TaxTMI 
TaxTMI 
2019 (3) TMI 1585
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....gistration Number-107 of 2003-04. The assessee is also registered u/s 12A/12AA of the Act, by the Commissioner of Income Tax-Jamshedpur vide F.No. Technical/JSR/VIII-69/03- 04/1275-78 dt. 31/03/2004. 4. The ld. Counsel for the assessee, before us filed a detailed written submission, which is extracted for ready reference:- 1. The appellant i.e. Jharkhand State Cricket Association (hereinafter referred as JSCA/Appellant) is a society registered under the Societies Registration Act and had been established in 1935.The appellant is the controlling authority of cricket activities in the State of Jharkhand. 2. The aforesaid society came into existence to promote sports activities namely the sports of cricket which is an object of general public utility. The objects of the appellant society as has been stated in the memorandum of the association of the appellant society is stated hereunder: (a) To promote, encourage, organize and control the game of cricket throughout the State of Jharkhand. (b) To arrange, organize and regulate representative matches in the State with teams representing the Association and also approved matches of JSCA and to selec....
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....of Control for Cricket in India, to publish cricket journals, magazines and literature on cricket, to spread the game of cricket throughout the State, to promote, encourage, organize and develop the game of cricket in schools and colleges in the State, to maintain a panel of approved umpires and also to encourage the formation of District Associations for the control of the game of cricket. In sum and substance, the objects of the appellant is to seek to encourage, promote, develop and control the game of cricket in the state. It is therefore seen that the activities and objects of the assessee revolve around promoting, developing and controlling the game of cricket. 4. It is submitted that since the objects of the appellant is promotion of sports and organizing sport, as such, objects of the appellant is charitable within the meaning of section 2(15) of the Income Tax Act, 1961. In fact, CBDT in Circular: No. 395 [F. NO. 181(5) 82/IT(A-I)], Dated 24-9-1984 has provided that promotion of sports and games is considered to be a charitable purpose within the meaning of section 2(15). For the sake of convenience, aforesaid circular is being extracted hereunder: "1. Th....
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....ure and exemption claimed u/s 11/12 of the Act was allowed (see page 374-375 of PB). 8 It is submitted that in all the three assessment years i.e. AY 2010-11, 2012-13 and 2013-14, the basis of disallowance of exemption was that assessee was in receipt of IPL Subvention, TV rights subsidy from the BCCI and also instedia advertisement. Since the income generated through conduct of IPL matches and sponsorship has been held as commercial in nature, and hence the subvention and TV subsidy received by the assessee is commercial in nature. In view of the aforesaid, learned AO has held that income of the assessee cannot be held to be eligible for exemption u/s 11 of the Act as receipts from BCCI in respect of IPL Subvention & /TV subsidy being receipts from commercial activities and are in excess of Rs. 25 lakhs. The details of receipt and utilization thereof is being submitted as Annexure-B to this synopsis. 9. The assessee society has been assessed to be a charitable society. Further, objects of the society being charitable in nature, till the AY 2009-10, the exemption granted u/s 11 has not been disputed. Infact for the AY 2011-12 and subsequent to these three year i.e....
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.... viii. CIT v. Godavari Corporation Ltd. 156 ITR 835 (MP) ix. UOI v Kuomidini Narayan Dalal and Another 249 ITR 219 (SC) x. UOI v Satish Panna Lal Shah 249 ITR 221 (SC) 10. It is submitted that admittedly and undisputedly, appellant is engaged in the promotion of sports and organizing sport and such activity of the appellant is in the nature of charitable within the meaning of section 2(15) of the Act. For the sake of convenience, provisions of section 2(15) of the Act is extracted hereinbelow: (15) "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility: 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, irre....
