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Dahisar Sports Foundation Versus ITO (Exemptions) - (1) , Mumbai

2017 (12) TMI 407 - ITAT MUMBAI

Denying benefit of exemption u/s. 11 - amended proviso to section 2 (15) applicability - scope of activities undertaken by assessee - Held that:- The main object of the Trust is to promote the sports and games. The authorities below have drawn adverse inference and invoked the amended provisions of section 2(15) by holding that by engaging into coaching camps and obtaining receipts therefrom, the assessee is engaging into activities of commercial nature. This proposition is not at all sustainabl .....

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No. 7046/Mum/2016 - Dated:- 9-11-2017 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER For The Appellant : Shri Vipul Joshi For The Respondent : Ms. Hemalatha ORDER Per Shamim Yahya, A. M.: This appeal by the assessee is directed against the order by the Commissioner of Income Tax (Appeals)-1, Mumbai ( CIT(A) for short) dated 08.09.2016 and pertains to the assessment year (A.Y.) 2011-12. 2. The grounds of appeal read as under: 1.1 The Learned Commissioner of Income - tax (Appeals) - 1, Mumbai, [ Ld. C1T .....

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g - but not admitting - that some addition was called for, the computation of the same is not in accordance with the law, is arbitrary and excessive. 3. The assessee in this case is a trust. The main object of the trust is to promote the sports and games. The assessee has accordingly claimed exemption u/s. 11 of the Income Tax Act. During the course of assessment proceedings, the assessing officer referred to the applicability of amended provisions of section 2(15) of the Income Tax Act w.e.f 01 .....

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Act, 2008. As can be seen from the above, the activity of the assessee is commercial in nature in view of amended provisions of section 2(15) vide Finance Act, 2008 states that the 'advancement of any other object of general public utility' shall not be a charitable purpose if it involves the carrying on of - (a) any activity in the nature of trade, commerce or business or (b) any activity of rendering any service in relation to any trade, commerce or business; for a cess or fee or any .....

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ted by the assessee that the objects of and the activities of the assessee trust fall within the fourth limb i.e. any other object of general public utility. The assessee had relied upon the case of DIT(E) Vs. Goregaon Sports Club (IT APPEALL NO.6301 OF 2010) which is prior to the amended provisions of section 2(15) of Finance Act W.E.F. 01.04.2009. In view of the above, it is seen that the assessee trust has satisfied both the conditions as under: a) That its object and activities fall within t .....

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section 2(15). Penalty proceedings u/s 271(l)(c) of the IT Act 1961 are initiated separately. 4. Against the above order, the assessee appealed before the ld. CIT(A). The ld. CIT(A) upheld the order of the assessing officer by distinguishing the case laws relied upon by the assessee. The learned CIT-A concluded as under: The appellant submitted that the AO has wrongly treated its activities as business activities and applied proviso to section 2(15). In this regard it is mentioned that the appe .....

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more than ₹ 6 lakhs. The similar is the position with reference to the receipts from Zen Garden. Accordingly, AO has treated this activity being an activity of rendering service in relation to trade, commerce or business for cess or fee. In view of the above, I agree with the assessing officer that the proviso to section 2(15) is triggered which renders the activities of the appellant as non-charitable under this section. ii. Appellant has relied upon several case laws. However, on perusal .....

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ducation or not. In case of India Trade Promotion Organization, constitutional validity of proviso to section 2(15) was challenged. Thus, the facts of these case laws relied upon by the appellant are not identical to the facts of the appellant's case and hence the ratio laid down by the Hon'ble Courts with reference to the facts of these cases is not applicable to the facts of the appellant's case. iii. Other points mentioned by the appellant in its submissions are a mere reiteration .....

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iso is applicable to an assessee which was engaged in a non-charitable business. For the proposition that the said proviso is not applicable if the alleged commercial activity is the very activity with respect of which registration u/s. 12 is granted and is in force, the learned counsel referred to following case laws: 1. PHD Chamber of Commerce & Industry vs. DIT(E) [2012] 357 ITR 296 (Del). 2. CIT vs. Lucknow Development Authority [2014] 98 DTR (All) 183 3. Society of Indian Automobile Man .....

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279 (Mum-Trib) 4. Bombay Presidency Golf Club Ltd. vs. DIT(E) [2012] 149 TTJ 471 (Mum) 5. Delhi & District Cricket Association v. DIT(E) [2015] 38 ITR (T) 326 (Del-Trib) 6. Tamil Nadu Cricket Association vs. DDIT(E) [2015] 42 ITR (T) 546 (Chennai-Trib) 7. DDIT(E) vs. All India Football Federation [2015] 43 ITR 656 (Del-Trib) 8. Rajasthan Cricket Association vs. ACIT [2017] 164 ITD 212 (Jaipur- Trib) 8. Per contra, the ld. Departmental Representative placed reliance upon the orders of the au .....

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es or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of 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 applicati .....

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issioner of Income-tax or a Principal Chief Commissioner of Income-tax under sub-section (1) of section 117; (15B) child , in relation to an individual, includes a step-child and an adopted child of that individual; 10. Upon careful consideration I find that the main object of the Trust is to promote the sports and games. The authorities below have drawn adverse inference and invoked the amended provisions of section 2(15) by holding that by engaging into coaching camps and obtaining receipts th .....

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l/regular surplus cannot taint receipts as arising from business/commerce. By the volume of receipt one cannot draw inference that the acivity is commercial. I find that this case law applies to all fours to the present case. Here also the authorities below have drawn adverse inference on the ground that amount received from the coaching camp being less than the expenditure incurred. Similarly, in the case of ICAI vs. DGIT(E) [2013] 358 ITR 91 (Del), the Hon ble Delhi High Court has expounded as .....

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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 purpose of interpreting and applying the first proviso to section 2 (15) of the Act to include any transaction for a fee or money. An activity would be considered business if it is undertaken with a profit motive. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business. The expressions business , .....

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