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TMI Blog2017 (4) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... "The impugned additions and disallowances made in the order u/s 143(3) dated 29/12/2010 are bad in law and on acts of the case, or want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. The ld. CIT(A) erred in law as well as on the facts of the case in confirming the denial of exemption u/s 11 of the Act by the AO. Such denial and confirmation being totally contrary to the provisions of law and facts, the exemption so withdrawn be restored back. 3. The Ld. AO erred in law as well as on the acts of the case in recording findings of fact which are contrary & perverse to the record by wrongly holding that there was sustentative changes made in the main objects and also erred in wrongly holding that it was mandatory on the part o the appellant to have intimated the same to the registering authority and further erred thereby, in withdrawing the exemption u/s 11 of the Act. Such findings and conclusion deserves to be quashed and the exemption so withdrawn be restored back. 4. The ld. CIT(A) further erred in law as well as on the facts o the case in confirming the taxation of the appellant in the status o AOP without allowing exemptions u/s11(1) and 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed under section 11 for want of fresh registration , thereby the assessing officer computed net income of Rs. 4,07,58,505/-. The assessing Officer treated the gross receipts as income from business. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submission partly allowed the appeal. However, he sustained the income computed by the Assessing Officer at Rs. 4,07,58,505/-. 2. Aggrieved by this the assessee is in further appeal before this Tribunal. At the time, the ld. Counsel for the assessee stated that he does not wish to press ground no. 1. The ld. CIT(DR) has no objection. The ground no. 1 of the assessee's appeal is dismissed as not pressed. 3. Ground nos. 2 to 8 are against denial of exemptions and computation of income as business income since the ground nos. 2 to 8 inter-related are taken up together for the disposal. The ld. Counsel for the assessee reiterated the submissions as made in the written submissions. The submissions of the ld. Counsel for the assessee are reproduced as under: "Brief facts of the case are that assessee is an association registered under Rajasthan Sports (Registration, Recognition and regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.03.2013 again withdrew registration u/s 12A primarily relying upon observations of AO. Assessee filed appeal against order of CIT, which was decided by Hon'ble ITAT vide order dated 09.06.2016. Vide said order, Hon'ble ITAT at page 16 para 5, decided the appeal in favour of assessee by observing as under: "We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that the assessee was granted registration u/s 12A on 25.11.1988, which has been withdrawn twice by the Ld. CIT. The issue has been set aside by the Coordinate Bench to reconsider the withdrawn of registration, which was also challenged by the revenue before the Hon'ble Rajasthan High Court, who has allowed the assessee's prayer and directed to consider the application afresh without influencing any of the observation made by the 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 objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pressed. Assessee's ground of Appeal No. 2 to 5 & 7: In grounds of appeal no.2 to 5, assessee has challenged the action of Ld. CIT(A) in confirming the action of Ld. AO in denying exemption u/s 11 and assessing the assessee in the status of AOP by applying maximum marginal rate whereas in ground of appeal no.7 assessee has challenged the action of AO in denying exemption on the allegation that activities of assessee are being run on commercial basis. All the grounds being related are being dealt herewith together for the sake of convenience: In this regard, at the outset it is submitted that all the grounds of appeal relate to denial of exemption u/s 11. Further, for claiming exemption u/s 11, pre conditions are that: (i) assessee holds a valid registration u/s 12A (ii) income is applied in accordance with the provisions of section11 and (iii) there is no violation in terms with section 13. In the instant case, so far as registration u/s 12A is concerned, the same is restored by Hon'ble ITAT, thus assessee can claim exemption u/s 11 subject to the fulfillment of conditions prescribed u/s 11 r.w.s.13. Section 11 of the Income Tax Act provides exemption in respect of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes , which does not result into benefit of the public. (ii) any income of trust or institution created or established for the benefit of any particular religious community or caste. (iii) if any part of income directly/ indirectly benefits author/ founder/ trustee/ manager or such other person specified u/s 13(3) (iv) funds remain invested in modes other than 11(5) (v) Income of charitable institution engaged in the advancement of "any other object of general public utility" if it involves carrying on of any trade, commerce or business activity. Apart from above, the most relevant provision is section 2(15), wherein the word "charitable purpose" is defined as to include: (a) relief of the poor, (b) education, (c) medical relief, and (d) advancement of any other object of general public utility. However, with effect from 01.04.2009 (i.e., from assessment year 