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....re the objects of an institution cover the public at large or a section of public the objects are to be held to the "objects of general public utility" as meant in Section 2(15) of the Act. In fact, in the case of CIT v. Gujarat Maritime Board [2007] 295 ITR 561 (SC), Hon'ble Apex Court has observed as under: '... in Section 2(15), namely, "any other object of general public utility". From the said decisions it emerges that the said expression is of the widest connotation. The word "general" in the said expression means pertaining to a whole class. Therefore, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose [CIT v. Ahmedabad Rana Caste Association [1983] 140 ITR 1 (SC)]. The said expression would prima facie include all objects which promote the welfare of the general public. It cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served. If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be charitable purpose. When an object is....
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....ring of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes." 11.3 That the High Court of Delhi in the case of GS1 India vs DGIT reported in [2014] 360 ITR 138 (Delhi), wherein assessee has acquired intellectual property rights qua bar coding system from 'G' and charged registration and annual fees from third parties to permit use of coding system. Assessee applied for registration under section 10(23C)(iv), which was denied by Director General (Exemption) on ground that activity of assessee was in nature of trade, commerce or business and that assessee had not maintained separate books of account for business activity. On the aforesaid facts, it was held by the Hon'ble High Court that Charging a nominal fees by assessee-society from beneficiaries to use coding system and to avail advantages and benefits therein....
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....neficiaries are present everywhere and the advantages are permeating and universal and would include consumers, government, beneficiaries of PDS etc. 32. The second proviso, which refers to the aggregate value of receipt of activities of Rs. 10 lacs (now enhanced Rs. 25 lacs vide Finance Act 2011 with effect from 1.4.2012) or less in a previous year, cannot be invoked in the present case because the said provision will apply only if the institution covered by the last/residuary clause is involved or carrying on activity of rendering any service in relation to trade, commerce or business. Contention of the respondent, if accepted, would deny charitable status to a faintly moderate size institution under the last/residuary limb, when it charges even a token or insignificant amount from the beneficiaries, who gain significantly from the altruism and benevolence. A small charitable organization that receives token fee of more than Rs. 80,000/- a month or now Rs. 2,00,000/- per month approximately, would disqualify and lose their charitable status. The object of the proviso is to draw a distinction between charitable institutions covered by last limb which conduct business or o....
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....n carried with an object of profit, as such same would not be hit by the proviso to section 2(15) of the Act. In the case of Rajasthan Cricket Association v. Additional Commissioner of Income-tax reported in [2017] 164 ITD 212 (Jaipur - Trib.), it has been held that where in case of assessee association registered under section 12A, predominant activity of assessee was conducting matches of cricket which fell under category of general public utility, mere fact that it earned certain anciliary income in form of TV subsidy, sale of advertisement and surplus of match receipts, would not lead to conclusion that assessee's case was hit by proviso to section 2(15). It is submitted that facts of the aforesaid case are similar to the facts of the instant case. Hon'ble Tribunal has after through examination of the fact and law has held as under: "6. The allegations of the Assessing Officer is that in the case of assessee the major income arise not from the game of Cricket but from the business of Cricket. It is alleged by the Assessing Officer that major source of income are from TV Subsidy, Sale of advertisement, surplus from one-day international between India and Pakistan in....
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..... Now, coming to the allegation of the Assessing Officer that the major source of income are TV subsidy, sale of advertisement surplus from ODI between India and Pakistan income from RCA Cricket academy and interest income. It is not in dispute that TV subsidy, sale on advertisement surplus from ODI between India and Pakistan income from RCA Cricket Academy are all relating to the conduct of Cricket matches by the society. It is undisputed fact that without conduct of matches income cannot be derived. Therefore, it can be safely inferred that these incomes are related to the incidental activity of the association. These incomes would not accrue without the game of Cricket. The main thrust of revenue's argument is that for allowing exemption under section 11 of the Act, the Assessing Officer need to examine whether the proviso to section 2(15) of the Act is attracted or not. It is the contention of the revenue that assessee would fall under the limb of any other object of general public utility to which category only the proviso to section 2(15) applies. It is contended that if proviso 2(15) attracted, assessee loses benefit of exemption as per section 13(8). Therefore, it is su....
