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TMI Blog2018 (3) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. 2(15) of the I.T. Act was applicable in the assessee's case, as the assessee was involved in carrying out commercial activities? 2. On the facts and in the circumstances of the case and in law, whether the decision of the CIT(A), of allowing exemption u/s 11 to the assessee disregarding the applicability of the Proviso to sec. 2(15) of the Act in the case of the assessee, was right considering that the Bombay High Court in an exactly similar case (of M/s Mumbai Cricket Association, in ITA no.221 of 2013) has admitted a similar substantial question of law, which is still pending for decision?" 3. The facts and circumstances are exactly identical in all these five appeals and the issue is exactly identical and hence, we will take up the facts from ITA No.501/Nag/2016 for assessment year 2010-11 and will adjudicate the issue. 4. Briefly stated, facts are that the assessee is a cricket association registered under the Societies Registration Act, 1860 and is affiliated to the Board of Control for Cricket in India (BCCI). The main source of income of the assessee is receipts from BCCI tournaments, international matches, club activities and interest on fixed deposits. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the activities of development of cricket. ii) As per the Board's Circular No.395 dated 24.09.1984, it was clarified that promotion of sports and games is an object of general public utility and institutions engaged in such activity are eligible for exemption u/s 11 of I.T. Act. iii) In the case of Tamil Nadu Cricket Association, Deputy Director of Income Tax (Exemption-1), Chennai had passed an order allowing exemption u/s 11 of I.T. Act to the institution. The objects of the said institution are identical to that of the assessee. Reliance is placed on the decision of Hon'ble Bombay High Court in the case of Tax Practitioner Benevolent Fund Vs. CIT reported in 266 ITR 561 in which it was held that when objects of two institutions are similar, then it's not open to the Income Tax Department to apply different parameters to different trusts carrying similar objects and similar purposes seeking grant of exemption u/s 80G of I.T. Act. iv) There is nothing adverse on record in the case of the assessee to deny the benefit of registration u/s 12A and income being not chargeable to tax u/s 11 of I.T. Act. v) The assessee has no motive of earning any profit as can be seen from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant application for registration under section 12A of I.T. Act 1961 was submitted on 1/4/2003. The aforesaid application had not been disposed off within a period of six months as provided under the provisions of section 12AA of LT. Act 1961. In the regular assessments framed upto assessment year 2008-09 the benefit of section 11 of I.T. Act 1961 was denied by the A.O. in respective assessment proceedings. In the appeal filed in respect of assessment framed under section assessment year 2008-09 was upheld by Hon'ble ITAT Nagpur Bench, Nagpur. The revenue had filed appeal in respect to orders passed by Hon'ble ITAT, Nagpur Bench, Nagpur before Hon'ble Bombay High Court which are ITA Nos.13, 23 of2011, 111,114,115,117 of 2010 and 133, 136, 138 & 139 of 2010. The Hon'ble Bombay High Court in the appeals filed by revenue had directed to the Department to dispose of application of appellant filed for registration u/s 12AA of LT. Act 1961 on 1/4/2003 within three months from the date of its order. The Hon'ble Commissioner of Income Tax(Exemption), Pune pursuance to direction of Hon'ble Bombay High Court in the case of appellant has passed the order granting regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on by the appellant association in Vidarbha. The Hon'ble ITAT, Chennai after considering proviso to section 2(15) of I.T. Act 1961 has held that benefit of section 11 cannot be denied in the said case. The relevant finding as recorded in the order are reproduced hereunder: "15. Now, let's examine whether the activity of conducting 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 Indian 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 expenditure, the BCCI allocates funds from the revenue it collected from advertisement and other sources. The assessee-society is allowed to sell tickets to the cricket viewers. No doubt, the players of Indian Premier League are sold in public auction for very huge amount. But the question is who is conducting and who is auctioning, whether the assessee-society or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11 of LT. Act 1961 cannot be denied to the appellant. 6.7. The appellant association is similar to that of Cricket Association of Bengal which is carrying out its activities in the State of Kolkatta. The Hon'ble Apex Court while considering the dispute between the Secretary Ministry of Information and Broadcasting and Cricket Association of Bengal, Kolkata in Civil Appeals Nos.1429-30 of 1995 vide judgement dated 09.02.1995 has observed at para 75 of the judgement as under: "An organizer such as the BCCI or CAB in the present case which are indisputably devoted to the promotion of the game of cricket cannot be placed in the same scale as the business organizations whose only intention is to make as large a profit as can be made by telecasting the game. Whereas it can be said that there is hardly any free-speech element in the right to telecast when it is asserted by the latter, it will be a warped and cussed view to take when the former claim the same right and contend that in claiming the right to telecast the cricket matches organised by them, they are asserting the right to make business out of it. The sporting organizations such as BCCI/CAB which are interested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he activities carried out by the appellant cannot be ascribed as activities of business for which the benefit of section 11 of I.T. Act 1961 can be denied. The ratio laid down fully supports the submission of appellant that it is eligible for benefit of exemption U/s 11 of I.T. Act, 1961. 