts of these cases, the benefits of Section 11 and 12, which were declined only by invoking the proviso to Section 2 (15), could not have been declined on the facts of these cases. 41. We have noted that all the learned representatives have advanced detailed arguments on the proposition that since the assessee cricket associations are engaged in educational activities, it is not really material whether or not the assessee has engaged itself in the activities in the natu....
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....t issue. 47. Ground nos. 1 and 2 are thus allowed in the terms indicated above. 48. In ground no. 3, the assessee has raised the following grievances: (3) (a) The learned CIT(A) has erred in law and on facts in not accepting the submissions of the assessee with relevant evidences in respect of the claim that the amount received from BCCI, Rs. 20,69,60,338/- is towards corpus donation. Hon. CIT (Appeals) has erred in not considering the BCCI AGM resolution which provides that all future payments by BCCI shall be towards corpus by using word 'Henceforth'. (b) Alternatively, the learned CIT(A) has erred in law and on facts when the status of the assessee is held to be AOP and Section 2(15) held to be not applicable, then as per the provisions of Sec.2(24) (iia) r.w.s. 13(8) and 56, the corpus donation of Rs. 20,69,60,338/- cannot be added as income. 49. As regards grievance raised by the assessee in ground no. 3(a), we have already decided this issue in favour of the assessee, vide our order of even date for the assessment years 2004-05 to 2007-08, and we have observed as follows: 12. So far as this grievance of the assessee is concerned, the relevant material facts....
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....he 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 claimed as corpus donation 13. The assessee is not satisfied and is in further appeal before us. 14. 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. 15. We find that, at pages 46 and 47 of the paperbook, the assessee has filed specific confirmations to the effect that these amounts were corpus....
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....e terms indicated above. 52. In ground no. 4, the assessee has raised the following grievances: (4) (a) The learned CIT(A) has erred in law and on facts in not accepting the submissions of the assessee with relevant evidences in respect of the claim that the amount received from BCCI Rs. 2,13,34,033/-, being infrastructure subsidy is towards capital receipt, when the amount being in the nature of Grant. Hon. CIT(A) has erred in stating that assessee has offered no rebuttal to the same (Para 39 of CIT(A) order), (b) Alternatively, the learned CIT(A) has erred in law and on facts when the status of the assessee is held to be AOP and Section 2(15) held to be not applicable, then as per the provisions of Sec. 2 (24) (iia) r.w.s. 13(8) and 56, the corpus capital receipt of Rs. 2,13,34,033/- cannot be added as income. 53. So far as this grievance of the assessee is concerned, the relevant material facts are like this. During the course of the assessment proceedings, the Assessing Officer noted that the assessee has received infrastructure subsidy of Rs. 3,52,86,521 from the BCCI, out of which the assessee has utilized the same only to the extent of Rs. 1,39,52,488 by way of payme....
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.... no. 5, the assessee has raised the following grievance: The learned CIT(A) has erred in law and on facts in denying exemption of Mutuality Income vis-a-vis club activities without any discussion of the claim of the assessee. 58. 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. 59. 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. 60. Ground no. 5 is thus allowed for statistical purposes. 61. In ground no. 6, the assessee has raised the following grievance: The learned CIT(A) has erred in law and on facts in holding that deprecation is not to be allowed on assets purchased in prior years, which amount of purchase has been allowed (when no such capital expenses are allowed in prior years) and has erred in restricting the depreciation on current year's purchases. It is claimed that even if full purchase cost is allowed (not allowed on facts) in prior years, as per judicial pronouncements, deprec....
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.... for assessment years 1977-78, 1978-79 and 1979- 80, the assessee claimed depreciation on the value of the building @ 2½% and they also claimed depreciation on furniture @ 5%. The question which arose before the Court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition? It was held by the Bombay High Court that section 11 of the Income-tax Act makes provision in respect of computation of income of the Trust from the property held for charitable or religious purposes and it also provides for application and accumulation of income. On the other hand, section 28 of the Income-tax Act deals with chargeability of income from profits and gains of business and section 29 provides that income from profits and gains of business shall be computed in accordance with section 30 to section 43C. That, section 32(1) of the Act provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. It further provides for deduction subject to section 34. In that matter also, a similar argument, as in th....