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....f Club Ltd. v. DIT(E) [2012] 52 SOT 149 (Mum.) (x) Delhi & District Cricket Association v. DIT(E) [2015] 69 SOT 101 (Delhi- Trib) (xi) Tamil Nadu Cricket Association v. Dy. DIT(Exemptions) [2015] 70 SOT 242/60 taxmann.com 287 (Chennai-Trib) (xii) Dy. DIT(E) v. All India Football Federation [2015] 62 taxmann.com 362 (Del-Trib) 15 It is submitted that the in the instant appeals, learned CIT(A) has placed reliance on the order of the Hon'ble Tribunal in the case of MIG Cricket Club vs. DIT (E) (I.T.A. No.602/Mum/2012 dated 18/04/2017) wherein assessee was also undertaking the activity of Banquet Hall Hiring, Hospitality (Restaurants) and Permit Room (Bar), which activities are held to be in the nature of carrying on trade, commerce, or business for consideration, which are hit by proviso to Section 2(15) of 1961 Act. Apart from the aforesaid it is submitted that while adjudicating the aforesaid appeal, judgment of the Tamil Nadu Cricket Association v. DIT (E) [2014] 360 ITR 633 (Mad HC) has neither been discussed nor been referred, as such, aforesaid order cannot be placed reliance. 16 It is further submitted if the objects of the assessee ....
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....vity 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, then even in respect of advancement of any other object of general public utility, will be charitable and benefit of section 11 and section 12 cannot be denied. 19 At this stage reliance is placed on the judgment of the Apex Court in the case of Queen's Educational Society vs. CIT reported in [2015] 372 ITR 699 (SC), wherein it was held that where a surplus was made by educational institution which was ploughed back for educational purposes, said institution was to be held to be existed solely for educational purpose and not for purpose of profit. Infact, the High Court of Delhi in the case of ICAI v. DGIT (Exemption) [2013] 358 ITR 91, has at para 67 observed as under :- 'The expressions "trade", "commerce" and "business", as occurring in the first proviso to section 2(15) of the Act, must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organised manner. The purpose and th....
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....d as charitable. The dominant purpose test presupposes that as long as the activity answers the description of charity and conforms to the objects of the trust or society, that profits or surpluses are generated, incidentally cannot rob it of the benefits. If the profits from business feed charitable objects, then it is not an activity for profit, so the exemption need not be lost. Therefore, total charity to some poor and deserving patients, partial subsidization of some others and charging of full rates from some, does not rob the essential and dominant object of the society, i.e. medical service and education. Indeed, in the case of medical facilities, a nuanced subsidization through a cross subsidization scheme (i.e. charging market rates from some and subsidizing some entirely and a few partly) would fit with the purpose of the petitioner society, which might be able to thus provide greater service to a larger number of people. It renders its existence economically viable and expands its reach and scope." 21 The appellant further submits that, the Apex Court in the case of ACIT s. Surat City Gymkhana reported in 300 ITR 214 have held that, where registration u/s 12A o....
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....adcasting Rights by BCCI amply shows that it is driven by pure commercial considerations for deriving maximum profits in the competition in a market economy. In the above backdrop, it becomes important to know the revenue sharing basis which is employed by the Apex Body i.e., BCCI with its affiliates, as all the operations of BCCI are in unison for itself and for its affiliates. Therefore, the relationship of assessee , the JSCA with that of BCCI has to be treated and understood not in isolation but in conjugation so as to better appreciate the facts of the case. It may be mentioned here that as per the basis of allocation of revenues generated by the BCCI out of its activities on behalf of its affiliates, a sharing ration of 30% : 70% is adopted by the BCCI towards its affiliates. 'JSCA' works completely under the aegis of BCCI , being its parent body from which it receives substantial revenue sharing amounts in the nature of IPL subvention, TV Broadcasting Rights though these are couched in the shape of subsidies, whereas the fact remains that the BCCI does consciously recognises the fact that its income from its activities is to be apportioned amongst its affil....
