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TMI Blog2012 (6) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... 996. The assessee filed its return of income for the assessment year 2007-08. During the course of assessment proceedings for assessment year 2007-08, the Assessing Officer noticed that the assessee society amended its memorandum and made amendments in the rules & regulations and that the same were not intimated to the Income Tax Department. For better appreciation of the facts in the present case, it is important to note the following inter-departmental and vice-versa correspondences exchanged between the assessee and the DIT as well. ♦ Letter dated 12th November 2009 written by the Addl. DIT (Exemption) to the DIT (Exemption); ♦ Letter dated 19th November 2009, written by the Addl. DIT, Range-1, Mumbai, to the DIT, Range-1, Mumbai; ♦ Letter dated 30th November 2009, written by the DIT (Exemption), Mumbai, to the assessee; ♦ Letter dated 3rd December 2009, written by the DIT (Exemption) to the assessee. ♦ Letter dated 4th December 2009, written by the Addl. DIT, Range-1, Mumbai, to DIT, Range-1, Mumbai; ♦ Reply dated 14th December 2009, submitted by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amendments were made on 1st June 2006 and also on 21st August 2007, but this had not been informed to DIT, who had granted registration under section 12A of the Act and that this information on amendments had not been given the Department for more than three years and, hence, as the very foundation for grant of registration had been removed, the registration would not survive. Reliance was placed on the decision of the Hon'ble Allahabad High Court in Allahabad Agricultural Institute v. Union of India [2007] 291 ITR 116/163 Taxman 67; (iii) on the contention that there is no mandatory requirement to intimate the changes, the DIT held that if the institution does not want to communicate the changes, the only consequence is that the benefit of registration will not be applicable. He held that the decision is with the assessee to apply for fresh registration by enclosing changed memorandum and rules so that the authority granting the registration, may apply his mind to come to a conclusion that the registration is to be granted or not. Reliance was placed on Page-107 of the book "Charitable and Religious Trusts and Institutions" by S. Rajaratnam, [6th Edition, May 2008]. At Para-14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot being carried out in accordance with the object of the trust or institution. He submitted that no such satisfaction is recorded by the DIT and, hence, the order is bad-in-law. 10. He referred to the judgment of Hon'ble Allahabad High Court in Allahabad Agricultural Institute (supra), which was heavily relied upon by the DIT and distinguished the same by submitting that it was a Writ Petition filed for grant of stay of collection of tax and the Hon'ble Court was concerned with was the discretionary jurisdiction under Article 226 of the Constitution of India. He submitted that it was a case where the objects were enlarged from six objects to fourteen objects and was a case where objects are drastically changed. Under these circumstances, the Hon'ble Court took a view that there is substantial change in the Articles and in the objects. He argued that nowhere in the judgment, the Hon'ble Court has laid down that if objects are changed the registration would automatically be withdrawn. He referred to the Board Circular no.3/1995 dated 24th September 1984, and submitted that for promotion of sports was considered a charitable activity. Referring to the change in the objects, he submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequences of the changes in the objects to the assessee. He argued that on such intimation, an appeal cannot lie under section 253 of the Act. He submitted that this is a case where the assessee by his own voluntary act of changing the objects without seeking approval, cancelled the registration. He vehemently contended that when the association has been registered under section 12A, and subsequently it alters its objects and also involved in commercial transactions, it would be unreasonable to hold that the registration under section 12A, still holds good. He argued that the benefit of registration cannot be extended with the newly amended objects. He argued that it is not for the assessee to decide as to whether the amendments are material or not. On merits, he submitted that the assessee has suppressed Pages-38 and 39 of the amended Memorandum and rules and regulations and that these two pages are of vital importance and for the benefit of the bench, he provided copies of the same. He pointed out that change such as Indian Premier League was added by way of these amendments. He further filed a copy of 79th Annual Report of the assessee for the year 2007-08, wherein the concept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion granted under section 12A, cannot be cancelled. ♦ Sri Chaitanya Educational Committee v. CIT [2007] 106 ITD 256 (Hyd.); ♦ Bharati Vidyapeeth v. ITO [2009] 28 SOT 32 (Pune) (URO); ♦ Kailashanand Mission Trust v. Asstt. CIT [2004] 88 ITD 125 (Delhi); ♦ Namra Mahila Avam Bal Kalyan Samiti v. CIT [2005] 1 SOT 224 (Jabalpur). 13. He reiterated that there is no legal obligation to intimate the change and that the entire emphasise of the DIT was on the change in objects and that the rules were not referred. He submitted that the memorandum has only 4 pages and the rules provided for constitution of a committee for Indian Premier League which is the same as other committee formed and that nothing much turns on this. He emphasized that generation of income is different from application of income and that Indian Premier League is not business. 