TMI Blog2019 (1) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... main character of the assessee is a charitable in nature. So far as conducting international matches on behalf of the BCCI is concerned, it is secondary or incidental to achieve the main object. Therefore, in our opinion, the dominant object of the assessee is to only develop the game of the cricket and not to carry any business activity directly or indirectly in the activities related trade, commerce, business. Therefore, assessee is entitled for claim of exemption under section 11 and section 10(23C)(iv) of the Act. No reason to interfere with the order passed by the CIT(A). - Decided against revenue. Accumulated fund utilized within the specific period basing on the statement of expenditure submitted by the society during appellate proceedings - additional evidence produced by the assessee society by way of statement of expenditure - Held that:- DR is not able to point out any mistake or error committed by the CIT(A) finding in respect of accumulation of funds. However, AR has pointed out from paper book at page Nos. 12 to 15 that in respect of accumulation of profits, a detailed submission was made before the Commissioner (Exemptions) by letter dated 04/08/2017, the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on sale of tickets and advertisement space (BCCIT Reimbursements of ₹ 24,64,80,295/-) which is not eligible for exemption u/s. 11 or 10(23C) of the Act. 2. CIT(A) is erred in not considering that the act of selling tickets at varied amounts/rated depending on the stands n the stadium and maintaining corporate boxes is nothing but commercial activity. 3. CIT(A) erred in coming to a conclusion that for managing the crowd tickets at varied amounts/rated depending on the stands in the stadium is required. 4. CIT(A) ought to have observed the fact that sale of in stadia advertisement slots commes under commercial activity which is nothing but to earn profit. 5. CIT(A) is not correct in considering that the receipts by way of television subsidy and IPL subvention receipts from BCCI are not bearing commercial character and voluntary donations from BCCI in spite of the fact that the receipts are depending on share of the assessee-society for a particular match/matches and the same are not equally distributed to all the affiliated units of BCCI which is nothing but profit sharing. 6. CIT(A) erred in considering that receipts from BCCI are of voluntary i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 12A and approval under section 10(23C)(iv) of the Act. During the course of assessment proceedings, the Assessing Officer has asked the assessee why your case has to be considered for exemption under section 11 of the Act. It was submitted by the assessee before the Assessing Officer that the main object of the assessee is for promotion of game of cricket and the activities carried by the assessee are in accordance with the objects of the association, for which it is existed, and the assessee is already having registration under section 12A as well as approval under section 10(23C)(iv) of the Act and submitted that the activities are carried by the assessee are charitable in nature, therefore, his income is exempt under section 11 of the Act. The Assessing Officer has not accepted the explanation of the assessee and he came to a conclusion that the activities carried by the assessee are in the nature of trade, commerce and business, hence, is not eligible for exemption under section 11, though assessee is having registration under section 12A as well as approval under section 10(23C)(iv) of the Act. The Assessing Officer noted that the assessee during the previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charitable in nature. In view of the above, the Assessing Officer was of the opinion that the assessee has involved in carrying commercial activities constituting business as contemplated in 1st proviso to section 2(15) and receipts from such commercial activity were more than the stipulated amount of ₹ 25.00 lakhs as per 2nd proviso to section 2(15). Hence, 1st proviso to section 2(15) is attracted to the assessee s case, as such the assessee is not eligible for exemption under section 10(23C)(iv) of the Act for the Assessment Year 2013-14. Insofar as claim of the assessee for exemption under section 11 is concerned, the Assessing Officer has noted that the assessee has carried the activities of game of cricket by selling tickets, paid service tax and the same is received from BCCI of ₹ 3,04,64,964/-. Since BCCI is not exempted from payment of service tax for being not charitable, assessee cannot be considered as its activities are charity in nature. Therefore, the Assessing Officer is of the opinion that though the assessee is having registration under section 12A, his income is not exempt under section 11 of the Act. 6. On being aggrieved, the assessee carried the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is contrary to the objects of the assessee-association. He has also not pointed out any new activity carried by the assessee after registration under section 12A and approval under section 10(23C)(iv) of the Act. Therefore, the Assessing Officer simply denied the claim of the assessee under section 11 of the Act on the ground that the assessee s activities carried are commercial in nature is without any basis and the observations made by the Assessing Officer that the activities carried by the assessee are commercial in nature, is not correct and contrary to the facts of the case. 12. Ld. counsel for the assessee has further submitted that the issue involved in this appeal is squarely covered by the decision of the coordinate bench of the Visakhapatnam tribunal in ITA Nos. 963 241/VIZ/2015 ITA No. 01/VIZ/2016 for Assessment Years 2010-11 to 2012-13, by order dated 10/11/2017. He also strongly relied on the order passed by the ld. CIT(A). 