6.8 In the case of the Andhra Cricket Association the activities carried out by the said association are similar to that carried out by appellant association in the region of Vidarbha. In the case of M/s. Andhra Cricket Association the benefit of exemption under section 11 of LT. Act 1961 was denied by A.O. which was challenged in appellate proceedings before Hon'ble CITCA), Vijaywada. The appeal of the said association for the assessment year 2012-13 has been disposed off vide order dated 28/9/2015 in Appeal No. 460/CITCA)/VJA/2014-15. In the aforesaid appeal the Hon'ble CITCA), Vijaywada has, following the decision of Hon'ble ITAT, Chennai Bench, Chennai in the case of Tamil Nadu Cricket Association held that the appellant in the aforesaid appeal is eligible for the benefit of exemption under the provisions of section 11, 12 and 13 of I.T. Act 1961. The case of the appellant being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late orders for the past assessment years no where in the assessments as well as in the appellate orders ever there has been any allegation as to that the appellant association is carrying on activities which are in the nature of trade, commerce or business. On the face of the aforesaid factual position the various observations made at para 7 of the assessment order are unjustified and are without justification. 6.11 The A.O. at para 7 at point (i) to (iii) has referred to activities of club and collecting charges by appellant for use of same from members. The Hon'ble Bombay High Court in the case of Director of Income Tax (Exemptions) v/s. The Chembur Gymkhana reported at 345 ITR 86 (Born) has upheld the decision of ITAT wherein activities of club including that of running a Bar and Sports activity were held to be eligible for benefit of exemption U/s 11 of I.T. Act, 1961. In view of above there remains nothing for which any adverse view can be considered for grant of exemption U/s. 11 of I.T. Act, 1961. The application of income for creating infrastructure is permissible in terms of provisions of Sec. 11 of I.T. Act, 1961. This is settled position of Law in terms of decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the association. The expenditure incurred on objects of the appellant association are in the nature of expenses to that considered by the Hon'ble IT AT, Chennai Bench in the case of Tamil Nadu Cricket Association. In view of above factual position, various adverse observation in the assessment order at para 10 of the assessment order deserves no credence and are without justification. The decision of Hon'ble Uttarakhand High Court has been reversed by the Hon'ble Apex Court in appeal of Queens Educational Society in Civil Appeal No. 5167 of 2008 vide judgment dated 16.03.2015. In view of above I am of the considered opinion that various adverse observation at para 10 of the assessment order for denial of exemption under section 11 of LT. Act 1961 to the appellant association are not justified and deserve no credence. 6.13. Considering the totality of facts and circumstances in the case of appellant and respectfully following the decision of Hon'ble ITAT, Chennai in the case of Tamil Nadu Cricket Association detailed reasons and various judicial precedents given herein above. I hold that the appellant association is eligible for benefit of income being exempt un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, which under the garb of "general public utility", carry on business or commercial activity only to escape the liability under the Act thereby gain unmerited exemption under section 11 of the Act." 8. Further, Hon'ble Madras High Court has followed the decision of Hon'ble Bombay High Court in the case of Sinhagad Technical Education Society Vs. CIT - (2012) 343 ITR 23 (Bom) in paragraph 35, which is reproduced below :- "36. In the decision reported in (2012) 343 ITR 23 (Bom) (Sinhagad Technical Education Society V. Commissioner of Income Tax (Central), Pune & Anr), the Bombay High Court held as follows: "As a result of the amendment, which has been brought about by the Finance Act of 2010, Subsection (3) of Section 12AA has been amended specifically to empower the Commissioner to cancel a registration obtained under Section 12A as it stood prior to its amendment by the Finance (No.2) Act, 1996. Sub Section (3) was inserted into the provisions of Section 12AA by the Finance (No.2) Act, 2004 with effect from 1 October 2004. As it originally stood, under subsection (3), a power to cancel registration was conferred upon the Commissioner where a trust or an institution had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IPL Season-I worked out to 8.5% of the total receipts. It further held that 78% of the total receipt came out of advertisement revenue. 53. The Income Tax Appellate Tribunal pointed out that the physical aspect of the game was one in accordance with the objects of the assessee and the activities are genuine. However, the matches held were not in advancement of any specific object of general public utility. The pattern of receipt is commercial in character and the matches conducted are not in accordance with the objects of the Association. Thus, it rejected the assessee's case and held that both the conditions under Section 12AA(3) of the Act stood attracted. 54. As seen from the observation of the Income Tax Appellate Tribunal, although generally it accepted the case of the assessee that the physical aspect of the game was one in accordance with the objects, the quantum of receipt apparently led the Income Tax Appellate Tribunal and the Revenue to come to the conclusion that the activities are commercial and hence by Section 2(15) proviso to the Act, the receipt from BCCI could not be called as subsidy. As for the observation of the Income Tax Appellate Tribunal that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12AA(3) to impose commercial character to the activity of the Association. In the circumstances, we agree with the assessee that the Revenue has not made out any ground to cancel the registration under Section 12AA(3) of the Act." 10. Although the decision of Hon'ble Madras High Court is in respect of grant of registration u/s 12AA but the relevant observations reproduced above are very much relevant to the issue before us. We also find that in earlier years also in assessee's own case, Hon'ble Bombay High Court has affirmed the orders of the Tribunal allowing the issue in favour of the assessee i.e., for assessment years 2003-04 to 2008-09 although the same is prior to introduction of proviso to Section 2(15) of the Act. In view of the earlier year's decision of Hon'ble Bombay High Court, we are of the view that as regards to charitable activity, this aspect is covered. No contrary decision was brought to our notice during the course of hearing by the Revenue. Hence, respectfully following the decision of Coordinate Bench of ITAT, Chennai Bench in the case of Tamil Nadu Cricket Association (supra), we are of the view that the issue is squarely covered in favour of the assessee a ..... 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