2009-10 onwards), section 2(15) has been amended to the extent that, the "advancement of any other object of general public utility" shall not qualify as a "charitable purpose" if the same involves the carrying on of any activity in the nature of trade, commerce or business, or rendering of any service in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is thus prayed that exemption claimed by assessee may please be allowed. However, without prejudice to this, our submission on merits is as under: Ld. AO by observing huge surplus concluded that activities of the assessee were profit oriented and assessee was carrying its activities on commercial basis. It is noteworthy here that the term "any other activity in the nature of trade, commerce or business" is not defined and thus the same has to be understood in common parlance, and accordingly expression trade, commerce or business has to be understood as a regular and systematic activity with the primary motive to earn profit, whereas the Association never acted as a professional advertiser, TV producer etc. No matches of any game other than cricket or no other events are organized to attract audience rather only cricket matches are being organized whether the same result into profit or loss. Further, all the cricket matches do not attract audience, e.g. matches between India v/s South Africa and India v/s New-Zealand could not even reach upto 70-80% of the collection. However, during the year under consideration, assessee organized ODI match between India vs Pakistan from whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is ultimately for the benefit of overall or a section of public but never for the benefit of an individual organization. The subsidy received was utilized in the promotion and development of sport of cricket in state at each level, i.e. from mufasils areas to big cities like Jaipur. Also, renting out premises by RCA has been viewed adversely for which it is respectfully submitted that RCA has been formed with a sole objective of promoting cricket and with the view to achieve the desired objective the resting of premises as done is wholly and exclusively for the purpose of cricket and no other activity of whatsoever nature has been carried out and neither it is engaged in the systematic activity as hotelier, thus the said act of association is fully in the direction of achieving its basic object of promoting Cricket and cannot be viewed adversely. It is also to be noted that RCA is run by a Committee, which consists of members from different walks of the Society and such members are not professional managers or businessmen. Agreement with the players is only to control and monitor their activities to bring the same in accordance with the objects. RCA is providing technical and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be relevant to resort to the decision of Delhi High Court in the case of The Institue Of Chartered ... vs The Director General Of Income Tax ... on 4 July, 2013 defining the term "business" in relation to charitable institutions, post the amendment carried out in section 2(15) relevant extracts of which are as under: 57. After discussing various decisions with regard to the scope of the words trade, commerce & business, this court in The Institute of Chartered Accountant of India v. Director General of Income- tax (Exemption) (supra) held that while construing the term business for the purpose of Section 2(15) of the Act the object and purpose of the Section must be kept in mind and a broad and extended definition of business would not be applicable for the purpose of interpreting and applying the first proviso to Section 2(15) of the Act. The relevant extract of the said judgment is as under:- "Section 2(15) defines the term "charitable purpose". Therefore, while construing the term "business" for the said section, the object and purpose of the section has to be kept in mind. We do not think that a very broad and extended definition of the term "business" is intended for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commerce" and "business" as occurring in the first proviso to section (15) of the Act must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organised manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The purport of the first proviso to section 2(15) of the Act is not to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee. The object of introducing the first proviso is to exclude organizations which are carrying on regular business from the scope of "charitable purpose". The purpose of introducing the proviso to Section 2(15) of the Act can be understood from the Budget Speech of the Finance Minister while introducing the Finance Bill 2008. The relevant extract to the Speech is as under:- "......."Charitable purpose" includes relief of the poor, education, medical relief and any other object of general public utility. These activities are tax exempt, as they should be. However, some entities carrying on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table with a charitable object of general public utility as a mask or a device to hide the true purpose and that object is nothing other than trade, commerce or business. Thus revenue has to substantiate absence of genuineness. Mere conducting matches or earning income from incidental activities would not entail cancellation of registration. Hon'ble Delhi Bench of ITAT in the case of Delhi & District Cricket Association vs DIT(E) has observed as under: (relevant extracts) 10.7. Even otherwise the main and predominant object and activity of the assessee is to promote, regulate and control the game of cricket in and around Delhi. The undisputed fact is that over the years this activity has been recognized by the Income Tax Dept. as a charitable activity and registration u/s 12A was granted to the assessee. A number of assessment orders u/s 143(3) were passed, wherein the assessee was held as eligible for exemption u/s 11/12 of the Act. Hence this fact of the assessee being a charitable institution is not in dispute. 