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M/s Rajasthan Cricket Association Versus Commissioner of Income Tax-1, Jaipur

2016 (6) TMI 499 - ITAT JAIPUR

Registration U/s 12A cancelled - profit motive / commercial activity - The assessee claimed that even if there are certain substantial amendments in object, the assessee deserved registration continue on the ground that the activities are yet charitable in nature - Held that:- The amended objects were not voluntary change. The assessee has to follow the said laws related to sports activities. The comparison given by the ld CIT in his order dated 28/03/2013 does not show any fundamental deviation .....

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ies of the trust are not genuine, (ii) are not being carried out in accordance with the object of the trust as the case may be. The ld CIT has not found any infirmity in the activities carried out by the RCA as non- genuine or not being carried out as per object of the trust. It is also a fact that the game of cricket become very potential with reference to revenue compared to other games, therefore, the revenue generated by the RCA are substantial but this ground cannot be used to cancel the re .....

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aliet Kumar, JM For the Assessee : Shri Kapil Goyal(Adv) For the Revenue : Shri M.S. Meena (CIT) ORDER Per T. R. Meena, A. M. This is an appeal filed by the assessee against the order dated 28/03/2013 of the learned CIT(A)-I, Jaipur for A.Y. 2005-06. The effective grounds of appeal are as under:- 1. The impugned order dated 28.03.2013 u/s 12AA(3)/254 of the Act is bad in law and on facts of the case, for want of jurisdiction in as much as the Hon ble ITAT directed the Id. CIT, Jaipur-I, Jaipur t .....

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red in holding that some of the objects are not charitable, which finding of the fact, is perverse and contrary to the record and hence, may kindly be quashed. 3. The Id. CIT, Jaipur-I, Jaipur erred in law as well as on the facts of the case in invoking and applying the provisions of Sec.12AA(3) of the Act in this case, which is bad in law and on facts of the case and hence, the invoking of the said provisions be quashed. 4. The Id. CIT, Jaipur-I, Jaipur erred in law as well as on the facts of t .....

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f the Act for and from A.Y. 2009-10 and onward, which is bad in law and on facts of the case and hence, the application of the said proviso be quashed. 6. The Id. CIT, Jaipur-I, Jaipur further erred in law as well as on the facts of the case in holding that the activities of the appellant trust, were commercial and there was no element of charity and hence in withdrawing the registration granted u/s 12A(a) of the Act. Such finding and action is bad in law and on facts of the case and hence, the .....

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rranted being out of the scope of Sec.12AA(3) of the Act and thus without jurisdiction. Hence, such findings be declared void or be reversed. 2. All the grounds of the appeal are revolving around withdrawing of registration granted U/s 12A of the Income Tax Act, 1961 (hereinafter referred as the Act) by the ld Commissioner of Income Tax, Jaipur. The ld CIT observed that the registration U/s 12A of the Act was granted on 25/11/2988 to Rajasthan Cricket Association (in short the RCA) on the basis .....

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ceased to be operative. The above facts came in the notice in this office in F.Y. 2010-11. Therefore, he gave reasonable opportunity of being heard on this issue. Accordingly, registration was withdrawn vide order dated 27/12/2010 from A.Y. 2005-06 and onward. 2.1 He further observed that the assessee filed appeal before Hon ble ITAT challenging the withdrawal of Registration u/s 12AA(3) dated 27.12.2010. The Hon ble ITAT, Jaipur Bench, Jaipur vide its order in ITA No.69/JP/2011 dated 13.07.201 .....

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partment also filed appeal before Hon ble High Court challenging the order of Hon ble ITAT dated 13.07.2012. The Hon ble High Court, Rajashtan in DBIT Appeal No. 255/2012 order dated 23.01.2013 had decided and observed as under:- The prayer is allowed. The appeal is, accordingly, dismissed as withdrawn with observation that while considering application afresh, the assessing officer will not be influenced by any observation of appellate authority or the Income tax Appellate Tribunal . The assess .....

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rawal of registration i.e. assessee s activities are commercial was not a good basis. It was matter relating to application of income which could be examined only at the time of assessment. (4) RCA s activities are not commercial. (5) No commercial activity under amended section 2(15). After considering the assessee s reply, the ld CIT had made comparison between the objects as per Memorandum of Rules of Association 1999 and objects of 2005 on page 3 to 6 of the CIT order. After comparing the ob .....

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e changes are not made as per the provisions of Rajasthan Sports (registration, Recognition and Regulation of Association) Act, 2005. Consequent upon changes the scope of activities is enhanced. As per main objects of the Trust underwent changes, assessee was required to apply freshly for registration U/s 12A/12AA. This view is supported by the decision of the Hon ble Allahabad High Court in the case of ALLAHABAD AGRICULTURAL INSTITUTE AND ANOTHER vs. UNION OF INDIA AND OTHERS [2007] 291 ITR 116 .....

