TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1046
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....ctivities of the assessee are being run on commercial basis, there being no element of charity. 2. Any other question of law as deemed fit in the facts and circumstances of the case may also be framed before the Hon'ble Tribunal in the interest of justice. 2. The brief facts of the case are that the assessee is a society trust registered under Rajasthan Society Trust Registration Act, 1958 and also registered under Sport Association's Registration Accreditation Act, 2005 with the main object of promotion and development of the game of Cricket in the State of Rajasthan. The assessee society filed its return of income on 08.02.2006 declaring total income at NIL after claiming the exemption U/s 11/12 of the Income Tax Act, 1961. The assessment was completed u/s 143(3) of the Income Tax Act 1961 on Nil income dated 31.12.2007. The ITO reopened the assessment vide notice u/s 148 dated 20.12.2011 and completed the assessment under section 147 of the IT Act on 29.03.2013 at a total income of Rs. 20,28,203/- by making addition on account of net surplus as per income and expenditure account at Rs. 15,37,806/- and disallowance of claim of depreciation at Rs. 4,90,397/-. The AO has initiat....
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....see trust made it clear that this amendment in object of memorandum in 2005 was due to change made in the Rajasthan Sports (registration, Recognition and Regulation of Association) Act, 2005. The amended objects were not voluntary change. The assessee has to follow the said law related to sports activity. The comparison given by the ld. CIT in his order dated 28/03/2013 does not show any fundamental deviation from the original charitable activities to non-charitable activity. The assessee's object to promote the cricket by providing/involving various activities at the district level to state level through coaching provided by coaches, ground and facilities etc. Therefore the assessee's activities are charitable. The other activities are incidental or conducive of the main activity. The case law referred by the assessee particularly the Hon'ble Delhi High Court decision in the case of Mool Chand Khairati Trust (supra) is squarely applicable as the assessee amend the provisions, does not change the character of the assessee from charitable to non-charitable or commercial. At the time of registration, the ld. CIT has to consider section 12AA(3) and he has to consider two conditions fo....
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....d the claim of the assessee being eligible for exemption under Sections 11 and 12 of the Act. Aggrieved by the order of the ld. CIT(A), the Revenue has filed the present appeal. 4. Before us, the ld. D/R has submitted that the AO has reopened the assessment because of withdrawal of registration by the ld. CIT (Exemptions) under section 12AA(3). Since, the registration has been granted by the order of ITAT Jaipur Bench in ITA N0. 544/JP/2013 dated 09.06.2016 and also upheld by Honorable Rajasthan High Court, at this juncture the issue is covered in favor of the Assessee. 5. On the other hand, the Ld AR mentioned the detailed facts of the case and relevant decisions of this Coordinate Bench of the ITAT Jaipur in assessee's own case and also the decision of Hon'ble Rajasthan High Court citing the operating part of the decision, as mentioned in the order of the Ld. CIT (A). Further the Ld AR also referred the detailed order of the ITAT Jaipur Bench in ITA No. 1355 & 1356/JP/2018 dated 25.11.2020 wherein the full facts have been dealt with and the relevant cases of Hon'ble High Court and Hon'ble Supreme Court have been referred are also relied. The Ld A/R further requested that since ....
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....ng Officer further observed that the assessee's investment is increasing, this shows that the assessee is converting the surplus into investment which in turn has strengthened its capacity to earn more. Therefore, he concluded that the assessee exist for purpose of earning profit and the applicant is not promoting sports on non-profit basis. The assessing Officer further observed that that the assessee had built a premises in the name of Rajasthan Cricket Academy, which has been given on rent to a service provider on a monthly rent of Rs. 75,000/-. The agreement executed with the service provider states that booking for 28 rooms will be made through service provider. The Assessing Officer reproduced the clause 2.2.1 of the agreement and inferred that the said clauses leave no doubt for the commercial exploitation of the property by the service provider under the direct control of the RCA. He observed that in the present case the service provider is paying to the RCA for using the premises as hotel. It is clear for the same that the motive of RCA is to maximize the profit. He observed that RCA is generating huge profit year after year and itsexpenditure on sports promotion coaching ....