10.8. The core activity of the assessee is undisputedly, charitable in nature. Hence it is not the case of the Revenue that the assessee is carrying on "trade, commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. We agree with the submissions of the assessee. 11.2. The assessee has to perform many activities and for this purpose it has to enter into transactions with various types of persons. These persons can be commercial or non-commercial organizations, professionals, vendors of goods, vendor of services and so forth and so on. Merely entering into such agreement does not tantamount to the assessee being a business entity. The question is whether the activity done by assessee, would tantamount to business activity or not. This has to be viewed, from view point of the assessee. The other person with whom the assessee has an agreement, may have its own object and reason for doing transaction and accordingly, the nature of transaction and the resultant activity would be determined in the other persons hands. However, that by itself, should not have any bearing at all on the nature of the transaction, as well as resultant activity in the hands of assessee. To carry out a transaction in an organized manner and to ensure that the transaction would help the assessee in achieving its charitable object, it is imperative that the terms and conditions of the transactions are clearly defined, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a liquor dealer. This is not correct. Internationally, when facilities are provided to players, liquor is part of the menu. This is just incidental to providing food and beverages. When the Ld.DIT(E) does not find anything wrong in the assessee supplying food and beverages in the canteen to the members, we cannot find fault with liquor being part of the menu card and being served as per international customs and requirements. 11.5. Hence to meet global standards these facilities are required and these are not independent of the activity of providing food and refreshments ITA No. 3095/Del/2012 Delhi & District Cricket Association, New Delhi to Members and Associated Persons. Running of a canteen is an incidental and necessary activity as is in every organization. This cannot be termed as business activity. It is part and parcel of the charitable activity and the receipt in question cannot be termed as exempt from activity which is in the nature of "trade, commerce or business". 11.6. On advertising and contractual receipts the same explanation as was given by the assessee, as in the case of sponsorship money. Consistent with the view expressed by us, when we were dealing with sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promotion of game of cricket. 2. The assessee is not free to use it as per its convenience for any purpose other than for promotion of cricket. Thus, the amounts received in this manner cannot be characterized as business receipts. The amount has been received as the voluntary contribution on discretion of the contributor (for e.g. BCCI). These have been received for raising the funds for meeting its costs and expenses. 4. In none of the cases there is any quid pro quo. The ultimate beneficiary is either the cricketer or the game of the cricket. 5. The assessee is not charging any fees or revenue from the cricketer who is ultimate beneficiary. Thus, there is no quid pro quo relationship with the cricketer. The assessee is promoting cricket on charitable basis as far as real beneficiary is concerned. 6. Whenever the revenue is earned these are not earned on commercial lines and these are earned without any commercial attributes. The revenue is generated for recovering the cost, at least partly if not fully. 7. The assessee has not entered any transaction with any person on profit motive. The other person may be an entrepreneur or may be doing business but the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest. The contribution received by way of sponsorship, advertisement, sale of tickets etc. and user charges on the facts of this case, do not convert the charitable activity into "trade, commerce or business" activity 11.13. In view of the above discussion and in view of the binding judgements cited above, we have to necessarily quash the impugned order passed by the DIT(E) u/s 12AA(3) r.w.s. 12 of the Act, as it is bad in law. DDIT vs. All India Football Federation [2015] 62 taxmann.com 362 (Delhi-Trib.). S. 2(15) Activity of Society to promote football The main objective of the assessee was to promote the game of football in India which certainly amounts to charitable purpose, being covered under the limb "the advancement of any other object of general public utility" as contained in section 2(15). The receipt of fees from the sponsorship rights and telecasting rights do not amount to carrying out of any activity in the nature of trade, commerce or business but is incidental to carrying on of the main objective of the Respondent assessee. It was further observed that no part of its surplus could be distributed to the board of its members in the form of dividend or profit. