TMI Blog2018 (2) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... en established in order to popularize the game of cricket in the State of Kerala and provide and strengthen the players with competitive skills. It is, further, held by the CIT(A) that the source of funds for the relevant assessment year is only the grant received from the BCCI, and the interest earned on deposits of surplus amount (past year’s surplus). It cannot be stated that the assessee was doing any activity in the nature of business, trade or commerce. In other words, the assessee is not driven by any profit motive, on the contrary its primary objective is only to promote the game of cricket in the State of Kerala. Thus we hold that the activity of the assessee is not hit by the proviso to sub-section (15) of section 2 of the Act. The receipts from BCCI are not in the nature of trade, business or commerce and consequently the proviso to section 2(15) of the Act was not applicable.The assessee is an affiliate of the Board for Control of Cricket in India (BCCI in short) and is the body representing cricketing activities in Kerala. The assessee carries out various activities for the sole purpose of development of the game of cricket in Kerala. The assessee is also n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociation was reviewed. As all other exemption units at various parts of India have challenged the verdict except in Kerala in order to take a uniform view in the matter, appeal to ITAT is pursued. According to the above, in order to bring uniformity across all jurisdictions of CCIT(exemption), this appeal is being filed. Hence it is prayed that the delay of 224 days may kindly be condoned as it was not deliberate and the appeal may please be admitted. 2.1 The reason stated for the delay in filing the appeal is that there was revision of jurisdiction and creation of Commissioner of Income-tax (Exemption), Kochi on 15/11/2014 and, consequently, decision to file an appeal was taken only after 15/11/2014. In the instant case, the appeal ought to have been filed on 19/06/2014. Admittedly, there was a revision of jurisdiction and creation of Commissioner of Income-tax(Exemption), Kochi on 15/11/2014. The new Commissioner of Income-tax(Exemption) in order to take an uniform view on the issue, across all jurisdictions of CCIT(Exemption), had recommended for filing an appeal. From the date of revision of jurisdiction on 15/11/2014, the appeal was filed before the Tribunal within a reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment are lost for such defaults, no person is individually affected; but what, in the ultimate analysis, suffers is public interest. The decisions of Government are collective and institutional decisions and do not share the characteristics of decisions of private individuals. 17. Therefore, in assessing what, in a particular case, constitutes sufficient cause for purposes of Section 5, it might, perhaps, be somewhat unrealistic to exclude from the considerations that go into the judicial verdict, these factors which are peculiar to and characteristic of the functioning of the government. Governmental decisions are proverbially slow encumbered, as they are, by a considerable degree of procedural red tape in the process of their making. (C) In the case of State of Haryana vs. Chandra Mani and Others reported in 3 SCC 132, while condoning the delay of 109 days in filing the appeal before the High Court, the Hon ble Apex Court has observed that certain amount of latitude within reasonable limits is permissible, having regard to impersonal bureaucratic set-up involving red-tapism. In the same decision, the Hon ble Apex Court directed the State to constitute legal cells to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law on the facts and circumstances of the case. (2) The learned Commissioner of Income tax(Appeals) ought to have noted that as per recent amendment in Section 2(15) with effect from A.Y. 2009-10, it is clarified that advancement of any other object of general public utility shall not be a charitable purpose , if it involves carrying on activity in the nature of trade, commerce or business or any activity of rendering any service in relation to trade, commerce or business for a cess or a fee or any other consideration irrespective of the nature of or an application or retention of the income from such activities and receipts exceeds ₹ 25 lakhs. (3) The learned Commissioner of Income tax(Appeals) has erred in allowing the exemption claimed u/s. 11 on the basis that their activities are charitable nature when the assessee itself has admitted that it has received ₹ 18.63 crores from BCCI as contribution. (4) The learned Commissioner of Income tax(Appeals) has erred in allowing the amount of ₹ 24.67 crores as capital expenditure. (5) For these and other grounds that may be advanced at the time of hearing the order of the learned Commissioner of appeals, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43,66,26,625/- Taxable Income Rs.37,38,62,134/- 4.4. Aggrieved by the assessment order, the assessee preferred an appeal to the first appellate authority. Before the first appellate authority, the assessee had filed written submission. The CIT(A), after considering the submissions of the assessee as well as the findings of the AO, partly allowed the appeal of the assessee. The CIT(A) held that the assessee s activities are charitable in nature and proviso to section 2(15) of the Act will not have application. Accordingly, the CIT(A) granted exemption u/s. 11 of the Act. The CIT(A) had, further, deleted the addition made by the AO on account of capital expenditure, amounting to ₹ 24,67,06,336/-. The CIT(A) however confirmed the disallowance made u/s. 40(a)(ia) of the Act, amounting to ₹ 16,65,453/- and prepaid expenses amounting to ₹ 18,55,697/-. 