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.... volume and nature of receipt goes to demonstrate that the assessee is engaged into commercial activity and for the purposes of making profit. Per contra it is contended that the assessee is an association registered under Rajasthan Sports (Registration, Recognition and Regulation of Association) Act, 2005 and formed with objective of promoting of sport of cricket within the state of Rajasthan. RCA, under a memorandum of understanding with Rajasthan State Council has exclusive use and possession of SwaiMansingh Stadium for the purpose of organizing national and international matches. The main object of the association is to control, supervise, regulate, or encourage, promote and develop the game of cricket in the areas under the jurisdiction of Association on no profit or no loss basis. It is contented that the assessee was holding registration under section 12A of the Act with effect from 25th Nov. 1988, and thus was claiming exemption u/s 11 on this basis. The ld. CIT, withdrew the registration under section 12A of the Income Tax Act, pertaining to the Assessment year 2005-06 onwards. However, on appeal to the Tribunal the issue of registration was set aside to the ld. CIT to dec....
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....r the benefit of an individual organization. It is contended that the subsidy received by the RCA is utilized in the promotion and development of sports of cricket in state at each level, i.e. from mufasils areas to big cities like Jaipur. It is also contended that renting out by premise by RCA has been viewed adversely in the context it was submitted that RCA is formed with a sole objective of promoting cricket and with the view to achieve the desired objective the renting of premises as done is wholly and exclusively for the purpose of cricket and no other activity of whatsoever nature has been carried out neither it is engaged in the systematic activity as hotelier. Thus, the main act of association is fully in the direction of achieving its basic object of promoting cricket. It is contended that RCA is provide technical and financial support to the all District Cricket Association i.e. providing equipments, nets, balls, etc. without any consideration on other side RCA is getting only affiliation fee from them which is very nominal (Rs. 200/- only). The RCA has providing grants to Districts of a substantial amount of Rs. 39,20,763/-. RCA is organizing various matches of national....
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....ment and beverage revenue and it incurs expenses for the conduct o the matches. BCCI earns revenue by way of sponsorship and media right as well as franchisee revenue for IPL and it distributes 70% of the revenue to the member cricket association. Thus the assessee is also the recipient of the revenue. Thus, for invoking Section 12AA read with section 2(15) of the Act, Revenue has to show that the activities 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 Income Tax Appellate Tribunal's view that it is an entertainment and hence offended Section 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 Income Tax Appellate Tribunal rested its decision....
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....spicion with regard to the activity is that during the one-day international played between India and Pakistan, there was huge surplus and the assessee had rented out rooms to belonging to the society at a very higher rate. Therefore, it can be inferred that the Assessing Officer is swayed by the volume of receipts. These identical facts, were also before the Hon'ble Madras High Court in the case of Tamil Nadu Cricket V. The Director of Income Tax(E)(supra) wherein the Hon'ble Court opined that by the volume of receipt inference that activity is commercial cannot be drawn. It was observed by the Hon'ble High Court, that the basis of the decision of the Tribunal was on irrelevant consideration. It was held that these considerations are not germane in considering the question whether the activities are genuine or carried on with the object of the association. It is also noteworthy that as per section 11(4A) substituted by the Finance Act, 1983 with effect from 1/4/1984 sub section 1 or sub section 2 or sub section 3 or sub section 3A shall not apply in relation to any income of a trust or an institution, being profit and gains of business, unless the business is incidental to the a....
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....only cricket matches are being organized whether the same result into profit or loss. It is contented that all Cricket Matches do not attract audience but due to historical background in the case of match between India and Pakistan audience for such match remains abnormally high. Therefore, under these peculiarity of fact it making inference that the assessee is engaged into commercial activities is not justified. 7. We have given our thoughtful consideration to the rival submissions of the parties. If volume of receipts and constant increase into surplus is considered, this necessity gives impression of commercial activity. Let us appreciate the facts in light of various judicial pronouncement. The Hon'ble Supreme Court in the case of Commissioner of Sale Tax vs Sai Publication Fund 258 ITR 70(SC) has held: "There is no dispute that the primary and dominant activity of the trust is to spread the message of Saibaba. This main activity does not amount to "business". The activity of publishing and selling literature, books and other literature is obviously incidental or ancillary to the main activity of spreading the message of Saibaba and not to any business as such even without....