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset, it would still be application of income to the charitable purpose. If the assessee invests in construction of a building, which is a permissible investment under section 11(5) of the Income-tax Act, so as to augment its resources for fulfilling the objectives of the institution, there is no doubt that such capital outlay would qualify as income applied for charitable purposes. Further, no doubt has been raised by AO that investment is not applied for the purposes of business. Thus, in view of our above submission regarding eligibility of exemption u/s 11, this ground is completely consequential in nature. It is thus prayed that sum of Rs. 6,15,32,225/-be allowed as Application of income in consonance of provisions of section 11. Ground of Appeal No. 8 & 9: In ground of appeal no.8 , assessee has challenged the action of Ld. CIT(A) in confirming the assessment of income of Rs. 4,07,58,505/- as "business income" in the hands of assessee, whereas in ground of appeal no.9 charging of interest u/s 234B & 234D have been challenged. In this regard, it is submitted that both the grounds of appeal are consequential in nature and thus in view of above submission it is prayed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not justified as amended provisions does not fall within the permissible limit of section 12AA(3) of the Act and accordingly the order of DIT(E) was considered bad in law and the appeal of the Institution was allowed. In the case of Cane Development Council(supra) similar view has been epressed does not fall under the provisions of section 2(15) and therefore, the assessee was entitled to registration u/s 12AA of the Act. In view of the discussion of ours and in view of the decision of Tribunal, we are of the view that ld. CIT was not correct in withdrawing registration already granted by the order of the Tribunal to the Institution. If in any year, the gross receipts of the institution exceeds Rs. 10 lakhs or Rs. 25 lakhs, as the case may be, then in that year, the Assessing Officer is empowered to examine the allowability of exemption u/s 11 but the same has no effect on granting the registration u/s 12AA of the Act. Accordingly, we set aside the order of ld. CIT and restore the registration already granted u/s 12AA of the Act. Thus, the appeal of the Institution is allowed." 3. Even while restoring Registration u/s 12A, ITAT order in assessee's case require AO to examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fee gathered from public for matches and percentage of advertisement receipts while conducting matches. 10. Once provisos to 2(15) are attracted, assessee loses benefit of exemption u/s 11 as per s. 13(8) and entire income becomes taxable. Kindly see PB 16 of assessee's paper book of A.Y. 2008-09 where match receipts are shown. SNo. 11 & 12 show sale of tickets for as high as Rs. 30,000 & Rs. 1,00,000/-. According to Wikipedia, Trade/Commerce involves transfer of goods and/ or services from one person or entity to another, often in exchange for money. The nature of receipts in the hands of the assessee certainly would all under "Trade & Commerce" as understood in common parlance. Once the receipts are commercial in nature and such receipts exceed the threshold of Rs. 10 lakhs (both conditions satisfied in assessee's case), the assessee would be hit by Proviso to s. 2(15). The said Proviso stipulated that "advancement of any other object of general public utility shall not be charitable purpose if it involves carrying on of any activity in the nature of trade and commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a ces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istrative charges, listing of hotels on their website, conducting film appreciation course clearing represented receipts from activity of rendering services in relation to trade, commerce or business and after insertion of proviso in section 2(15), assessee could not be regarded to have been established for charitable purpose- Held, yes" Since the receipts of the assessee are similar in nature, these would fall under the category of commercial receipts. The case of the assesee is distinguishable from the case of ICAI cited by the assessee since receipts of ICAI are basically from members ( and not public as in case of assessee) and do not exploit any commercial/advertisement /TV rights as in the case of assessee. One test of commerciality of receipt is whether receipts are at market rates and are open to subscription by general public as opposed to a select few members. Similarly in the case of Ahemdabad Urban Development Authority v. CIT (2016) 69 taxmann. Com 381, the ITAT, Ahemdabad has recently held in this context of s. 2(15), as follows: "Section 2(15) of the Income Tax Act, 1961 - Charitable purpose ( object of general public utility) Assessment years 2009-10 to 2011-12- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the activities carried out by it. The Assessing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted that the looking to the quantum 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 Swai Mansingh 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of overall section of public but never or 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to all in-stadia sponsorship advertisement 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 