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....asting Rights is quite dependent upon the activities which are performed by any affiliate entity i.e., JSCA in actually conducting the matches. Thus, the income of BCCI per se is dependent is the efforts the state association in conducting the matches from which the media rights accrue. Thus, it should make it ample clear that receipts of such revenue or sharing of such revenue with the SCAs or the JSCA for that matter in this case, is nothing but the commercial profit/ income of JSCA. In such an arrangement, the BCCI works and operates as an umbrella platform, however, the cricket matches as such are conducted by the affiliate entity only, therefore, to couch such revenue sharing by the nomenclature such as 'Subsidy" is quite a misnomer, as in its true essence, the original receipts partake the character of income and also carrying the nature of income does percolate to the affiliate entity i.e., JSCA and in the process it does not lose its such character or attains the nature of subsidy. Once it is arising out of commercial nature, as rightly held in the case of BCCI by the Department, then it ought to be treated as commercial and profit / income in the hands of JSCA as well. It ....
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....ne Day and T20 matches. Thus, apart from the matches where BCCI has direct control over the Advertisements, the JSCA has included all other matches. Such an activity is essentially arising out of commercial activities and , hence commercial in nature. Even the charitable Activities Claim is also not duly substantiated by the assessee before the AO It is also pertinent to refer to the decision of Hon'ble ITAT Ahmedabad Bench, Ahmedabad which is rendered recently and relied upon on the issue by the assessee. At page 32 of the said decision, which is reproduced part of the decision of the CIT(A) in the said case, the BCCI has itself admitted that the amounts accruing form the TV Broadcasting Rights were in the nature of income and these were to be shared between the BCCI and its affiliates. This position has been made amply clear by Mr. I.S. Bindra, the then president of BCCI and same is well borne from the minutes which have been reproduced by the ld. CIT(A) in the said case. Thus, it is submitted that all the revenue generation activity of BCCI which is shared by the BCCI with assessee i.e. JSCA is in the nature of Income and therefore the AO has rightly and correc....
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....support of his contentions. 7.1. The ld. CIT D/R, on the other hand submitted that the Assessing Officer passed an order without application of mind and without enquiry on the factual aspects and hence the ld. CIT has rightly held that the order is not only erroneous but prejudicial to the interest of the revenue. He took this Bench through the order of the ld. CIT and submitted that cogent reasons were given therein for the revision. 7. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 8. We first take up the appeal for the Assessment Year 2010-11 in ITA No. 158/Ran/2017. 9. The first issue that arises before us is the validity of reopening of assessment. The reasons of re-opening are as follows:- "1. Jharkhand State Cricket Association, hereinafter referred to as the assessee is an AoP involved in the Business of Cricket in the State of Jharkhand. The assessee is an affiliated member of the BCCI. One of the objects of the assessee is promotion, encouragement, organization and control of the game o....
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....r 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 twentyfive lakh rupees or less in the previous year; 6. The assessee is engaged in the business of cricket. The assessee has also received an amount of Rs. 18,63,99,133/- as TV Rights Subsidy from BCCI. This amount represents the receipts from the commercial activities of the assessee in association with BCCI. The assessee has not carried out promotion of cricket during the year. Only some matches have been arranged by the assessee. In the garb of charitable activities the assessee has indulged in commercial activities. This is also evident from the fact that the assessee has utilized only 7.49% of its receipts on cricketing activities. Perusal of the Schedule-C of the Income and Expenditure account of the assessee reveals that the assessee has only spent an amount of Rs. 45,721/- on Summer Coaching Ca....
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....e above there is no legal requirement to seek the sanction of the Joint/Addl. Commissioner of Income-tax as the notice u/s 148 of the Act is being issued for the A.Y. 2010-11 and four years from the end of the relevant A.Y. have not expired. 14. Issue notice u/s 148 of the Act to the assessee." 10. A perusal of these reasons demonstrate that no new tangible material came into the possession of the Assessing Officer, based on which he formed a belief that income subject to tax has escaped assessment The entire reasons are based on a perusal of the return of income, income and expenditure statement and computation of income as evident from para 2 of the reasons recorded. The reopening is done merely on a change of opinion that too, it is not based on any tangible material coming into the possession of the Assessing Officer, after completion of the original assessment u/s 143(3) of the Act on 22/03/2013. We find that the Assessing Officer, after passing the assessment order for the Assessment Year 2012-13, based on his conclusions drawn therein, came to a conclusion that the assessment order for the earlier Assessment Year 2010-11, passed u/s 143(3) of the Act on 22/03/201....