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....ntion of the assessee that the main source of receipt was the match conducted between India vs. Pakistan. This fact is not refuted by the revenue by placing any contrary material. The Coordinate Bench of this Tribunal in the case of District Cricket Association vs. DIT, wherein the Coordinate Bench has decided the issue in para 10.9 of the order as under: "Thus respectfully following the decision of Hon'ble Madras High Court in the case of Tamil Nadu Cricket Association (supra), we have to hold that the amounts received by the assessee from a) ground booking charge, b) health club charges, c) income from corporate boxes, d) lawn booking income ,e) sponsorship money and sale of ticket, advertisement, souvenirs and other such receipts do not result in the assessee being held a undertaking activities in the nature of "trade, commerce and business". These receipts are intrinsically related, interconnected and interwoven with the charitable activity and cannotbe viewed separately. The activities resulting in the said receipts are also charitable activities and not "trade, commerce or business" activities." Further the Hon'ble Jurisdictional High Court in the case of Commissioner of ....
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....neral public utility, if would remain charitable even I an incidental entry into thepolitical domain for achieving that purpose e.g. promotion of or opposition to legislation concerning that purpose, I contemplated." (emphasis added) 20. In sole Trustee, Lok Shikshana Trust vs. CIT, (1975) 101 ITR, 254, the Hon'ble Supreme Court observed: "If the profit must necessarily feed a charitable purpose under the terms of the trust, the mere facts that the activities o the trust yield profit will not alter the charitable character of the trust. The restrictive condition that purpose should not involve the carrying on of any activity for profit would be satisfied if profit making is not the object." 21. In the matter of "Additional CIT vs. Surat Art Silk Cloth Manufactures Association", (1980) 121 ITR, 1, the Hon'ble Supreme Court held that if the primary or dominant purpose of a trust or institution is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity. The court further observed that true meaning of the words in section 2(....
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....erest of those who conduct the said trade or industry ( CIT v. Andhra Chamber of Commerce[1965] 55 ITR 722 (SC)]. If the primary or predominant object of any institution is charitable, any other object which might not be charitable but which is ancillary or incidental to the dominant purpose, would not prevent the institution from being a valid charity ( Addl. CIT v. Surat Art silk Cloth manufacturers Association [1980] 121 ITR 1 (SC). The present case in our view is squarely covered by the judgment of this court in the case of CIT v. Andhra Pradesh State Road Transport Corporation [1986] 159 ITR1 (SC) in which it has been held that since the corporation was established for purpose of providing efficient transport system, having no profit motive, though it earns income in the process, if is not liable to income-tax. Applying the ratio of the said judgment in the case of Andhra Pradesh State Road Transport Corporation [1986] 159ITR 1(c), we find that, in the present case, the Gujarat Maritime Board is establish for the predominant purpose of development of minor ports within the State of Gujarat, the management and control of the Board is essentially with the State Government and ....
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....ing that there are findings of facts that the assesseeappellant has not been acting to advance any of the object concerning general public utility. Further while referring to first proviso to Section 2(15), the court has observed that "we find that no substantial question of law much less a substantial question of law would emerge from the impugned order of Income Tax Appellate Tribunal warranting admission of the appeal."A bare perusal of the order reveal that the catena of decisions of the Hon'ble Supreme Court referred to hereinabove, interpreting the effect of first proviso in context of the main provision of Section 2(15), which defines 'charitable purpose', were not brought to the notice of the court and therefore, the said order passed by the court by merely recording its ipse dixit does not help the Revenue in any manner. From various decisions of the Hon'ble Supreme Court discussed hereinabove, the settled position of law emerges is that if the primary or predominant object of an institution is charitable, any other which might not be charitable but which is ancillary or incidental to the dominant purpose, may be involving element of profit, would be prevent the institut....
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....s fact is not disputed by the Revenue. All these activities an ancillary to the main activity. Therefore, we are of the considered view that the Assessing Officer was not justified in declining the exemption. Ld. CIT (DR) vehemently urge that first proviso to clause (15), Section 2 of the Act, therefore, as per section 13(8) of the Act nothing contained in section 11 or Section 12 shall operate, so as to exclude of income of total income of previous year of the present. As we have held that in the light of the various judicial pronouncement proviso to clause (15) to Section 2 of the Act would not be applicable on the facts of the present case. Ld. DR has relied on the decision of the co-ordinate Bench in the case of Entertainment Society of Goa Vs. CIT (2013) 34 Taxmann.com 201(Panji). This decision does not help the Revenue in view of judgments of Hon'ble Madras High Court and Delhi High Court cited (supra). Therefore, this argument of the ld. CIT (DR) is also devoid of any merit. In view, of the above discussion ground nos. 2 to 8 of the of the assessee's appeal are allowed." 30. In the aforesaid decision, the Coordinate Bench has held that the main objective of the assesse....
