TMI Blog2014 (3) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 37(i) should not affect the interpretation of Section 57(iii). The assessee in the present case was created in 1979 with the object of promoting sports; there was no other object and all its constituents were giving grants/ funds only for that purpose. In truth and reality the assessee was merely acting as a custodian or conduit to the constituents for the purpose of promoting sports activity inside and outside the country. The expenditure incurred by the assessee is only for the purpose of promoting the sports events and activities and in this respect there is no challenge to the finding of fact recorded by the Tribunal. If such expenditure is not allowed, it may amount to taxing the gross receipts of the assessee and not the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous oil companies was brought to tax under the head income from other sources ; an estimated expenditure of Rs.1,20,000/- was deducted from the aforesaid amount as expenditure incurred in collecting the grant and the balance of Rs.1,51,42,990/- was assessed to tax. Similar assessments were made for the other two assessment years. The assessee preferred an appeal before the CIT (Appeals) for all the three assessment years. In the appeals the assessee challenged the jurisdiction of the assessing officer to reopen the assessment under Section 148 of the Act and the restriction of the allowance of expenses to Rs.1,20,000/- for all the years. It was submitted that the assessee was a society formed for the promotion of sports and was registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the provision of Section 4 of Income Tax Act, 1961 4. After following the due procedure, the additional ground was admitted being a pure legal ground. On merits, however, the additional ground did not find favour with the CIT (Appeals) who held that principle of mutuality was not applicable to the assessee. Thereafter he proceeded to examine the merits of the disallowance of the expenditure claimed by the assessee and held as follows: - 6. The appellant also in the course of assessment proceedings by the Assessing Officer submitted the details of all expenditures incurred for the purpose of sports activities as well as books of accounts. The Assessing Officer has not brought out any adverse materials/ features in assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt will get relief to the extent stated in paragraph 6 6.1 and balance amount of income over expenditure will be taxable. 7. For statistical purpose, the appeal will be treated as Partly Allowed for all the three years. 5. The revenue challenged the aforesaid order of the CIT (Appeals) before the Tribunal. The Tribunal passed a consolidated order, recording the following findings: - (a) The assessing officer has not brought out any adverse material to show that the expenditure claimed to have been incurred by the assessee on the sports activities did not in fact relate to those activities or were not supported by documentary evidence; (b) The full details of the expenditure showing their purpose were submitted before the AO and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r allowing the expenditure incurred on the promotion of the sports activities is not acceptable since even under Section 57(iii), any expenditure incurred for the purpose of making or earning the income is allowable as a deduction. It is open to the income-tax authorities to deny the exemption under Section 11 of the Act in the absence of registration under Section 12A and if they do so, then the assessment has to be completed in accordance with the provisions of the Income Tax Act; if the income is assessed under the residual head full play must be allowed to Section 57(iii). Though prima facie it would appear that the phraseology employed in Section 57(iii) is different from Section 37(1), it has been held by the Supreme Court in CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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