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....rbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the re-assessment proceedings. 13. The fact in controversy in this case is with regard to the deduction under Section 10A of the IT Act which was allegedly allowed in excess. The show cause notice dated 10.02.2005 reflects the ground for re-assessment in the present case, that is, the deduction allowed in excess under Section 10A and, therefore, the income has escaped assessment to the tune of Rs. 57,36,811. In the order in question dated 17.08.2005, the reason purportedly given for rejecting the objections was that the assessee was not maintaining any separate books of accounts for the two categories, i.e., software development and human resource development, on which it has declared income separately. However, a bare perusal of notice dated 09.03.2004 which was issued in the original assessment proceedings under Section 143 makes it clear that the point on which the re-assessment proceedings were initiated, was well considered in the original proceedings. In fact, the very basis of issuing the show ca....
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....sement etc. In our considered opinion, these receipts from BCCI cannot be considered as income received from activities in the nature of trade, commerce or business. The pith and substance of the argument of the ld. D/R is that the nature of receipt in the hands of BCCI is business or commercial receipts on account of IPL Subvention, T.V. Rights etc. and where these receipts are shared with the state association on an 30:70 ratio basis, the nature of receipt does not change and it would be business receipts in the hands of the State Associations also. The allegation of revenue is that these receipts are couched in the form of subsidies. 12.1. These issues have come up before the Ahmedabad 'D' Bench of the ITAT in the case Gujarat Cricket Association vs. JCIT (Exemptions) [2019] 101 taxmann.com 453 (Ahmedabad -Trib.) and after considering the issue in its entirety at para 35, 36 & 40 held as follows:- "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 no....
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....nd 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 cricket association can become a Member of the BCCI. We are also alive to learned Commissioner's argument that what is being sought to be protected by the charitable status of these associations is the share of these cricket associations from the commercial profits earned by the BCCI by organizing the cricket matches. The problem, however, is that the activities of the apex body, as we have explained earlier, cannot be reason enough to trigger proviso to Section 2(15) in these cases. Whether these cricket associations collectively constitute BCCI or not, in the event of BCCI being involved in commercial activities, the taxability of such commercial profits will arise in the hands of the BCCI and not 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. W....
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.... 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 do not find any objects, other than objects of the cricket associations, being pursed by these cricket associations. The objects of these cricket associations clearly demonstrate that these cricket associations exist and operate purely for the purpose of promoting cricket. We are, therefore, of the considered view that the proviso to Section 2(15) has been wrongly invoked in these cases. 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 Secti....
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....e concerned, 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. As to whether the assessee is carrying out educational activities or not, given our above finding, that aspect of the matter is wholly academic as on now and we decline to address that 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 'Hencefor....
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....tration 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: 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 give....
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....d to delete this addition of Rs. 1,58,00,000. 50. We see no reasons to take any other view of the matter than the view so taken in assessee's own case. Respectfully following the same, we uphold the plea of the assessee and direct the Assessing Officer to treat the TV subsidy of Rs. 20,69,60,338 received from the BCCI as a corpus donation. The assessee gets the relief accordingly. As we have decided the main grievance of the assessee, as set out in ground no. 3 (a), we see no need to adjudicate on the alternative plea set out in ground 3 (b). That aspect of the matter is rendered academic and does not call for any adjudication as on now." 12.2. The Ahmedabad Bench, in this order has not agreed with the arguments of the revenue that BCCI with its affiliates have to be viewed together in unison and not separately. It also rejected the contention that, receiving substantial revenue sharing amounts in the nature of :- 1) IPL Subvention, 2) T.V. Broadcasting rights & 3) Sponsorship Rights, are in the nature of commercial receipts and are couched in the shape of subsidies. The contention that the nature of the income has not changed even after the receipt of such amounts ....
