9911796707
TMI Blog2019 (3) TMI 1585X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is also registered u/s 12A/12AA of the Act, by the Commissioner of Income Tax-Jamshedpur vide F.No. Technical/JSR/VIII-69/03- 04/1275-78 dt. 31/03/2004. 4. The ld. Counsel for the assessee, before us filed a detailed written submission, which is extracted for ready reference:- 1. The appellant i.e. Jharkhand State Cricket Association (hereinafter referred as JSCA/Appellant) is a society registered under the Societies Registration Act and had been established in 1935.The appellant is the controlling authority of cricket activities in the State of Jharkhand. 2. The aforesaid society came into existence to promote sports activities namely the sports of cricket which is an object of general public utility. The objects of the appellant society as has been stated in the memorandum of the association of the appellant society is stated hereunder: (a) To promote, encourage, organize and control the game of cricket throughout the State of Jharkhand. (b) To arrange, organize and regulate representative matches in the State with teams representing the Association and also approved matches of JSCA and to select such teams for any tournament, championship or fixture, local and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State, to promote, encourage, organize and develop the game of cricket in schools and colleges in the State, to maintain a panel of approved umpires and also to encourage the formation of District Associations for the control of the game of cricket. In sum and substance, the objects of the appellant is to seek to encourage, promote, develop and control the game of cricket in the state. It is therefore seen that the activities and objects of the assessee revolve around promoting, developing and controlling the game of cricket. 4. It is submitted that since the objects of the appellant is promotion of sports and organizing sport, as such, objects of the appellant is charitable within the meaning of section 2(15) of the Income Tax Act, 1961. In fact, CBDT in Circular: No. 395 [F. NO. 181(5) 82/IT(A-I)], Dated 24-9-1984 has provided that promotion of sports and games is considered to be a charitable purpose within the meaning of section 2(15). For the sake of convenience, aforesaid circular is being extracted hereunder: "1. The expression "charitable purpose" is defined in section 2(15) to include relief of the poor, education, medical relief and the advancement of any other o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2013-14, the basis of disallowance of exemption was that assessee was in receipt of IPL Subvention, TV rights subsidy from the BCCI and also instedia advertisement. Since the income generated through conduct of IPL matches and sponsorship has been held as commercial in nature, and hence the subvention and TV subsidy received by the assessee is commercial in nature. In view of the aforesaid, learned AO has held that income of the assessee cannot be held to be eligible for exemption u/s 11 of the Act as receipts from BCCI in respect of IPL Subvention & /TV subsidy being receipts from commercial activities and are in excess of Rs. 25 lakhs. The details of receipt and utilization thereof is being submitted as Annexure-B to this synopsis. 9. The assessee society has been assessed to be a charitable society. Further, objects of the society being charitable in nature, till the AY 2009-10, the exemption granted u/s 11 has not been disputed. Infact for the AY 2011-12 and subsequent to these three year i.e. for the AY 2014-15 i.e. after the passing of the order of the learned CIT(A), exemption claimed u/s 11 of the Act has been allowed by the revenue and, as such, on the principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, appellant is engaged in the promotion of sports and organizing sport and such activity of the appellant is in the nature of charitable within the meaning of section 2(15) of the Act. For the sake of convenience, provisions of section 2(15) of the Act is extracted hereinbelow: (15) "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places 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 application, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [ten lakh rupees] or les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt has observed as under: '... in Section 2(15), namely, "any other object of general public utility". From the said decisions it emerges that the said expression is of the widest connotation. The word "general" in the said expression means pertaining to a whole class. Therefore, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose [CIT v. Ahmedabad Rana Caste Association [1983] 140 ITR 1 (SC)]. The said expression would prima facie include all objects which promote the welfare of the general public. It cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served. If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be charitable purpose. When an object is to promote or protect the interest of a particular trade or industry that object becomes an object of public utility, but not so, if it seeks to promote the interest of those who conduct the said trade or industry [CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC)]. If the primary o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an object of general public utility, it cannot but be regarded as an institution established for charitable purposes." 