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conducted matches of the Cricket. The only suspicion 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 busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... events are organized to attract audience rather 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 Saiba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Tournament from the records. It is the contention 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 Co- ordinate 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 cannot be viewed separately. The activities resulting in the said receipts are also charitable activities and not "trade, commerce or business" activities." Further the Hon'ble Jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mary purpose be advancement o objects of general public utility, if would remain charitable even I an incidental entry into the political 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut not so, if it seeks to promote the interest 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority was dismissed by the court observing that there are findings of facts that the assessee-appellant 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. 27. From various decisions of the Hon'ble Supreme Court discussed hereinabove, the settled position of law emerges is that if the primary or predominant objet 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 elemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he category of general public utility. This 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. 8. Ground no. 9 is against charging of interest, which is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed. Ground no. 1 of the Revenue's appeal is dismissed. 12.2 Ground no. 2 in the revenue's appeal in the deletion of addition made on account of non-deduction of deduction of tax at source. The ld. Departmental Representatives supported the orders of the Assessing Officer. 12.3 On the contrary, the ld. Counsel for the assessee supported the orders of the ld. CIT(A). 12.4 We have heard the rival contentions, we find that ld. CIT(A) has given a finding on facts by observing as under: "I have considered facts of the case. It is noticed that the AO has disallowed this amount without bringing out any fact on record and without giving an opportunity of being heard to the appellant. The appellant's submission is that the TDS has been deposited before due date of filing the return. Since the amount has been deposited by due date, the disallowance appears to be uncalled for and is, accordingly, deleted." This finding of fact is not controverted by the Revenue. Therefore, we do not see any reason to interfere into the order of the ld. CIT(A). 13. The grounds raised in the Revenue's appeal in ITA No.921/JP/2013, are dismissed. 14. Now, we take up, the assessee's appeal in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case in confirming the action of the AO in charging the tax at the maximum marginal rate (MMR) which action is also being completely contrary to the provisions of law and facts on record and hence, kindly be quashed. 5. Rs. 50,00,000/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of Rs. 50,00,000/- relying on the allegation of the non-production/absence of the books of account. The disallowance so made, being completely contrary to the provisions of law and facts on record and hence, the same be deleted in full. 5. The ld. CIT(A) further erred in law as well as on the facts of the case in confirming the charging interest of Rs. 12,29,368/- u/s 234A & 2,02,84,572/- u/s 234B of the Act. The appellant totally denies its liability of charging of any such interest. The interest so charged, being contrary to the provisions of law and facts, kindly be deleted in full. 6. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing." 15. Ground no. 1 at the time to hearing, the ld. Counsel for the assessee submitted that he does not wish to challenge pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llary would not normally amount to "business" unless an independent intention to carry on "business" in the incidental or ancillary activity is established. In such cases, the onus of proof of an independent intention to carry on "business" connected with or incidental or ancillary sales will rest on the department. Thus, if the main activity of a person is not trade, commerce, etc., ordinarily incidental or ancillary activity may not come within the meaning of "business". To put if differently, the inclusion of incidental or ancillary activity in the definition of "business" pre-supposes the existence of trade, commerce, etc." In the light of the above judgment it can be safely inferred that if the activity is not independent of main activity of the assessee in that event such ancillary activity would not fall within the term "business". The objection of the Assessing Officer is that, that the other activities have predominated the main activity. This reasoning of the assessing officer is based upon the receipts of the assessee from the other activity. But it is undisputed fact that these all activities are dependent upon conducting of the match. The allegation is that the matche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrying on o any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; Provided further that the first proviso shall not apply I the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year". 