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....ained registration at any time under s. 12A as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently the CIT is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution : Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.' 32. Thus, in contrast to s. 12AA(1)(b) of the IT Act, 1961, where the grant of registration requires satisfaction about the objects of the trust as well as the genuineness of the activities, for the cancellation of the registration under s. 12AA(3), all that it is insisted upon is the satisfaction as to whether the activities of the trust or institution are genuine or not and whether the activities are being carried on in accordance with the objects of the trust. Thus, even if the trust is a genuine one, i.e., the objects are genuine, if the activities are not genuine and the same not being ....
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....h the objects. All that the Revenue stated was that the nature of receipt could not be called a subsidy. Thus Revenue came to the conclusion that the objects and activities could not come within the meaning of 'charitable purpose' under s. 2(15) of the Act. 53. On going through the materials, the Tribunal pointed out that instead of promoting and developing the game of cricket, the assessee was promoting and developing cricket as an entertainment and the tickets are highly priced; here, the assessee has shifted the activities of general public utility to commercial activity for generating revenue; the public merely participate to view costly matches; hence the conditions of s. 12AA(3) were satisfied. The Tribunal agreed with the Director of IT (Exemption) that the expression 'subsidy from BCCI' was a misleading nomenclature and it was a share from the revenue collected by BCCI from the sale of telecast rights. The surplus from IPL Season-I worked out to 8.5 per cent of the total receipts. It further held that 78 per cent of the total receipt came out of advertisement revenue. 54. The Tribunal pointed out that the physical aspect of the game was one....
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....ctivities are not fitting with the objects of the association and that the dominant activities are in the nature of trade, commerce and business. We do not think that by the volume of receipt one can draw the inference that the activity is commercial. The Tribunal's view that it is an entertainment and hence offended s. 2(15) of the Act does not appear to be correct and the same is based on its own impression on free ticket, payment of entertainment tax and presence of cheer group and given the irrelevant consideration. These considerations are not germane in considering the question as to whether the activities are genuine or carried on in accordance with the objects of the association. We can only say that the Tribunal rested its decision on considerations which are not relevant for considering the test specified under s. 12AA(3) to impose commercial character to the activity of the association. In the circumstances, we agree with the assessee that the Revenue has not made out any ground to cancel the registration under s. 12AA(3) of the Act. 57. As regards the observation of the Tribunal that IPL matches and Celebrity Cricket Matches are also being held by the assoc....
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....siness" would mean that : (i) It is undertaken with the profit motive; (ii) The activity is continued on sound and recognized business principles and is pursued with reasonable continuity; (iii) There should be facts and other circumstances which justify and show that the activity undertaken is in fact, in the nature of business; (iv) The five tests propounded in the case of CCE v. Lord Fisher (1981) STC 238 and the propositions in the case of CST v. Sai Publication Fund [2002] 258 ITR 70/122 Taxman 437 (SC) apply. (v) Business activity is an important prevailing element of self interest. (e) From a perusal of Circular No. 11 of 2008 [[2009] 17 DTR (St) 1 : [2009] 221 CTR (St) 1] issued by the CBDT, it is clear that the new proviso of s. 2(15) of the Act is applicable to the assessees who are engaged in commercial activities i.e. carrying of trade, commerce or business in the garb of "public utility" to avoid tax liability, and where the object of "general public utility" was sometimes only to mask or device to hide the true purpose, which was "trade, commerce or business". (f) Charitable activity is antithesis of activ....
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....assessee's activity is not disputed by the Revenue. Thus the Director of IT (Exemption) has contradicted himself by holding on one hand, that the assessee is a charitable institution carrying out charitable activity and on another hand, coming to a conclusion that the assessee is doing business. It is also not the case of the Director of IT (Exemption) that, the assessee is not carrying on its activities in accordance with the objects for which it is founded. No such finding is recorded in the order. Thus, the twin conditions mandatorily required for invoking the jurisdiction under s. 12AA(3) by the learned Director of IT (Exemption), to cancel the registration granted under s. 12AA i.e., the satisfaction of the Director of IT (Exemption) that (a) the activities of the trust or institution are not genuine, or (b) that the activities of trust or institution are not being carried out in accordance with the objects of the trust or institution are not existing in this order. 10.6 Thus applying the principles laid down in the judgement of Hon'ble Madras High Court in the case of Tamil Nadu Cricket Association (supra), the impugned order cancelling the registration under....