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....in law, the Hon'ble ITAT is right in allowing exemption u/s. 11 of the IT Act, 1961 in spite of the fact that the proviso to Section 2(15) is invoked in the case of assessee as the activities of the assessee being run on commercial basis and there being no element of charity? ii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in holding that the assessee is liable to claim depreciation of Rs.2,16,62,215/- on the assets which were claimed as application u/s. 11 at the time of purchase?" 32. The Hon'ble High Court has taken into consideration the nature of activities undertaken by the assessee society and nature of receipts being accounted for in its books of accounts in form of one day international cricket match, income from advertisement, sale of tickets, TV subsidy, etc, at para 6.2 of its order which read as under: "6.2 He contended that the following income which is received by the assessee through Commercial Activity reads as under:- (4) Commercial Activity:- Besides that, it is seen that the activities of the RCA is commercial. It is judicially accepted proposition that where profit making is the predominant o....
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....into consideration the CBDT Circular dated 24/09/1984 wherein promotion of sports and games were considered as charitable activities within the meaning of Section 2(15) of the Act and the relevant para reads as under: "7.1 He also relied upon the Government Circular dt. 24.9.1984 wherein CBDT has issued circular and has explained charitable purpose as under:- "SECTION 2(15) CHARITABLE PURPOSE 10. Whether promotion of sports and games can be considered to be charitable purpose 1. The expression "charitable purpose" is defined in section 2(15) to include relief of the poor, education, medical relief and the advancement of any other object of general public utility. 2. The question whether promotion of sports and games can be considered as being a charitable purpose has been examined. The Board are advised that the advancement of any object beneficial to the public or section of the public as distinguished from an individual or group of individuals would be an object of general public utility. In view thereof, promotion of sports and games is considered to be a charitable purpose within the meaning of section 2(15). Therefore, an association or institution engaged in the pro....
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....s as per the approved bye-laws but nonetheless cancellation of registration is uncalled for. 12. In that view of the matter, all the issues are answered in favour of the assessee and against the department. However, we make it clear that earlier order which has been passed by the High Court, we are not modifying in any manner whatsoever, it will be open for the department to take appropriate proceedings in accordance with law." 35. We therefore find that the order so passed by the Coordinate Bench has been affirmed by the Hon'ble Rajasthan High Court and is thus binding on this Tribunal. It is relevant to note that besides the aforesaid matter, the matter relating to granting of registration U/s 12AA as well as granting exemption U/s 11 of the Act for the A.Y. 200809 were also considered by the Hon'ble Rajasthan High Court while passing aforesaid consolidated order dated 21.11.2017 in D.B. Income Tax Appeal No. 236/2016, D.B. Income Tax appeal No. 252/2017 and D.B. Income Tax appeal No. 257/2017. In the aforesaid order, the Hon'ble High Court has held that it will be open for the Department to take appropriate action in respect of expenses and income which are not in accordance....
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....A/R that there is no change in the nature of activities and the activities are the same as carried out by the assessee society as in earlier year. As we have noted above, even on perusal of the assessment orders and the findings of the Assessing officer, there is no finding recorded by the Assessing officer that the nature of activities being carried on by the assessee society has changed since last years and even during the course of hearing, the ld CIT D/R has not submitted anything contrary to the contentions so advanced by the ld A/R and as found from the perusal of past assessment orders. We therefore find that where the undisputed facts are that these are the same activities which the assessee society has been carrying on all these years and then on what basis, the same activities are treated as promotion of sport of cricket in all the past years and for the year under consideration, the Assessing officer hold that these are not sport promotion activities and thus, not charitable in nature. On this ground alone, where there are no changes in the facts and circumstances of the case, following the rule of consistency as upheld by the Courts from time to time and more so in view....