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....the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciation in respect of those assets cannot be taken into account. This view of the Tribunal has been confirmed by the Bombay High Court in the above judgment. Hence, Question No. 2 is covered by the decision of the Bombay High Court in the above Judgment. Consequently, Question No. 2 is answered in the Affirmative i.e., in favour of the assessee and against the Department." 2. After hearing learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High Court correctly states the principles of law and there is no need to interfere with the same. 3. It may be mentioned that most of the High Courts have taken the aforesaid view with only exception thereto by the High Court of Kerala which has taken a contrary view in 'Lissie Medical Institutions v. CIT [2012] 24 taxmann.com 9/209 Taxman 19 (Mag.)/348 ITR 344'. 4. It may also be mentioned at this stage that the legislature, realising that there was no specific provision in this behalf in the Income-tax Act, has made amendment in Section 11(6) of t....
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....grievances are dismissed as infructuous at this stage. 67. Ground nos. 7 to 11 are dismissed as infructuous. 68. In the result, the ITA No 1257/Ahd/13, i.e. Gujarat Cricket Association's appeal for the assessment year 2009-10, is thus partly allowed in the terms indicated above. ITA No. 3303/Ahd/16 69. We now take up appeal filed by the Gujarat Cricket Association for the assessment year 2010-11. 70. 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. 71. 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) an....
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....ave 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 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. 78. Ground nos. 3 and 4 are allowed in the terms indicated above. 79. 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 15% of income as per provisions of Act by not considering the addition made to the income (Though such addition is not accepted by assessee) and Hon. CIT(A) has erred in law and on facts in not accepting the claim of the assessee. 80. As regards this grievance, all that learned counsel prays is that a direction may be given to compute the income as per provisi....
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.... hence the provision of proviso to section 2(15) and section 13(8) are not applicable. 92. 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. 93. Ground no. 2 is dismissed as infructuous. 94. 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.V, Rights, IPL subsidy etc is a voluntary payment by BCCI and when such distribution by BCCI has not been granted a....
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....the assessee. 101. As regards this grievance, all that learned counsel prays is that a direction may be given to compute the income as per provisions of section 11 of the Act, after giving deduction of 15%. Learned Departmental Representative does not oppose the prayer. We, therefore, direct the Assessing Officer accordingly. 102. Ground no. 6 is allowed in the terms indicated above. 103. In ground no. 7, 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. 104. 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. 105. 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. 106. Ground no. 7 is thus allowed for statistical purposes. 107. In the result, ITA N....
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....ts paid to various State Cricket Associations in the form of T.V, Rights, IPL subsidy etc is a voluntary payment by BCCI and when such distribution by BCCI has not been granted as a deduction to BCCI by it's A.O. (ii) Alternative Ground of Appeal. The learned A.O. and Hon'ble CIT(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. 116. 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....
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.... 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 126. Ground no. 7 is thus allowed for statistical purposes in terms indicated above. 127. In the result, ITA No. 408/Ahd/17 i.e. appeal of the assessee for the assessment year 2012-13 is partly allowed in the terms indicated above Conclusions- Gujarat Cricket Association 128. In the result, ITA No. 408/Ahd/17, i.e. appeal of Gujarat Cricket Association for the assessment year 2012-13 is partly allowed in the terms indicated above. To sum up, all the four appeals filed by Gujarat Cricket Association are partly allowed in the terms indicated in the orders above. 129. We will now take up the appeals filed by Baroda Cricket Association. ITA No: 336 /Ahd/2015 130. This appeal challenges correctness of the order dated 7th November, 2014 passed by the CIT(A) in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961, for the assessment year 2009-10. 131. Ground nos. 1 to 3 challenge reassessment proceedings. However, learned counsel for the assesse....