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.... and not "trade, commerce or business" activities. 11. We now take up each of the issues raised by the learned Director of IT (Exemption) in his order. 11.1 On the issue of sponsorship income from M/s Twenty First Century Media (P) Ltd. (TFCM), it was explained that despite the receipt of sponsorship money during the year of Rs. 31,01,038 and receiving a sum of Rs. 14,20,000 from BCCI as subsidy, there was a shortfall of Rs. 29,84,835, which was met by the assessee. It was specifically argued by the learned Departmental Representative that the agreement with "M/s Twenty First Century Media (P) Ltd." is commercial in nature. The reply of the assessee is that it should be appreciated that for any organization to run and survive it is essential that it should augment some funds to meet the cost/expenditure, as required to be incurred, to carry out the activities meant to achieve its object. We agree with the submissions of the assessee. 11.2 The assessee has to perform many activities and for this purpose it has to enter into transactions with various types of persons. These persons can be commercial or non-commercial organizations, professionals, vendors of....
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....an eatery was established which was eventually shaped as a canteen for the benefit of the members as well as few other persons associated with DDA e.g. players, coaches, staff, other guests, etc." 11.4 In our view, for the purpose of making this canteen self-sustainable. It has to follow global standards and international protocols, since cricket is played at international level. Canteen keeps various items as per menu. Liquor is just part of this menu. It is not sold independently as trading item. The eatery is available for the use only of members, players, staff, other guests of DDCA. It is not open for public. A walkin customer/guest cannot enjoy the facility of this eatery. The basic fact is that this canteen has direct and inextricable link with one of the core activities of DDCA i.e., maintaining such a huge cricket stadium and promoting the game of cricket. The Revenue, in this case is trying to project that the assessee is a liquor dealer. This is not correct. Internationally, when facilities are provided to players, liquor is part of the menu. This is just incidental to providing food and beverages. When the learned DIT(E) does not find anything wrong in the asse....
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....at the receipts are directly or inextricably linked with the organizing of matches and tournaments or for promotion of game of cricket in any other manner or for maintenance or building up the infrastructure meant for the promotion of the game of cricket. Thus, it can be safely said that the DDCA exists for cricket and cricket only. The CBDT has already clarified that sports is a matter of general public utility. Therefore DDCA satisfies the condition of having a charitable object as mentioned in s. 2(15) of the IT Act, 1961. It does not violate any condition as mentioned in proviso to s. 2(15). The apprehension that certain income received by the assessee during the year partakes the character of business income, is ill-founded. In this regard we have submitted in detail that this apprehension is misplaced on account of various submissions as per details given below : 1. The entire receipts have been received for the promotion of game of cricket. 2. The assessee is not free to use it as per its convenience for any purpose other than for promotion of cricket. Thus, the amounts received in this manner cannot be characterized as business receipts. ....
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....embers. The receipts are miniscule and hence, negligible. 11.10 Similarly as far as receipt from health club is concerned, we find that only a part of the expenditure incurred on health club is recovered by way of charges from members who are using the health club facility. These are all, at best be called user charges. In our view these receipts cannot be termed as an activity in the nature of "trade, commerce or business". In fact, health club facility is recognized to promote the game of cricket. 11.11 All the receipts of the assessee are intrinsically linked with the activity of organizing matches and tournaments for the promotion of cricket. User charges are required for maintaining the facilities that are provided as part of the infrastructure for conducting the activities of the assessee. 11.12 On consideration of all the facts and circumstances of the case and when viewed in totality, we have to come to a conclusion that the assessee is not carrying on the activities with any profit motive or with any self-interest. The contributions received by way of sponsorship, advertisement, sale of tickets, etc. and user charges on the facts of this case, do....