11.3 That the High Court of Delhi in the case of GS1 India vs DGIT reported in [2014] 360 ITR 138 (Delhi), wherein assessee has acquired intellectual property rights qua bar coding system from 'G' and charged registration and annual fees from third parties to permit use of coding system. Assessee applied for registration under section 10(23C)(iv), which was denied by Director General (Exemption) on ground that activity of assessee was in nature of trade, commerce or business and that assessee had not maintained separate books of account for business activity. On the aforesaid facts, it was held by the Hon'ble High Court that Charging a nominal fees by assessee-society from beneficiaries to use coding system and to avail advantages and benefits therein was neither reflective of business aptitude nor indicative of profit oriented intent and thus assessee could not be denied registration under section 10(23C)(iv) on ground that activity of assessee was in nature of trade, commerce or business. The relevant finding of the Hon'ble High Court is reproduced her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1.4.2012) or less in a previous year, cannot be invoked in the present case because the said provision will apply only if the institution covered by the last/residuary clause is involved or carrying on activity of rendering any service in relation to trade, commerce or business. Contention of the respondent, if accepted, would deny charitable status to a faintly moderate size institution under the last/residuary limb, when it charges even a token or insignificant amount from the beneficiaries, who gain significantly from the altruism and benevolence. A small charitable organization that receives token fee of more than Rs. 80,000/- a month or now Rs. 2,00,000/- per month approximately, would disqualify and lose their charitable status. The object of the proviso is to draw a distinction between charitable institutions covered by last limb which conduct business or otherwise business activities are undertaken by them to feed charity. The proviso applies when business was/is conducted and the quantum of receipts exceeds the specified sum. The proviso does not seek to disqualify charitable organization covered by the last limb, when a token fee is collected from the beneficiaries in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducting matches of cricket which fell under category of general public utility, mere fact that it earned certain anciliary income in form of TV subsidy, sale of advertisement and surplus of match receipts, would not lead to conclusion that assessee's case was hit by proviso to section 2(15). It is submitted that facts of the aforesaid case are similar to the facts of the instant case. Hon'ble Tribunal has after through examination of the fact and law has held as under: "6. The allegations of the Assessing Officer is that in the case of assessee the major income arise not from the game of Cricket but from the business of Cricket. It is alleged by the Assessing Officer that major source of income are from TV Subsidy, Sale of advertisement, surplus from one-day international between India and Pakistan income from RCA Cricket Academy and interest income. All these activities are more in the nature of business of cricket than the promotion of game of Cricket. As per AO, though, the word 'Business' is not defined in the Income Tax Act. It has been held to postulate the existence of certain elements in the activity of assessee, which would invest it with the character of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct of Cricket matches by the society. It is undisputed fact that without conduct of matches income cannot be derived. Therefore, it can be safely inferred that these incomes are related to the incidental activity of the association. These incomes would not accrue without the game of Cricket. The main thrust of revenue's argument is that for allowing exemption under section 11 of the Act, the Assessing Officer need to examine whether the proviso to section 2(15) of the Act is attracted or not. It is the contention of the revenue that assessee would fall under the limb of any other object of general public utility to which category only the proviso to section 2(15) applies. It is contended that if proviso 2(15) attracted, assessee loses benefit of exemption as per section 13(8). Therefore, it is submitted that only question to be decided is to whether assessee is engaged in commercial activity for fee or other consideration. It is also contended that nature of receipt about hands of the assessee by way of sharing of sponsorship of media rights with BCCI as well as match revenue for conducted various cricket matches. It is contended that in the assessment year 2008-09, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Tribunal in the case of MIG Cricket Club vs. DIT (E) (I.T.A. No.602/Mum/2012 dated 18/04/2017) wherein assessee was also undertaking the activity of Banquet Hall Hiring, Hospitality (Restaurants) and Permit Room (Bar), which activities are held to be in the nature of carrying on trade, commerce, or business for consideration, which are hit by proviso to Section 2(15) of 1961 Act. Apart from the aforesaid it is submitted that while adjudicating the aforesaid appeal, judgment of the Tamil Nadu Cricket Association v. DIT (E) [2014] 360 ITR 633 (Mad HC) has neither been discussed nor been referred, as such, aforesaid order cannot be placed reliance. 