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M/s. Kerala Cricket Association Versus The Dy. Commissioner of Income-tax (Exemption) , Thiruvananthapuram

2018 (2) TMI 966 - ITAT COCHIN

Revision u/s 263 - as per CIT-A assessee was not eligible for deduction u/s 11 and 12 of the I.T.Act and the status of the assessee should be treated as an A.O.P. - Held that:- The Cochin Bench of the Tribunal had held in assessee’s own case for assessment year 2010- 2011 [2018 (2) TMI 857 - ITAT COCHIN] that activities of the assessee are charitable in nature and was not hit by the proviso to section 2(15) of the I.T.Act, and consequently, the assessee was entitled to exemption u/s 11 and 12 of .....

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peals at the instance of the assessee are directed against two orders of the Commissioner of Incometax, passed u/s 263 of the Income-tax Act, 1961, both dated 22.07.2016. The relevant assessment years are 2012-2013 and 2013-2014. 2. Common issues are raised in these appeals, hence they were heard together and are being disposed off by this consolidated order. Identical grounds are raised for both the appeals, except for variance in figures. The grounds relating to assessment year 2012-2013 are r .....

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Commissioner of Income-tax (Exemptions) has grossly erred in revising the order passed by the learned Assessing officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the learned CIT (E) is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant's case. The direction to make fresh assessment amounts to ordering for making .....

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circumstances of the case. 5. The learned Commissioner of Income-tax (Exemptions) erred in issuing the show cause notice under section 263 of the Act by stating that the appellant were in receipt of ₹ 31,22,19,927 /- from BCCI and same is not included in the receipt side or income side, contrary to the facts on record that the appellant has considered the amount of ₹ 22,95,90,081/- in the income side and ₹ 8,26,29,646/- included in the corpus fund in the balance sheet in. the b .....

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e learned Commissioner of Income-tax (Exemption) failed to appreciate that the learned Assessing Officer had indeed verified the details and after being fully satisfied by the said explanation and after application of mind passed the assessment order in respect of the return of income filed by the appellant on the facts and circumstances of the case. 8. The learned Commissioner of Income Tax (Exemptions) is not justified in exercising revisionary powers under section 263 of the Act as the entire .....

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law on the facts and circumstances of the case. 10. The learned Commissioner of Income-tax (Exemptions) is not justified in law in holding that the appellant has engaged in activities in the nature of rendering services in .relation to a purely commercial activity' and the proviso to section 2(15) of the Act is applicable and the appellant activities ceases to be charitable, hence the appellant is not eligible for benefits under section 11 and 12 of the Income-tax Act, 1961, and without prej .....

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on 263 of the Act by invoking the second limb of the proviso to section 2(15) of the Act by holding that the activity of rendering services relation to any trade, commerce or business and consequently the order passed on different issue other than notice issued is bad in law on the facts and circumstances of the case. 12. The learned Commissioner of Income-tax (Exemptions) is not justified in law in holding in the order passed under section 263 of the Act that the status of the appellant should .....

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he same afresh after considering the issues raised herein on the facts and circumstances of the case. 14. Without prejudice the order passed under section 263 of the Act by the learned Commissioner of Income-tax (Exemptions) is in violation of principles of natural justice and without giving proper opportunity of being heard and consequently the order passed under section 263 of the Act is liable to be quashed on the facts and circumstances of the case. 15. The show cause notice and order passed .....

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t may be urged at the time of hearing of appeal, the appellant prays that the appeal may be allowed for the advancement of substantial cause of justice and equity. 3. Briefly stated the facts of the case are as follow:- 3.1 The assessments for assessment years 2012-2013 and 2013-2014 were completed u/s 143(3) of the Income-tax Act, granting assessee, the benefit of deduction u/s 11 of the I.T.Act. Subsequently, the notice u/s 263 of the Income-tax Act was issued for denying the benefit of deduct .....

