TaxTMI 
TaxTMI 
2020 (12) TMI 27
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.... on total income of Rs. 26,71,55,964/- and the AO held that the assessee is not eligible for exemption u/s 11 of the act on the reason that the assessee is engaged in commercial activities. During the assessment proceedings, the AO found that the assessee has claimed the infrastructure expenses of Rs. 28,74,14,336/- revenue expenditure which is capital in nature and hence, did not accept the claim of the assessee. The AO worked out the excess of income over expenditure at Rs. 19,14,77,837/-. Since the activities of the assessee are held to be in the nature of trade and commerce, the AO invoked the provisions of section 2(15) and held that the assessee does not qualify to be charitable within the meaning of section 2(15) of the Act. 2.1. The AO verified the Form 26AS and from the form 26AS, the AO found that the assessee has received the sum of Rs. 50,26,78,635/- and admitted the receipts of Rs. 37,74,16,941/- thus, there was a difference of Rs. 12,52,61,694/- on which the assessee has claimed the credit for TDS u/s 194C for whole amount of Rs. 1,00,90,251/-. Since, there was a difference in gross receipts and the admitted receipts the AO made the addition of Rs. 12,52,61,694/....
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....lowing components : Particulars of Income Amount (Rs.) BCCI Reimbursements & grants 37,74,16,941 Income from investments and deposits 4,25,02,854 Income from India - Srilanka T20 match 2,50,08,563 Annual subscriptions received 10,000 Interest on IT refund 17,09,125 Rent received from stadium complex 20,07,770 Income from IPL matches 27,36,287 Total 45,13,91,540 10. It was further observed that the BCCI reimbursements & grants of Rs. 37,74,16,941/- consisted of annual grants from BCCI of Rs. 13,50,00,000/-, share of media rights income from BCCI of Rs. 18,66,89,642/- and reimbursement of expenses of Rs. 5,57,27,299/-. It was observed that the assessee society is a full-fledged member of BCCI as per the Memorandum and Rules & Regulations of BCCI and the MOA of the assessee. The assessee conducts representative matches allotted by the BCCI and the expenditure incurred by the assessee for conducting the matches is reimbursed by BCCI. In response to a specific query raised during the assessment proceedings regarding the existence of any agreement between BCCI and the assessee with regard to the financial support extended to ....
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.... exceeded 20% of the total receipts of the assessee, it was held by the AO that the case of the assessee is hit by the proviso to Sec.2(15) of the Act and consequently, the activities of the assessee cannot be considered to be charitable in nature for being eligible for the exemption u/s 11 of the Act." 3. The Ld.CIT(A) followed the order of this Tribunal and allowed exemption u/s 11 of the Act. Thus, deleted the addition of Rs. 14,18,94,270/-. With regard to the difference in gross receipts declared by the assessee in Form 26AS, the assessee filed written submissions reconciling the differences before the CIT(A). After considering the reconciliation statement submitted by the assessee, the Ld.CIT(A) found that there was no difference or short admission of receipts and accordingly deleted the addition made by the AO. 4. Against which the department has filed appeal before this Tribunal and raised following grounds of appeal : i. The Ld.CIT(A) erred in allowing the appeal of the assessee. ii. The Ld.CIT(A) erred in deleting the addition made by the AO amounting to Rs. 14,18,94,270/- towards income from business by allowing the exemption u/s 11 of the Act. ....
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.... "21. On careful examination of the facts of the case and the judicial precedents cited by the assessee, it is seen that the contention of the assessee is acceptable. It is noticed that the Hon'ble ITAT, Visakhapatnam held in the assessee's own case for A.Ys.2010-11 to 2012-13 in I.T.A.No.93 & 241/Viz/2015 and ITA No.01/Viz/2016 vide order dated 10.11.2017 that the AO is not correct in rejecting the exemption claimed by the assessee u/s 11 of the Act and u/s 10(23C)(iv) of the Act. It was held that all the receipts of the assessee were received in connection with the sport of cricket and the AO is not justified in observing that the activities of the assessee are in the nature of business activities. The relevant part of the decision of the Hon'ble Tribunal is reproduced as under : 18. In this context, it is necessary to examine what are the receipts of the assessee and how assessee has been incurred towards the objects. The assessee is receiving grants from BCCI partly as reimbursements for various tournaments conducted by the assessee. The assessee has already constructed a stadium at Visakhapatnam suitable for conducting "test matches‟. During the year under co....
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....lied on by the assessee in the case of Tamil Nadu Cricket Association (supra), the Hon'ble Madras High Court has only dealt with the issue of cancellation of registration under section 12AA (3) of the Act. In the present case, the Assessing Officer has denied exemption under section 11 of the Act. In our opinion, the case law relied on by the assessee has no application to the facts of the case. As the Assessing Officer failed to establish that the assessee has violated sections 11, 12 & 13 of the Act, the case-law relied on by him in the case of Allahabad Agricultural Institute & another (supra) has no application to the facts of the present case. In view of the above, the appeal filed by the revenue is dismissed. 22. Further it is noticed that the Hon'ble ITAT, Visakhapatnam once again held in the assessee's own case for A.Ys 2013-14 to 2015-16 in ITA Nos. 279, 280 & 368/Viz/2018 vide order dated 18.01.2019 that the dominant object of the assessee is to develop the game of cricket and conducting of International matches on behalf of BCCI is incidental to the main activities carried on by the assessee. It was held that the activities carried on by the assessee cannot ....