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y act of the assessee, the registration would not survive. Accordingly, he held that the assessee had to apply afresh for registration U/s 12A of the Act after amending the object of the Trust. It is necessary to intimate the change and also applied for fresh registration. It is the basic principles of law that the registration is granted on the basis of object of an Institution. If there is change in the objects, the registration would not survive. After such an event, if the institution does n .....

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t of memorandum 2005, which is very substantial in nature. He particularly referred clause (s) of object, 2005 to receive monies and donations from any person/s clubs associations or institutions and to utilize and/or invest the same in any manner and for any purpose as per the decision of the Executive Committee. He further considered the object clause (u), which is as under:- To invest monies and funds of the association in authorized securities or in any way and manner as may be decided upon .....

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the case of Board of Control for Cricket in India (BCCI), Mumbai Vs ITO in ITA No. 1285/Mum/2010 vide order dated 30/03/2012, wherein the Hon ble ITAT has held as under:- We are of the opinion that the registration granted under section 12A, on 12th Feb, 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, memora .....

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to whether the amendments in question meet the requirement of law." He further observed that on the basis of which registration was granted, had been amended and some objects are not charitable in amended memorandum, therefore, registration should not survive. The assessee claimed before him that even if there are certain substantial amendments in object, the assessee deserved registration continue on the ground that the activities are yet charitable in nature., which was also not found con .....

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e not commercial in nature and the Hon ble ITAT has decided that on the basis of commercial activities, the withdrawal of registration is not a good basis for rejection of registration. It was the matter relating to application of income, which could be examined only at the time of assessment. The ld CIT held that these observations made by the ITAT has been modified by the Hon ble Rajasthan High Court and directed to the Assessing Officer not to influence by any observation made by the appellat .....

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and convert the trust activities in profitable. The sports activities including cricket would be charitable activity if it is not involved any element of trade, commerce or business. The conduct of certain activities and receipts of income from these activities clearly shows that these activities are totally commercial and there is no element of charity in the conduct of RCA. He further considered the annual accounts for F.Y. 2007-08 under the various heads and held that the assessee had let ou .....

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ered the amended provision of Section 2(15) of A.Y. 2009-10 and onward. The assessee got registration from 1988 being charitable organization engaged in the promotion of sports, which is last limb of definition of charitable purpose given U/s 2(15) of the Act. He further analysed the annual account for the F.Y. 2007-08 under the various heads and found that motive of RCA is profit making. Therefore, he withdrew the registration granted w.e.f. A.Y. 2009-10 and onwards. The main and predominant ob .....

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roceedings had filed detailed reply. There was a change in the object due to change made in the Rajasthan Sports (registration, Recognition and Regulation of Association) Act, 2005 and was not voluntary change. Basically new law was in force but the assessee s character as it remained sports body engaged in promotion of cricket and further amended objects did not make assessee s objects any where non-charitable. All along assessee s activities have remained intra vires and not ultra vires even a .....

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ther than its objects, which was the base of holding that the trust is not charitable. A plain reading of object indicates that it includes devising means for imparting education and improving Ayurvedic system of medicine and preaching the same. He further relied on the decision in the case of Lakshmanaswami Mudaliar Vs LIC, AIT 1963 SC 1185 wherein the Hon'ble Supreme Court has held that power to carry out an object, undoubtedly includes power to carry out what is incidental or conducive to .....

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d in assessee s favour by following direct decision of Hon ble Mumbai ITAT B Bench in the case of Bhansali Trust wherein the Hon ble Tribunal held that not intimating the amended object in the trust deed to the department cannot ipso facto lead to cancellation of registration because the statutory requirement of cancellation of registration contained in Section 12AA(3) of the Act. He further relied on the following case laws:- (i) Shri Sanmukhananda Fine Arts & Sangeetha Sabha in ITA No. 184 .....

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) Gujarat Cricket Association in ITA No. 93/Ahd/2011 order dated 31/01/2012 (ITAT Ahd.) Therefore, various Hon'ble High Courts including Hon ble Tribunals had rejected the revenue appeals made U/s 2(15) in identical cases of various cricket associations. He further relied on a recent decision of Hon ble ITAT C Bench, Kolkata in the case of The Technological Institute of Textile Vs Director of Income Tax, Exemption, Kolkata in ITA No. 689 & 690/Kol/2011 order dated 18/03/2016 wherein the .....

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s the case may be. Therefore, he prayed to allow the assessee s appeal. 4. At the outset, the ld CIT DR has vehemently supported the order of the ld CIT and argued that the RCA s activities are commercial and by considering the amended provisions of Section 2(15), the activities of the trust are in nature of commercial, trade and business and element of profit is involved. Therefore, the assessee s appeal may please be dismissed. 5. We have heard the rival contentions of both the parties and per .....

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e appellate authority. The assessee has been provided reasonable opportunity of being heard by the ld CIT. The assessee 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 laws related to sports activities. The comparison given by the ld CIT in his order dated 28/03/2013 does not .....

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