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2019 (7) TMI 931
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....ry for adjudication of the controversy at hand are : Assessee, an association established to encourage and promote the game of Cricket in the Province of Delhi and District of Karnal which was registered under section 12A of the Income-tax Act, 1961 (for short 'the Act'), but the registration was withdrawn w.e.f. 01.04.2009 for AY 2009-10 onwards. However, the registration u/s 12AA of the Act was subsequently restored by the Tribunal vide order dated 13.01.2015. Assessee is also registered u/s 25 of the Companies Act, 1956. Assessing Officer, in scrutiny proceedings, denied exemption u/s 11 of the Act on the ground that the assessee is involved in the business activities as per Proviso 1 & 2 of section 2(15) of the Act because the assessee has received sponsorship fees, casual membership fee, permanent membership fee, rent from the ground, collection from the health club, ticket sale from public and the corporate house, restaurant and telecasting right fees etc. and thereby assessed the income by passing the following order :- "7. In view of the above the activities of the assessee during A.Y.2009-10 , A.Y. 2010-11 and A.Y. 2011-12 have been held to be commercial in nature....
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....r period expenses Rs. 39,13,766/- which are disallowed and added to the total income of the assessee. 12. With these remarks, the income of the assessee is computed as under: Income as per Income & Expenditure A/c Rs. 4,70,70,202/- Add: Depreciation(as per company Act) separately treated Rs. 7,34,76,349/- Add: Admission/Membership Fees Rs. 61,67,000/- Add: Provision for gratuity Rs. 17,48,920/- Add: Prior period expenses Rs. 39,13,766/- Add: Disallowance u/s 40(A)(3) Rs. 1,37,66,227/- Rs. 14,61,42,464/- Less: Depreciation as per I.T. Act Rs. 12,98,53,113/- Net Income Rs. 1,62,89,351/- B/f losses A.Y.2010-11 Rs. 3,19,56,121/- A.Y.2011-12 Rs. 76,83,655/- Rs. 3,96,39,776/- C/f losses Rs. 2,33,50,425/- Tax as per normal rate Nil Tax calculation as per section 115JB of I.T. Act, being company is registered under Company Act Book Profit Rs. 4,70,70,202/- @ 18.5% Rs. 87,07,987/- Assessed as above. Since the assessee has filed its return u/s 139(4) on 19-02-2013, it is not allowed to carry forward the above loss determined in the current assessmen....
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.... various agreements entered by the assessee. After analyzing these agreements and nature of income he came to the conclusion that the assessee's activities falls within the ambit of trade, commerce of business. After coming to such conclusion, it appears that he has made a proposal to DIT (Exemption) for withdrawal of registration u/s 12AA on the same very points. In pursuance thereof, ld. DIT (E) vide its order dated 23.5.2012 has withdrawn the registration u/s 12AA (3), precisely on the same issues which has been raised by the Assessing Officer in the impugned order: This is prima facie evident from the facts and issue discussed in detail by the Tribunal in its order dated 13.1.2015. On a plain reading of the decision of the Tribunal, we find that on exactly same points as, raised by the DIT (E) and also argued from the side of the Department, this Tribunal has taken note of all these objections raised by the revenue as well as the submissions made by the assessee and after relying upon the decision of Hon'ble Madras High Court in the case of Tamil Nadu Cricket Association vs. DIT (E) reported in 360 ITR 633 and the decision of Hon'ble Delhi High Court in the....
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....a) ground booking charges) b) health club charges, c) income from corporate boxes, d) lawn booking income, e) sponsorship money and sale of tickets, advertisement) souvenirs and other such receipts do not result in the assessee being held as undertaking activities in the nature of "trade, commerce or business. J) These receipts are intrinsically related, interconnected and interwoven with the charitable activity and cannot be viel.ued separately. The activities resulting in the said receipts are also charitable activities and not "trade, commerce or business" activities. 11. We now take up each of the issues raised by the Ld. DIT (E) 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 short fall of Rs. 29,84,835/-, which was met by the assessee. It was specifically argued by the Ld. D.R. that the agreement with "M/s Twenty First Century Media Pvt. Ltd." is commercial in nature. The reply of the assessee is that it should be appreciated that....
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.... the issue of sale of liquor, it was submitted that initially DDCA was formed as a Club to take over the assets and liabilities of the Association called, "Delhi Cricket Association". He referred to the objects and submitted as follows. "One of the objects as given in the MOA of DDCA is to lay ground for playing game of cricket and to provide pavilion, refreshment rooms and other facilities in connection therewith. Therefore, 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 and other guests of DDCA. It is not open for public. A walk in customer/ guest, cannot enjoy the facility of this eatery. The basic fact is that this canteen has direct and inextric....
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....ave revealed that the expenses have been incurred on the promotion of the game of cricket. These expenses have been incurred either for the development of game of cricket or the development of players. There is no other cause or item for which any amount has been spent by the assessee. Similarly, when we analyse the receipt side, we would find that 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 DDA 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 Income Tax Act, 1961. It does not violate any condition as mentioned in pro viso to S.2 (l5). The apprehension that certain income received by the assessee, during the year, partake the character of business income, is ill founded. In this regard we have submitted in detail that this apprehension i....
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..... Under these circumstances, the sale of tickets cannot be considered as an activity of "trade, commerce or business". We agree with the submissions of the assessee. 11.9. Regarding playing cards, it is an incidental recreation activity undertaken in most Clubs and what is charged by the assessee, goes to recover the' costs for providing such recreational facility to, its member. The receipts are miniscule and hence negligible. 11.10. Similarly as far as receipts 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 activi....