4.5 Aggrieved by the order of the CIT(A), to the extent went against the Department, an appeal has been filed in I.T.A. No.78/Coch/2015 by the Revenue and the assessee has preferred a Cross Objection in C.O. No.08/Coch/2015. The Ld. DR strongly relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that there was sale of tickets and advertisement fee collections, is not correct. On a perusal of the financial statements for the relevant assessment year which is placed on record at pages 2 to 27 of the paper book filed by the assessee, it is clear that there is no sale of tickets and collection of advertisement fees by the assessee during the previous year relevant to the concerned assessment year. The CIT(A), also in the impugned order at para 8, had categorically held that for the relevant assessment year the assessee was not in receipt of any revenue from advertisements and sale of tickets. Even assuming that there was collection of receipts on account of sale of tickets for one day matches, it cannot be stated that there was any activity in the nature of trade, business or commerce. As such the collections were only to be meant for the conduct of matches and not with a view to earn any profit therefrom. In other words, there was no commercial activity involved in the process of conducting cricket matches. 4.6.3 As regards advertisement subsidy and IPL subvention in total of ₹ 18,63,99,139/- (Refer para 4 of sub-clause (iii) of the assessment order), the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verall well-being of the citizens and activities relating to the development of sports and games cannot be treated as trade, business or commerce in any manner whatsoever. 4.6.5 The CIT(A) has also held categorically in para 8 after perusal of the objects of the Society that it is doing activities to promote the game of cricket in the State of Kerala and to arrange for coaches for the players, to train and maintain panel of umpires and to do such acts for the furtherance of the game of cricket. The CIT(A) has, further, held that the income and the property of the assessee-Society shall be applied solely for the promotion of the objects of the Society and no portion of such income shall be paid or transferred directly or indirectly by way of dividend or otherwise. According to the CIT(A), this makes it amply clear that the Society has been established in order to popularize the game of cricket in the State of Kerala and provide and strengthen the players with competitive skills. It is, further, held by the CIT(A) that the source of funds for the relevant assessment year is only the grant received from the BCCI, and the interest earned on deposits of surplus amount (past year s su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness income under section 28(iii) would still be entitled to the exemption under section 2(15) read with section 11, provided there is no profit motive. (B) The Hon'ble Bangalore Tribunal in the case of M/s. Karnataka Industrial Area Development Board Vs. ACIT in ITA No.378/Bang/2013 dated O4/09/2015 by applying the principles laid down in the decision of the Delhi High Court in the case of India Trade Promotion Organization held that the assessee does not driven primarily by desire or motive to earn profits but to do charity through advancement of an object of general public utility. The assessee operating on no profit basis. The proviso to section 2(15) is not applicable to the case of the assessee. (C) India Vs. DGIT (Exemptions) and Another (2014) 360 ITR 138 (Delhi). The Hon'ble Court observed as follows: Profit motive is determinative and a critical factor to discern whether an activity is business, trade or commerce. An activity would be considered as 'business' if it is undertaken with profit motive. There is no statutory mandate that a charitable institution falling under the last clause should be wholly, substantially or in part must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit arises from the activity . (E) Bureau of Indian Standards Vs. DGIT (Exemptions) (Delhi) (2013) 358 ITR 78 (Delhi). The Hon ble Court at para 13 at page 87 of the reported decision has observed as follows: In view of the above discussion, it cannot be said that BIS is involved in any carrying on trade, commerce or business. BIS is a statutory body established under the BIS Act and was brought into existence for the harmonious development of the activities of standardization, marking and quality certification of goods . This was, and has been, its primary and predominant object. Even though it does not take licence fee for granting marks/ certification, the