18. The 'charitable purpose' as defined under section 2(15) and particularly, the expression 'any other object of general public utility' used therein, have been interpreted by the Hon'ble by the Supreme Court and various High Courts in catena of decisions, which may be beneficially referred. 19. In Andhra Chamber as commerce's case (supra), while considering the expression 'object of general public utility' as used in Section 4 (3) of the Income Tax Act, 1922, the Hon'ble Supreme Court observed: "The Expression "object of general public utility" in s.4(3) would prima facie include all objects which promote the welfare of the general public. It cannot be said that a purpose would cease to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Art Silk cloth Manufactures Association", (19800 121 ITR 1 and "CIT Vs. Bar Council of Maharashtra", (1981) 130 ITR 28 (SC), held that if predominant object is to carry out a charitable purpose and not earn profit, the purpose would not lose its charitable character merely because some profit arises from the activity. 23. In Gujarat Maritime Board's case (supra), the Hon'be Supreme Court after due consideration of various earlier decisions, observed: "We have perused a number of decisions of this court which have interpreted the words, in section 2(150, namely, "any other object of general public utility". From the said decisions it emerges that the said expression is of the wide t connotation. The word "general" in the said expression means pertaining to a whole class. Therefore, advancement of any object of benefit to the public or a section of the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose ( CIT v. Ahmedabad Rana Caste Association [(183) 140 ITR 1 (SC)]. The said expression would prima facie include all objects which promote the welfare of the general public. If cannot be said tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire amount received by the samiti is required to be spent for the purposes mentioned therein, which obviously include advancement of "any other object of general public utility'. 25. In Lukhnow Development Authority's case (supra), while examining the question regarding applicability o proviso to Section 2(15), Allahabad High Court observed: "29. For the applicability of proviso to Section 2(15), the activities of the trust should be carried out on commercial lines with intention to make profit. Where the trust is carrying out its activates on non-commercial lines with no motive to earn profits, or fulfillment of its aims an objectives, which are charitable in nature and in the process earn some profit, the same would not be hit by proviso to section 2(15). The aims and objects of the Mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available under section 11. The intention of the trustees and the manner in which the activities of the charitable trust institution are undertaking are highly relevant to decided the issue of applicability of proviso to section 2 (15)." 26. Coming to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se activities of the association. It is also brought to our notice that in the international one day match between south Africa and India, the association suffered deficits of Rs. 1.6 crores. It is also brought to our notice that the RCA has also incurred in various other expenses with a view to promote the game of Cricket viz. on coaching camps of Rs. 20,40,360/-, state cricket activities of Rs. 1,08,60,566/-, Ground expense of Rs. 33,97,435/- and international tournament expenses of Rs. 2,09,16,911/-. These facts go to demonstrate that the assessee has been predominantly engaged into the activity of promoting cricket match. The counsel for the assessee has placed reliance on the judgment of the Hon'ble Delhi High Court rendered in the case of Institute of Chartered Accountant vs Director General of Income Tax, wherein the Hon'ble High Court held that even though fee are charged by the petitioner Institute for providing coaching classes and holding interviews with respect of campus placement, the said activity cannot be stated to be rendering of service in relation to any trade, commerce or business as such activities are undertaken by the petitioner institute in furtherance of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. 15.6 Ground no. 5 is against confirmation of disallowance of Rs. 50 lakhs. Ld. Counsel for the assessee reiterated the submissions as made in the written brief and submitted that the addition was made by AO are bitterly without pointing out any specific expense to be claim excessively it was submitted before Assessing Officer with books on accounts of the assessee were duly audited by Chartered Accountant, wherein no adverse noting is made. 15.7 On the contrary, ld. Departmental Representatives supported the orders of the authorities below. 15.8 We have heard the rival contentions, perused the material available on records and gone through the orders of the authorities below. The ld. CIT(A) has decided the issue in para 13.1 by observing as under: "Even at the appellate stage the only submission of the appellate I that since the books of account were audited by a Chartered Accountant, the AO should have accepted the authenticity of the accounts. This, however, does not appear to be a valid argument. If the AO were bound to accept all the accounts which are audited by an Accountant, there was no need for any provision in the IT Act to enable the AO to call for details u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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