13. We have heard both the sides, perused the material available on record and orders of the authorities below. 14. The assessee is a Andhra Cricket Association and has been granted registration under section 12A w.e.f. 01/04/1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is not entitled for his income as exempt under section 11 as well as 10(23C) of the Act. We find that the assessee owned a cricket stadium which is constructed for the purpose of development of sport of cricket. The assessee being a Member of BCCI, hosting matches which are conducted by BCCI, expenditure for conducting the matches claimed by the assessee as reimbursement from the BCCI. The assessee is selling the tickets on behalf of the BCCI, therefore, selling of tickets by the assessee cannot be considered as commercial activity. The main intention of the assessee is to develop the game of the cricket. Sometimes, the matches sponsored by the BCCI, conducted in the assessee s stadium and for that purpose tickets are sold and expenses incurred collected as reimbursement. The selling of the tickets by the assessee is only on behalf of the BCCI. The Assessing Officer has also pointed out that in respect of selling of tickets of the cricket match, BCCI paid service tax. Therefore, BCCI is similar to the assessee therefore assessee s activity cannot be treated as charitable activity. We find that international matches hosted by the assessee in its stadium on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year. A bare reading of the above proviso, it is clear that if the assessee involves in carrying on 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, then proviso to section 2(15) shall attract. In the present case, the assessee is a charitable association carrying with the object of development of game of crick ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities 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. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VIZ/2018 (A.Y. 2015-16) 17. The grounds raised by the department are similar to the grounds raised in ITA No. 279/VIZ/2018. Therefore, our decision in ITA No. 279/VIZ/2018 shall apply mutatis mutandis to this appeal also. Thus, this appeal filed by the Revenue is dismissed. ITA No. 280/VIZ/2018 (A.Y. 2014-15) 18. The additional ground raised in this appeal is extracted as under:- 12. CIT(A) erred in coming to a conclusion that the accumulated fund of ₹ 4,52,37,665/- was utilized within the specific period basing on the statement of expenditure submitted by the society during appellate proceedings, without calling for remand report from the AO on the additional evidence produced by the assessee society by way of statement of expenditure. 19. The Assessing Officer has noted that during the Financial Year 2008-09, an amount of ₹ 4,52,37,665/- was accumulated under section 11(2) of the Act for specific purpose and this amount should have been spent before 31/03/2014 for the purpose for which it was accumulated. But as pr ROI and as discussed in the above table, the assessee has spent an amount of ₹ 1,88,46,317/- and the balance amount of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,07,79,110 2008-09 2009- 10 24,61,39,101 20,92,18,236 16,39,80,571 2,72,82,335 15,67,18,236 4,52,37,665 5,25,00,000 12,59,96,775 2009-10 2010- 11 21,91,76,076 18,62,99,665 20,54,28,763 1,91,29,098 18,62,999,665 10,68,67,677 2010-11 2011- 12 24,68,68,870 20,98,38,539 14,26,49,701 3,11,162 14,23,38,539 6,71,88,838 6,75,00,000 17,40,56,515 2011-12 2012- 13 37,12,64,123 31,55,74,505 18,10,26,197 5,40,56,515 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there are unutilised accumulation of funds relating to F.Y. 2008-09, it shall be deemed to be the income of the previous year immediately following the expiry of the specified period i.e. 5 years u/s. 11(3). Thus in the present case the accumulated funds of F.Y. 2008-09 shall be deemed to be the income of the previous year i.e. F.Y. 2014-15 relevant to A.Y. 2015-16 but not in the A.Y. 2014-15 as Assessing Officer added. The AO is directed to delete the addition. Ground No. 14 is allowed. 21. Before us, the Departmental Representative is not able to point out any mistake or error committed by the ld. CIT(A) finding in respect of accumulation of funds. However, ld. AR has pointed out from paper book at page Nos. 12 to 15 that in respect of accumulation of profits, a detailed submission was made before the Commissioner (Exemptions) by letter dated 04/08/2017, the Commissioner (Exemptions), Hyderabad has considered the same and gave a categorical finding at page No. 21 of the paper book that there is no violation in respect of accumulation of funds pertaining to Financial Year 2007-08 and 2008-09 for treating unutilized within the specified period of five years. Therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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