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....ber of assessment orders under section 143(3) were passed, wherein the assessee was held eligible for the exemption under sections 11 and 12 of the Act. It appears that it is only after the Proviso came to be inserted that, all of a sudden, the department now believes that the activity of the assessee is commercial in nature and no longer charitable. It is difficult for us to take the view that the assessee could be said to be carrying on "trade, commerce or business" under the garb of the activity being "general public utility". Merely because an activity is performed in an organized manner, that alone, will not make such activities as business/commercial activity. The profit motive is one essential ingredient which is apparently missing in the case on hand. In carrying out an activity, one may earn profit or one may incur loss. But for making it as a business activity, the presence of the profit motive is sine qua non. 38. In the case on hand, the ultimate beneficiary is either the cricketer or the game of cricket. The assessee is not charging any fees or revenue from the cricketer who is the ultimate beneficiary. Thus there is no quid pro quo relationship with the cricketer. T....
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....aritable purposes, would not make any difference and the activity would nonetheless not be regarded as being carried on for a charitable purpose. We have seen that by virtue of section 25 of the Companies Act, the petitioner is enjoined to plough back its income in furtherance of its object and the declaration of dividends is prohibited. If a literal interpretation is to be given to the proviso, then it may be concluded that this fact would have no bearing on determining the nature of the activity carried on by the petitioner. But, we feel that in deciding whether any activity is in the nature of trade, commerce or business, it has to be examined whether there is an element of profit making or not. Similarly, while considering whether any activity is one of rendering any service in relation to any trade, commerce or business, the element of profit making is also very important." "141. From the aforesaid decisions, it is apparent that merely because the Association puts up tickets of the international cricket matches for sale and earns some profit out of the same, it would not lose its character of having been established for a charitable purpose. It is also important to note that....
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....titution, and while doing so, there results some income, such income will not amount to carrying on any trade, commerce or business. The crux of the matter is to understand the object of carrying on the activity which resulted into income. If the object is to simply earn income de hors the promotion of objects for which it was set up, it will fall within the ambit of proviso to section 2(15) and if the object of the activity is to promote the objects for which it was set up, then it will not be caught within the sweep of the proviso notwithstanding the fact that there results some income from carrying out such activity. The core of the matter is to see whether the activity which resulted into some income or loss was carried on with the object of doing some trade, commerce or business, etc., or it was in furtherance of the objects (non-business) etc., for which the assessee was set up. In other words, the predominant object of the activities should be seen as to whether it is aimed at carrying on some business, trade or commerce or the furtherance of the object for which it was set up. If it falls in the first category, then, the case would be covered within the proviso to section 2....
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....e element of profit making is essential. If the object is to simply earn income dehors the promotion of objects for which it was set up, it will fall within the ambit of the proviso to section 2(15) and if the object of the activity is to promote the objects for which it was set up, then it will not be caught within the sweep of the proviso notwithstanding the fact that there results in some income from carrying on such activity. In other words, the predominant object of the assessee should be seen as to whether it is aimed at carrying on business or the furtherance of the object for which it was set up. Further, it has been held that earning of surplus itself should not be construed as if the assessee existed for profit and what is relevant to determine is whether the profits and surplus so generated has been distributed outside the organization and where on facts, the profits and surplus are ploughed back into the activities of promotion and development of sport of cricket, the assessee cannot be termed to be carrying out commercial activities in the nature of trade, commerce or business. Further, making a distinction between the state cricket associations and the BCCI, it has be....
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....ncy and purity and integrity of the Game are the core values (c) To provide for measures necessary for promotion and development of the game of Cricket in Rajasthan, welfare and interest of Cricketers and elimination of unethical and unfair practices in the Game of cricket in Rajasthan; and for that purpose, organize coaching schemes, establish coaching academies, hold tournaments, exhibition matches, Test Matches, ODIs, Twenty/20, T-10 and any other matches and take other required steps; (d) To strive for sportsmanship and professionalism in the game of Cricket and its governance and administration; inculcate principles of transparency and ethical standards in players, team officials, umpires and administrators; and to ban doping, age fraud, sexual harassment and all other forms of in-equality and discrimination." 39. And therefore, the receipts from sale of tickets from one day international and IPL matches are incidental and ancillary to its predominant object of the promotion of sport of cricket and cannot be construed as commercial in character attracting the proviso to section 2(15). Further, other receipts in form of IPL subvention, TV subsidy from BCCI and other recei....