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nd since the receipts are exceeding ₹ 10 lakh, the proviso to section 2(15) of the I.T.Act are applicable, and assessee s activities ceased to be charitable. It was concluded by the CIT that assessee was not eligible for deduction u/s 11 and 12 of the I.T.Act and the status of the assessee should be treated as an A.O.P. The relevant finding of the CIT for assessment year 2012-2013 reads as follow:- 4. I have gone through the submissions made by the assessee during the course of the proceed .....

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ganise and affiliate District Cricket Associations; and vii. To resort to all such measures and do all such acts as are conducive to the furtherance of cricket. From the above, it is clear that the objects of the assessee fall under the category of 'Advancement of any other object of General Public Utility'. Hence the amended proviso to section 2(15) will become applicable if the assessee is in receipt of amounts in the nature of commercial receipts. With effect from the assessment year .....

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o any trade, commerce or business for a cess or fee or any other consideration irrespective of the nature of use or application of retention of the income from such activity. 5. In the light of the above discussion, I find that the assessee has engaged in activities in the nature of rendering services in relation to a purely commercial activity and the receipts from the same exceeds ₹ 10 lakhs, proviso to section 2(15) are applicable and the assessee's activities ceases to be charitabl .....

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of revenue. Accordingly, invoking the provisions of section 263 of the Income Tax Act, 1961, the assessment order dated 30-12-2014 is set aside with a direction to the Assessing Officer to redo the same afresh after considering all issues raised herein above and after affording an opportunity of being heard to the assessee. 4. Aggrieved by the revisionary order passed by the CIT u/s 263 of the I.T.Act for assessment years 2012-2013 and 2013- 2014, the assessee has filed the present appeals befo .....

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the revisionary order of the CIT passed u/s 263 of the I.T.Act. 7. We have heard the rival submissions and perused the relevant material on record. The Cochin Bench of the Tribunal had held in assessee s own case for assessment year 2010- 2011 (supra) that activities of the assessee are charitable in nature and was not hit by the proviso to section 2(15) of the I.T.Act, and consequently, the assessee was entitled to exemption u/s 11 and 12 of the I.T.Act. The relevant finding of the Cochin Bench .....

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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 Kerala. The assessee carries out various activities for the sole purpose of development of the game of cricket in Kerala. (iii) The assessee is also not providing any service to any trade, commerce or Industry. (iv) The assessee is not created for earning profit as its motive and object of the assessee is towards the uplifment of game o .....

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ral facilities available in the stadium. The assessee receives funds from BCCI for meeting the expenditure being the host. (vii) The amendment to section 2(15) of the Act was carried out to tax entities wearing the mask of charity but in fact carrying on commercial activities. a. In the course of budget speech for 2008-2009, Hon ble Finance Minister observed that Charitable purpose includes relief of the poor, education, medical relief and any other object of general public utility. These activi .....

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ng the provisions of Finance Bill is to a similar effect. While replying in to a debate on the Finance Bill, the Finance Minister assured that genuine charitable institutions would not be brought within the ambit of Section 2(15). (viii) It is relevant to point out that the statement made by the mover of the Finance bill can be used for demonstrating the objects of the amendment. Reliance is placed on the decision of the Apex court in the case of K.P. Varghese 131 ITR Page 597. It is also well s .....

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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 .....

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ucting one-day matches, T-20 matches and Indian Premier League matches would amount to doing business or trade. It is the case of the Revenue that the assessee-society is conducting or organizing T-20, one-day matches or India Premier League matches. In fact, BCCI, the parent organization which is a national body in India, is organizing and conducting the matches. The assessee-society, being a member of BCCI, hosts the matches which are conducted by BCCI. For the purpose of meeting its expenditu .....

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ole of the assessee-society is only to provide stadium for conducting matches. Other than that, the assessee-society has no role in conducting the international matches and Indian Premier League matches. 16. The other activity of the assessee-society is to conduct training programmes, coaching classes for college students at district level in the State of Tamil Nadu and in the Union Territory of Puducherry. The assessee is also conducting inter-university, interschool and inter-association match .....

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as also received funds from BCCI for meeting the expenditure, being the host. Therefore, this Tribunal is of the considered 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, .....

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