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....e and 12A registration is granted and not only that, by considering the very same objects, the Chief Commissioner of Income Tax has granted approval under section 10(23C)(iv) of the Act. The activities carried by the assessee from the beginning are same and no fresh activities are undertaken by the assessee. This fact is not disputed by the department. The case of the Assessing Officer is that the assessee selling tickets in respect of international cricket games and also received reimbursements from the BCCI which is commercial in nature. The Assessing Officer has further noted that the assessee has reserved boxes for eminent persons of public life without cost. Therefore, the activity carried by the assessee hits by proviso to section 2(15) of the Act and therefore the assessee is not entitled for his income as exempt under section 11 as well as 10(23C) of the Act. We find that the assessee owned a cricket stadium which is constructed for the purpose of development of sport of cricket. The assessee being a Member of BCCI, hosting matches which are conducted by BCCI, expenditure for conducting the matches claimed by the assessee as reimbursement from the BCCI. The assesse....
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....iated with establishing fact that the activity carried by the assessee is commercial in nature. We find that the assessee has incurred expenditure in relation to the objects of the association and also received reimbursement from BCCI in connection with the objects of the assessee-association. Therefore, the activities carried by the assessee cannot be considered as a commercial in nature and not attracts the proviso to section 2(15) of the Act. We find that the assessee is not providing any service to trade, commerce and business and therefore, in our opinion, the provision to section 2(15) has no application. For the sake of convenience, proviso to section 2(15) is extracted as under: "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, unless- (i) such activity is undertaken in the c....
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.... 16. The Hon'ble Delhi High Court in the case of India Trade Promotion Organisation Vs. Director General of Income Tax (Exemptions) & others in W.P.(C) NO. 1872/2013, dated 22/01/2015 has considered the scope of proviso to section 2(15) and concluded by the Hon'ble Delhi High Court by their Lordships as under:- 58. In conclusion, we may say that the expression "charitable purpose", as defined in Section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of Section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running fowl of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advanc....
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.... for the purpose to develop the game of the cricket in the State of Andhra Pradesh and therefore, the main character of the assessee is a charitable in nature. So far as conducting international matches on behalf of the BCCI is concerned, it is secondary or incidental to achieve the main object. Therefore, in our opinion, the dominant object of the assessee is to only develop the game of the cricket and not to carry any business activity directly or indirectly in the activities related trade, commerce, business. Therefore, assessee is entitled for claim of exemption under section 11 and section 10(23C)(iv) of the Act. In view of the above, we find no reason to interfere with the order passed by the ld. CIT(A). Thus, this appeal filed by the revenue deserves to be dismissed and is dismissed accordingly. 23. Further, it is noticed that Hon'ble. ITAT, Chennai held in the case of Tamilnadu Cricket Association Vs. DDIT(Exemption) (2015) 60 taxmann.com 287 (Chennai-Trib) that the activity of conducting one day matches, T20 matches and IPL matches does not amount to doing business or trade since the said matches are organised and conducted by the BCCI and the State Cricket As....
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....ss or rendering of any service in relation to any trade, commerce or business and the proviso to sec.2(15), therefore has no application to the assessee's case. Consequently, it is held that the assessee is eligible for exemption u/s 11 as well as u/s 10(23C)(iv) of the Act. 27. In view of the aforesaid discussion, the AO is directed to delete the addition of Rs. 14,18,94,270/- made towards income from business by disallowing the exemption claimed u/s.11 of the Act. The AO is directed to allow exemption u/s 11 of the Act as computed under the provisions of law. These grounds of appeal are therefore allowed." 7.1. Since the facts are identical and the Ld.CIT(A) followed the order of this Tribunal, we do not find any reason to interfere with the order of the Ld.CIT(A) and accordingly we, uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue on this ground. 8. Ground No.(iii) is related to deleting the addition of Rs. 12,52,61,694/-, difference being the receipts admitted by the assessee and the receipts as per Form 26AS. 9. We have heard both the parties and perused the material placed on record. We observe from the order of the AO that th....
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....rm 26AS cannot be disregarded by the AO on the ground that the assessee did not explain the reason for the corrections made by BCCI and that no confirmation letter or any other evidence from BCCI has been furnished. In this regard, it is pertinent to mention that the TDS information in Form 26AS is generated by the Income Tax Department based on the TDS returns filed by the deductors and the assessee has no control over the same. The information available in Form 2'6AS has to be taken into consideration by the AO without placing any burden on the assessee to .prove the veracity of the said information uploaded by the deductors. On the contrary, where the assessee disputes the veracity of the receipts reflected in Form 26AS, the onus is on the revenue to lead evidence that the assessee was actually in receipt of the said income reflected in Form 26AS. Hence, it, is held that the revised, Form 26AS is required to be taken into - consideration for the purpose of ascertaining whether there is any short admission of receipts from BCCI. 38. As against the receipts of Rs. 41,54,08,99.34 reflected in the revised Form 26AS in respect of BCCI, it is noticed that the assessee cre....