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....der various heads of fees cannot be held to be 'income from property held for charitable purposes' for the purposes of section 11(1) of the Act and the assessee society is therefore not entitled to exemption u/s 11 of the Act. In addition, the Assessing officer noted that the assessee society has allowed various benefits to persons covered under section 13(3) and in view of the provisions of section 13(1), the assessee society is not held eligible for exemption under section 11 of the Act. 15. Here, we refer to the decision of Hon'ble Supreme Court in case of Queen's Education Society v. CIT [2015] 372 ITR 699/231 Taxman 286/55 taxmann.com 255 where relevant principles of law have been laid down to determine whether an educational institution exists solely for educational purposes and not for profit. In that case, the provisions of section 10(23C)(iiiad) of the Act were under consideration of Hon'ble Supreme Court . The Revenue therein has argued that the legislature and the language employed in the statute doesn't contemplate making of large profits and if an educational institution, in fact, makes large profits, then even though it may plough such profit....
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....foresaid discussion, the following principles of law can be summed up - It is obligatory on the part of Chief Commissioner of Income-tax or the Director which are the prescribed authorities, to comply with proviso thirteen (un-numbered). Accordingly , it has to be ascertained whether the educational institution has been applying its profit wholly and exclusively to the object for which the institution is established. Merely because an institution has earned profit would not be deciding factor to conclude that the educational institution exists for profit. The provisions of section 10(23C)(vi) of the Act are analogous to the erstwhile section 10(22) of the Act, as has been laid down by Hon'ble Supreme Court in the case of American Hotel and Lodging association (supra). To decide the entitlement of an institution for exemption u/s 10(23C)(vi) of the Act, the test of predominant object of the activity has to be applied by posing the question whether it exists solely for education and not to earn profit [see5 Judges constitution Bench Judgment in the case of Surat Art Silk Cloth Manufactures association (supra)]. It has to be borne in mind that merely because profits have resul....
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....his Court in the Surat Art Silk Manufacturers Association Case and Aditanar Educational Institution case as follows: .....The fact that the Petitioner has a surplus of income over expenditure for the three years in question, cannot by any stretch of logical reasoning lead to the conclusion that the Petitioner does not exist solely for educational purposes or, as that Chief Commissioner held that the Petitioner exists for profit. The test to be applied is as to whether the predominant nature of the activity is educational. In the present case, the sole and dominant nature of the activity is education and the Petitioner exists solely for the purposes of imparting education. An incidental surplus which is generated, and which has resulted in additions to the fixed assets is utilized as the balance sheet would indicate towards upgrading the facilities of the college including for the purchase of library books and the improvement of infrastructure. With the advancement of technology, no college or institution can afford to remain stagnant. The Income-tax Act, 1961 does not condition the grant of an exemption under Section 10(23C) on the requirement that a college must maintain the sta....
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....he assessee has applied Rs. 8 lakhs for charitable purposes in India by purchasing a building which is to be utilized as a hospital. This income, therefore, is entitled to an exemption u/s 11(1). In addition u/s 11(1)(a), the assessee can accumulate 25% of its total income pertaining to the relevant assessment year and claim exemption in respect thereof. Section 11(1)(a) does not require investment of this limited accumulation in government securities. The balance income of Rs. 1,64,210.03 constitutes less than 25% of the income for the assessment year 1970-71.Therefore, the assessee is entitled to accumulate this income and claim exemption from Income tax u/s 11(1)(a)." 19. Subsequently, the Hon'ble Supreme Court in its subsequent decision in case of Visvesvaraya Technological University v.Asstt. CIT [2016] 384 ITR 87/239 Taxman 395/68 taxmann.com 287, in context of section 10(23C)(iiiab), referred to principles laid down in Queen's education society (supra) and stated that one further test as laid down in Surat Art Silk Cloth Manufacturer's Association (supra) and culled out in American Hotel & Lodging Association Educational Institute (supra) may be added which is ....
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....eld that the appellant University exists solely for educational purposes and not for the purposes of profit. 20. In our view, the above decision of Hon'ble Supreme Court in case of Visvesvaraya Technological University supports the case of assessee society where under similar fact pattern the surplus has been generated over the period of time and at the same time, the same has been ploughed back and utilised for the purposes of promotion of education through setting up educational institutions, operating them and also upgrading them from time to time for further benefits to the students at large. The society has also established a university, "Jaipur National University" for the promotion of technical and other higher education where the Society is the sponsoring Mahima Shiksha Samiti, Jaipur v. ACIT,(Exemption), Jaipur body of the University and has helped set up the University and its infrastructure. Here, it would be relevant to note the surplus that has been generated by the assessee society over the years starting AYs 1999-00 to 2011-12 and to what extent the same has been utilised over the years: Assessment Year Surplus as per Audited balance sheet (Rs.) Application ....
