TaxTMI 
TaxTMI 
2022 (3) TMI 153
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....ll as on facts in confirming the action of the AO to treat the interest income of Rs. 1,15,71,995/- as "Income from Other Sources" instead of 'Business Income" claimed by the appellant in the return of income filed, without proper consideration and appreciation of the facts of the case. In view of the facts and submissions filed, the impugned interest income is required to be treated as business income. 3. The Id. CIT(A) has erred in law as well as on facts in denying the claim of depreciation of Rs. 1,15,65,042/- as per return of income filed during the course of assessment proceedings without proper appreciation of the facts of the case and legal position. In view of the facts and submissions filed, the claim of depreciation of Rs. 1,15,65,042/- requires to be allowed." 3. The brief facts of the case are that the assessee, Sports Authority of Gujarat, is a society registered under the Society Registration Act, 1960 with the object to augment and promote sports in the State of Gujarat. The Society is funded by the Government of Gujarat by way of grant provided by the Ministry of Sports and Cultural activities of the Government of Gujarat to carry out various sports....
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....depreciation allowance, whether the same is claimed by the assessee or not, provided, the conditions mentioned u/s. 32 of the Act are satisfied. The Assessing Officer rejected the assessee's claim for treating interest income as business income and consequentially disallowed depreciation claimed against the same. 3.2 The ld. Assessing Officer observed that the assessee is not a commercial organization but is a sports authority formed with the objective to promote sports policies and sports activities in the State of Gujarat. After spending funds for sports activities, the unspent funds are parked with GFSC on which interest income is earned. The said interest income so earned is then utilized for promotion of sports. Therefore, from facts, it is observed that none of the activity can be termed as business or professional activity. The ld. Assessing Officer further held that on plain reading section 57(ii), it is clear that the depreciation u/s. 32(1) or 32(2) of the Act is allowable in case if any income is assessable under this head only if it is from letting on hire of any machinery, plants and furniture etc., but in the instant case, income is earned from interest on investme....
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....epreciation is allowable. Accordingly, the ld. CIT(A) upheld the action of the Assessing Officer and dismissed the assessee's appeal. Ground Number 1: Status of the appellant as AOP as against the status of Trust 5. Before us, the ld. Authorized Representative of the assessee submitted that ground no. 1 is not being pressed. Accordingly, ground no. 1 is dismissed as not pressed. Ground Number 2: Whether interest income of Rs. 1,15,71,995/- qualifies as "Income from Other Sources" or 'Income from Business or Profession" 6. With regard to ground no. 2, the assessee submitted before us that the ld. CIT(A) has erred in law and in fact in treating interest income of Rs. 1,15,71,995/- as "income from other sources" instead of "business income". The assessee submitted that the excess grant received from State of Gujarat for its various objects to encourage, promote and develop sports activities in games are kept as deposits on which the assessee earns/receives interest income which is subsequently utilized for the purpose of its objects only. Hence, the interest income earned on such deposits exclusively falls under the purview of objects i.e. business of the appellant and....
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....s not the desire to earn profit but object was to promote game of cricket and nurture best of talent, merely because it put up tickets of international cricket matches for sale and earned some profit out of same and said profit was used in activities of promotion of game, the assessee, could not be termed to be carrying out commercial activities in nature of trade commerce or business and therefore would not lose its character of having been established for a charitable purpose. The Gujarat High Court observed as below: It is not in dispute that the Associations have not distributed any profits outside the organization. The profits, if any, are ploughed back into the very activities of promotion and development of the sport of cricket and, therefore, the assessees cannot be termed to be carrying out commercial activities in the nature of trade, commerce or business. 6.5 In the case of Bombay Presidency Golf Club Ltd.v ITO[2016] 69 taxmann.com 208 (Mumbai - Trib.), the Mumbai Tribunal held that the act of deposit of money in scheduled banks complying with specific provisions of section 11(5) and receipt of interest thereon is not an activity in nature of trade, commerce ....
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....the petitioner institute in furtherance of its main object which as held earlier are not trade, commerce or business. 6.7 In the case of ICAI v. DGIT(E) [2012] 347 ITR 99/[2011] 202 Taxman 1/13 taxmann.com 175 (Delhi), the Hon'ble Delhi High Court held that while construing the term business for the purpose of Section 2(15) of the Act the object and purpose of the Section must be kept in mind and a broad and extended definition of business would not be applicable for the purpose of interpreting and applying the first proviso to Section 2(15) of the Act. The relevant extract of the said judgment is as under:- Section 2 (15) defines the term "charitable purpose". Therefore, while construing the term "business" for the said section, the object and purpose of the section has to be kept in mind. We do not think that a very broad and extended definition of the term "business" is intended for the purpose of interpreting and applying the first proviso to section 2 (15) of the Act to include any transaction for a fee or money. An activity would be considered "business" if it is undertaken with a profit motive. There should be facts and other circumstances which justify and s....
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....rplus funds kept with GSFC Limited would qualify as "income from business or profession". The assessee is admittedly not engaged in any business activity. The dominant/ sole object of the assessee is promotion of sports in the State of Gujarat. The Ld. AR of the assessee has not brought forth any argument or material to support his contention that he is engaged in any activity, the income from which may qualify as business income. The earning of interest on surplus funds kept with GSFC Limited is incidental to its dominant objective i.e. to encourage sports in the State of Gujarat, which we have concluded itself cannot qualify as a business activity. Therefore, in our considered view, interest income earned from surplus fund cannot qualify as "income from business and profession". In the result, Ground Number 2 of the assessee's appeal is dismissed. Ground Number 3: Claim of depreciation of Rs. 1,15,65,042/- againt Interest Income 7. This ground of the assessee relates to the claim of deduction on depreciation against income from interest which according to the assessee qualifies as income from business or profession. Having held that the income from interest qualifies as ....