TMI Blog2013 (10) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sharma (Judicial Member) This appeal by the assessee-trust is against the order dated 28.01.2013 of the Commissioner of Income-tax, Rajkot-2, Rajkot u/s 12AA(3) of the Income-tax Act, 1961. 2. The facts, in brief, are that the assessee-trust was created and instituted for the promotion and development of sports in Saurashtra region. The Commissioner of Income-tax, after duly considering the objects of the assessee-trust and genuineness of its activities, has granted the registration of trust u/s 12A of the Income-tax Act vide its order No. CIT-R/65-5/138/87-88 dated 05.05.1989. Subsequently, in the impugned order dated 28.01.2013, the Commissioner of Income-tax, Rajkot-2, Rajkot cancelled the registration of the assessee-trust by invoking provisions of section 12AA(3) of the Income-tax Act by observing that the trust has arranged one day international matches of cricket and in turn has received TV subsidy/subvention income i.e. sharing of TV broadcasting right income from BCCI and advertisement sales income. Therefore, the ld CIT is of the view that the assessee-trust had carried out the activities in the nature of trade, commerce or business in view of the first proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust or institution once registration has been granted u/s 12A of the Act. The ld counsel of the assessee submitted that the insertion of first proviso to section 2(15) with effect from 01.04.2009 would not have any bearing on section 12AA(3) since it does not extend to the objects of the trust or institution but only to its activities as stated therein. He further submitted that, in the present case, the assessee-trust was instituted for the promotion of game of cricket in Saurashtra and Kutch and throughout from its getting Registration of Trust from 1989 to till today and the said activities of the assessee-trust has been treated as genuine and charitable activities and exemption has always been granted to the assessee-trust u/s 11 and 12 of the Act. He further submitted that there is no change in the objects for which the Trust was instituted in as much as genuineness of the activities have never been questioned and doubted. He also pointed out that merely because of insertion of first proviso to Section 2(15) of the Act, the activities of the assessee-trust cannot be treated as non-genuine. To sum-up, the ld counsel of the assessee submitted that nowhere in the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or not so to be treated as in the nature of trade, commerce or business or charitable purpose. With regard to the first limb as mentioned in (a) above, the ld counsel of the assessee-trust, invited our attention to the circular No.395 [F. No.181(5) 82/IT(A-I)], dated 24-09-1984 wherein the Board has advised that promotion of sports and games is considered to be a charitable purpose within the meaning of section 2 (15) of the Act. With regard to the second limb as mentioned in (b) above, the ld counsel of the assessee-trust submitted that the law is settled by the larger bench of Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 that (i) the primary or dominant purpose of the trust or institution has to be examined to determine whether the said trust/institution is involved in carrying out any activity for the profit and (ii) if the object of the trust or institution is to carry out object of general public utility and this is the primary or dominant purpose and not carrying on any activity for profit, the same would satisfy the requirements of Section 2(15) of the Act. 7. It was further submitted by the ld counsel o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee-trust and with no intention to carry out any trade, commerce or business. 9. With regard to the decision of ITAT, Mumbai Bench in the case of Mumbai Cricket Association v. DIT (Exemption [2012] 138 ITD 338 relied upon by the ld CIT in the impugned order; the counsel of the assessee pointed out that the same is distinguishable because in that case it was found that (a) Mumbai Cricket Association entered into an agreement with another party for running activities such as restaurants, bar, banquet halls, etc apart from cricket academy and (b) the land was allotted by MMRDA to assessee strictly for non-commercial activity, which was violated by the planning, executing the activity of recreation centre. Whereas, in the present case, neither such commercial activities have been carried out by the assessee-trust nor any violation has been made by the assessee-trust; on the contrary, the assessee-trust carries out all the activities in accordance with the objects of the assessee-trust only. Therefore, he pointed out that, the ratio laid down by the ITAT, Mumbai Bench in the case of Mumbai Cricket Association (supra) is not applicable in the present case. 10. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case, the conceptual framework has not been followed. 12.3 In paragraph 55 of the above said decision of ITAT, Chennai Bench, it has been discussed that the DIT (Exemptions) has clearly stated that the activities of the association are not in the nature of activities for advancement of any object of general public utility. But the activities involve carrying on activity in the nature of trade, commerce or business or any other activity of rendering any service for a cess or fee. Therefore, it is clear that the first proviso inserted under section 2(15) hits the case of the assessee. 12.4 In paragraph 56 of the aforesaid decision, ITAT Chennai Bench has discussed that there cannot be a conflict between the first proviso inserted under section 2(15) and the conditions laid down in section 12AA(3) for cancelling the registration. If there is a conflict between the two, the law stated in the proviso will be defeated. So also, the law stated in section 12AA(3) will be defeated. Therefore, when the assessee is hit by the proviso to section 2(15), its consequential reflection is automatic on section 12AA(3), which prima facie establishes that the activities carried on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 192 (SC) h. CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 (SC) i. Controller of Estate Duty v. R. Kanakasabai [1973] 89 ITR 251 (SC) j. CIT v. Madho Pd. Jatia [1976] 105 ITR 179 (SC). 16. Rival submissions were considered. Admittedly, in the present case, the Registration has been cancelled by CIT, Rajkot-2, Rajkot on the basis of amended provisions of Section 2(15) of the Income-tax Act, 1961; therefore we are of the considered opinion that the action taken by the ld CIT, Rajkot-2, Rajkot does not fall within the permissible limits of Section 12AA(3) of the Income-tax Act, 1961 and therefore, the impugned order is bad in law. Similar view is taken by the Ahmedabad A Bench of ITAT, Ahmedabad in the case of Gujarat Cricket Association (supra) and the ratio of the said judgment is squarely applicable to the facts of the present case also. With regard to the judgment of ITAT, Chennai B Bench in the case of Tamil Nadu Cricket Association (supra) and ITAT, Mumbai Bench in the case of Mumbai Cricket Association (supra), as relied upon by the ld Departmental Representative; we are of the view that the same are distinguishable as rightly pointed out by the ld counse ..... 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