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....rom year to year cannot be a basis for rejection of application u/s 10(23C)(vi) if it is used for educational purposes unless the accumulation is contrary to the manner prescribed under law." 22. A perusal of the above clarification issued by CBDT clearly shows that while examining that an educational institute exists solely for educational purpose or for the purpose of the profit, mere generation of surplus from year to year cannot be basis to hold that it exists for the purpose of the profit as sufficient safeguards have been provided whereby accumulation of income is permissible subject to the manner prescribed therein provided such accumulation is to be applied wholly and exclusively to the objects for which it is established. In our view, the view of the CBDT is in consonance with the express wordings provided and intended by the legislature in 10(23C)(vi) and in conformity with the law laid down by the Hon'ble Supreme Court in case of Queens Education Society where it is provided that where the surplus is ploughed back for education purposes, the educational institution exists solely for educational purposes and not for purposes of profit. The same will apply with equal....
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.... by the revenue in ITA no. 67/JP/2022 are as under :- 1. "On the facts and the circumstances of the case and in law the Ld. CIT (Appeals) has erred in allowing exemption u/s 11 of the I. T. Act, 1961 to the assessee despite the fact that the proviso of section 2 (15) is invoked in the case of assessee as the activities of the assessee are being run on commercial basis, there being no element of charity . 2. On the facts and circumstances of the case and in law, the Id. CIT (A) has erred in allowing the expense towards grand to District Cricket Association (DCA) of Rs. 2,85,03,980/- without appreciation of the fact that the activities of the assessee society cannot be treated as charitable activity and accordingly provisions of section 11 and 12 of the Income Tax Act were not applicable in the assessee'scase . 3. On the facts and circumstances of the case the assessee has erred in adopting the accrual and not the payment system of accounting as the Trust/AOP/Society Institution exempted under the Income Tax Act is not employed to adopt Accrual system of Accounting. 4. Any other question of law as deemed fit in the facts and circumstances of the case may also be framed before....
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....in ITA no. 284/JP/2020 wherein vide order dated 25.11.2020 has decided the issue in favour of the appellant. The gist of the decision has already been extracted in the reply of the appellant reproduced in the preceding para. In view of the similar facts involved in the current year and respectfully following the decision of the Hon'ble ITAT in favour of the appellant, the issue is decided in favour of the appellant and the Ground No. 3 is allowed." Therefore, the ld. A/R prayed that the expenditure incurred by way of grants to various district cricket association may be allowed to the assessee. 12. On the other hand, the Ld. D/R. submitted that this issue is covered in favor of the assessee by the decision of Coordinate Bench of the Tribunal in ITA no. 284/JP/2020. 13. We have heard the rival contentions and perused the material available on record. At the outset, we find that the matter under consideration is squarely covered by the decision of Coordinate Bench of the ITAT Jaipur in the assessee's own case in ITA No. 1355, 1356/JP/2018 and ITA No. 284/JP/2020 dated 25.11.2020 wherein in para 50 the matter has been decided as under :- " 50. We have heard the rival contentions....
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....ngs, the AO noticed that in the Balance Sheet the assessee has shown provision for expenses of Rs. 2,30,26,342/-. As per the AO, the provisions are not allowable and thus the assessee was required to furnish the details of the provisions made as well as justification for the claim. The AO held that for claiming any expenditure it should have been incurred and provisions are not the expenditure incurred. It is an estimate for the expenses to be incurred in subsequent period. In absence of details furnished by the assessee, the AO disallowed the provision for expenses of Rs. 2,30,26,342/- and added to the total income of the assessee. Aggrieved by the order, the assessee preferred appeal before the ld. CIT (A). The assessee furnished the written submissions dated 14.01.2021 before the ld. CIT (A) explaining the provision of expenses. The ld. CIT (Appeals) considering the submissions of the assessee, allowed the claim of the assessee by observing in para 10.3.1 as under :- "10.3.1. The issue is disallowance of provision of expenses of Rs. 2,30,26,342/- on the ground that in the absence of information as to whether same has been incurred or not. From the submissions of the appellant,....