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....r.w.s.2(15) of the income Tax Act, 1961 as return was filed based on Finance Act, 2009 and on that day section 13(8) was not even in the Statue Book. 4. The C.I.T. (Appeals) erred in not allowing exemption u/s 11(l)(a) of the Income Tax Act, 1961 based on provision of section 2(15) of the Income Tax Act, 1961. 5. The C.I.T. (Appeals) erred in taxing the income from the cricketing activities as business income u/s 28 without establishing the said activities as in nature of business trade or commerce. 7. The C.I.T. (Appeals) erred in not appreciating that impugned Assessment order was passed based on the Assessment Order for A.Y.2010-11 of The Board of Control For Cricket in India ("BCCI" for short) that too without providing copy of said order. 142. 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, uphol....
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....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 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 pointe....
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.... 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 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. 146. We see no reasons to take any other view of the matter than the view so taken in the case of Gujarat Cricket Association. Respectfully following the same, we uphold the plea of the assessee and direct the Assessing 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.....
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....ight of our above observations. We order accordingly. 152. Ground no. 3 is thus allowed for statistical purposes in the terms indicated above. 153. In ground no. 6, the assessee has raised the following grievance: 6. The C.I.T. (Appeals) erred in not appreciating the fact that hosting of One Day International match ("ODI" for short) is one off adventure to raise funds to carry out objects of the Trust. The income from said ODI cannot take colour of commercial activities or income. 154. 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 t....
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.... whole of the income of your appellant whereas section 13(8) clearly speaks about denying exemption to such income which is covered by proviso to section 2(15) of the Act and not entire income. 4. The ld. CIT(A) erred in not appreciating that the ld. AO has made high pitched assessment by taking base from the Assessment Order for A.Y. 2010-11 passed in the case of the Board of Control For Cricket in India ("BCCI" for short) that too without providing copy of said order to appellant. 7. The ld. CIT(A) erred in upholding view of ld. AO of not allowing exemption u/s.11(1)(a) of the Income Tax Act, 1961 on provision of section 2(15) of the Income Tax Act, 1961. 8. The ld. CIT(A) erred in upholding view of ld. AO of taxing the income of appellant from the cricketing activities as business income u/s.28 without establishing the said activities as in nature of business trade or commerce. 9. The ld. CIT(A) erred in upholding view of ld. 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 decis....
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....lature 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 and it cannot, therefore, be treated as voluntary contribution in the....
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....art 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 11(1)(d) are satisfied. We, therefore, uphold the plea of the assessee. The Assessing Office....
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....o 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. 175. 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. 176. Ground no. 6 is thus allowed for statistical purposes in the terms indicated above. 177. In ground no. 10, the assessee has raised the following grievance: The ld. CIT(A) erred in not appreciating the fact that hosting of One Day International match ("ODI" for short) is one of adventure to raise funds to carry out objects of the Trust. 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, d....
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....firming the action of AO of applying the provisions of section 13(8) of the Act to the appellant. 3. The ld. CIT(A) has erred both in law and on the facts of the case in confirming the action of AO of denying the exemption claimed by the appellant u/s. 11 and 12 of the Act. 187. 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 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. 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 d....
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....5. 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. 23,44,45,066/- claimed u/s.11(2) of the Act. 6. 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. 5,37,04,677/- claimed u/s. 11(1)(a) of the Act. 195. The above relief are only consequential in nature inasmuch these exemptions were denied on account of assessee being held to be not involved in a charitable activity under section 2(15) of the Act. Now the issue regarding charitable status of the assessee, and admissibility of consequent exemption under section 11, is decided above in favour of the assessee, the consequences will follow. We, therefore, remit the matter to 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 te....
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....f 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 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. ....
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....ction 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 13(8) of the Act to the appellant. 3. The ld. CIT(A) has erred both in law and on the facts of the case in confirming the action of AO of denying the exemption claimed by the appellant u/s. 11 and 12 of the Act. 215. 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 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 followin....