14. The learned Sr. Advocate also submitted that the adjudication on the issue is the domain of the Assessing Officer and when an administrator gets benefit, provisions of section 13, can be invoked by the Assessing Officer. He submitted that the learned Departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted and this, in turn, enables the assessee to avail the benefit of sections 11 to 13 of the Act. Thus, what is registered is the society along with its memorandum and by-laws. If there are significant or material changes in the objects or bye-laws, in our opinion, it cannot be said that the registration under section 12A, can be extended to those amended objects and bye-laws. Any other view would defect the very purpose of registration. The assessee has made various amendments to the Memorandum of Association as well as in the Rules and Regulations, which are placed in the paper book vide Pages-36 to 41. These changes have been highlighted during the course of hearing. We do not want to list out the amendments as the Revenue has not examined the same, clause by clause and come to any conclusion. Suffice to say that some of the amendments are material and substantive, one of them being holding ODIs and Twenty-20, any other matches, etc. 18. Now let us examine as to how the assessee views these changes. The assessee, in its 79th annual report 2007-08, has, under the head "DLF Indian Premier League 2008 - Cricketainment", stated as follows:- "A sporting extravaganza that captiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obal audience. And who knows a couple of years down the line the DLF Indian Premier League could well have its first Chinese or American Players import playing for one of the eight franchises. Projected as "Manoranjan Ka Baap*" the league has thus more than lived up to all its claims and even set fresh records in TRP ratings, which have far outstripped TRPs for the soap serials. The sky is the limit, and hopefully, the DLF Indian Premier League will grow with each passing year to become the premier spectacle in Global Sport. *Father of Entertainment". 20. We further note the following amendments to clause 6.2.4 of the Regulations for player, team officials, umpire and administrator. "Prior to the amendment, Clause 6.2.4 of the Regulations for Players, Team officials, Umpires and Administrators, said "No administrator shall have, directly or indirectly any commercial interest in the matches and events conducted by the Board." After the amendment, though the clause said "no administrator shall have directly or indirectly any commercial interest in any of the events of the BCCI excluding IPL, Champions League and Twenty-20". 21. These amendments when read together leaves us in no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean that the Act allows the assessee society, to alter its objects and not intimate the same and seek approval from the Revenue, but can still claim benefit under the Act. Definitely, the examination of these issues is in the domain of the Assessing Officer while examining the claim of the assessee for exemption. It is well settled that the burden of proof, when exemption is claimed, is on the assessee. Learned Counsel argues that changes in the rules and regulations are not the grounds on which benefit under section 11 to 13 can be denied. We are of the opinion that when the rules and regulations can be amended so as to permit commercial interest to the administrators, it means, the memorandum and objects permit such activities. If the rules and regulations framed are not in violation of the objects, then any drastic change in the rules would determine the manner in which the objects of the association are to be understood. Hence, in our view, changes in the rules and regulations are also material and have to be intimated to the Revenue authorities for examination. Thus, we do not find any fault in the view taken by the DIT that the assessee should take steps by intimating the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the parties, the same are not applicable for the reason that the decision of a co-ordinate bench of the Tribunal in Shri Shanmukhananda Fine Arts & Sangeetha Sabha (supra) relied upon by the Revenue is distinguishable as on facts it was set aside to the DIT on the ground of natural justice. When it is the stand of the Revenue that the registration under section 12A, is not cancelled or withdrawn, the issue of examining the issue as to whether the DIT has power to withdraw or cancel the registration under section 12AA(3), or under section 12A, prior to amendment, does not arise. 29. To sum up, we are of the opinion that the registration granted under section 12A, on 12th February 1996, and the benefits flowing therefrom, cannot be extended to the amended objects of the society unless the DIT examines the same and comes to a conclusion that the registration under section 12A, can be extended to the revised objects, memorandum and by-laws. It would be illogical to hold that once an institution is registered under section 12A, no matter whatever may be the changes in the objects, rules and regulations, for any number of times, the institution should be given the benefit of se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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