same cannot be said to be done for the purpose of profit. If any profit/ revenue is earned, it is purely incidental. The BIS performs sovereign and regulatory function, in its capacity of an instrumentality of the State. Therefore, this court has no doubt in holding that it is not involved in carrying any activity in the nature of trade, commerce or business . (F) In the case of Jaipur Development Authority Vs. CIT (2014) 52 taxmann.com 25 (Jaipur-Tribu). The Hon'ble Tribunal observed as follows: The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply. (H) In the case of. Bangalore Golf Club v. Assistant Commissioner of Luxury Taxes [1999] 115 STC 338 wherein the Hon'ble High Court has held that- The expression 'business' though extensively used is a word of indefinite import. In taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealing, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure. 4.6.7 In view of the aforesaid reasoning and the judicial pronouncements, we hold that the activity of the assessee is not hit by the proviso to sub-section (15) of section 2 of the Act. Therefore, as regards exemption u/s. 11, we summarize our reasoning as follows: (i) The receipts from BCCI are not in the nature of trade, business or commerce and consequently the proviso to section 2(15) of the Act was not applicable. (ii) The assessee is an affiliate of the Board for Control of Cricket in India (BCCI in short) and is the body representing cricketing activities in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Board are binding on the revenue. (ix) The assessee has a history of distinguished record in serving the cause of the sport of cricket. It has been in public focus as a premier body serving, promoting and developing the sport of cricket. As a part of its commitment, the Association is actively involved for promoting infrastructure, conducting and also participation in tournaments. (x) As per Board Circular No. 39 5 dated 24/09/1984 the promotion of sports and games can be considered to be charitable purpose. The Board Circular are binding in nature on the department. (xi) The Chennai Tribunal in the case of Tamil Nadu Cricket Association Vs. DDIT (Exemptions) (2015) 60 taxmann.com 287 (Chennai-Trib). was considering the case of T.N. Cricket Association which was in receipt of (i) Subscription from members (ii) Sale of tickets (iii) Revenue from advertisements (iv) Receipts from BCCI (v) Interest from Bank deposits. The Tribunal also noticed that the assessee is in receipt of funds from BCCI. The Tribunal, after considering the submissions, held that it cannot be said that the Tamil Nadu Cricket Association is conducting any business activity, nor was it rendering a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered opinion that at any stretch of imagination, it cannot be said that the assessee is conducting any business activity. The assessee is also not providing any service to any trade, commerce or industry. In those circumstances, this Tribunal is of the considered opinion that proviso to Section 2(15) of the Act is not applicable to the assessee. In view of the above discussion, the assessee is eligible for exemption under section 11 of the Act for all the assessment years under consideration. Accordingly, the orders of the lower authorities for assessment years 2009-10 and 2010-11 are set aside and the Assessing Officer is directed to grant exemption under Section 11 of the Act. The Assessing Officer is also directed to grant exemption under Section 11 of the Act for the assessment year 2008-09 also . (xii) The Delhi Tribunal in the case of Delhi District Cricket Association Vs. DIT (E) in ITA No.3095/Del/2012 dated 13/01/2015 held that proviso to section 2(15) does not have application to Delhi Cricket Association. The relevant finding of the Tribunal reads as follows: On consideration of all the facts and circumstances of the case and when viewed in totality, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x authorities is confirmed. Disallowance u/s. 40(a)(ia) amounting to ₹ 16,65,453/- 5.4 The Assessing Officer in the assessment order in para 10 observed that in the P L a/c, the assessee claimed ₹ 16,65,453/- as fee given to Coaches. But, it is found that no TDS has been made on this payment. Hence, the AO disallowed the above payment by invoking the provisions of section 40(a)(ia) of the Act and added the same to the total income. 5.5 The CIT(A) confirmed the disallowance made by the Assessing Officer under the provisions of section 40(a)(ia) of the Act. The relevant finding of the CIT(A) reads as follows: Disallowance u/s. 40a(ia) The Assessing Officer has observed that although there have been debit of ₹ 16,65,453/- on account of fee paid to the coaches, no details for deduction of TDS were made available. The assessee has only argued for calling for the remand report. However, calling for remand report is not the part of regular assessment proceedings. The failure is quite on part of the assessee and for compensating the non submission and non-compliance on their part at the time of assessment proceedings, cannot be substantiated by res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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