16 It is further submitted if the objects of the assessee are charitable in nature under section 2(15) of the Act, as such, even if there is some surplus, same would still be entitled for the exemption under section 11/12 of the Act. It is submitted that section 2(15) of the Act as was originally brought in the statute, include the limitation of not involving the carrying on of any activity of profit. However, Section 2(15) was amended with effect from 1-4-1984 inasmuch as the words not involving the carrying on of any activity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015] 372 ITR 699 (SC), wherein it was held that where a surplus was made by educational institution which was ploughed back for educational purposes, said institution was to be held to be existed solely for educational purpose and not for purpose of profit. Infact, the High Court of Delhi in the case of ICAI v. DGIT (Exemption) [2013] 358 ITR 91, has at para 67 observed as under :- 'The expressions "trade", "commerce" and "business", as occurring in the first proviso to section 2(15) of the Act, must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organised manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The purport of the first proviso to section 2(15) of the Act is not to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee. The object of introducing the first proviso is to exclude organizations which are carrying on regular business from the scope of "charitable purpose". The purpose of introd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, does not rob the essential and dominant object of the society, i.e. medical service and education. Indeed, in the case of medical facilities, a nuanced subsidization through a cross subsidization scheme (i.e. charging market rates from some and subsidizing some entirely and a few partly) would fit with the purpose of the petitioner society, which might be able to thus provide greater service to a larger number of people. It renders its existence economically viable and expands its reach and scope." 21 The appellant further submits that, the Apex Court in the case of ACIT s. Surat City Gymkhana reported in 300 ITR 214 have held that, where registration u/s 12A of the Act had been granted, the same is fait accompli and the A.O. cannot go behind to probe into the objects of the trust. Thus it is submitted that, the pre-dominant object of the society was to promote sports and conduct sports and there is no profit motive and thus the assessment made by denying exemption is thus untenable in law. In fact, Hon'ble High Court of Gujarat reported in 366 ITR 85 in the case of DIT vs. Ahmadabad Management Association, in identical circumstances it has been held that the exemption cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate the facts of the case. It may be mentioned here that as per the basis of allocation of revenues generated by the BCCI out of its activities on behalf of its affiliates, a sharing ration of 30% : 70% is adopted by the BCCI towards its affiliates. 'JSCA' works completely under the aegis of BCCI , being its parent body from which it receives substantial revenue sharing amounts in the nature of IPL subvention, TV Broadcasting Rights though these are couched in the shape of subsidies, whereas the fact remains that the BCCI does consciously recognises the fact that its income from its activities is to be apportioned amongst its affiliates in the 30:70 ratio. In this regard, it is submitted that at page 32 of the order of Hon'ble ITAT Ahemdabad Bench, Ahemdabad which has been rendered recently, this conscious fact has been mentioned in the reproduced portion of CIT(A) order in the said case. It may be stated here that BCCI is no longer a charitable entity as its activities have been held to be commercial in nature. Therefore, the receipts of IPL subvention, TV Broadcasting Rights Subsidy or Sponsorship Receipts , which though may be treated in accounting as being in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are conducted by the affiliate entity only, therefore, to couch such revenue sharing by the nomenclature such as 'Subsidy" is quite a misnomer, as in its true essence, the original receipts partake the character of income and also carrying the nature of income does percolate to the affiliate entity i.e., JSCA and in the process it does not lose its such character or attains the nature of subsidy. Once it is arising out of commercial nature, as rightly held in the case of BCCI by the Department, then it ought to be treated as commercial and profit / income in the hands of JSCA as well. It may be reiterated here that nature of income, source and activity that of BCCI and its affiliates i.e., JSCA in this case, continues to the same. Morose, the commercial nature of such revenue can also be fathomed from the fact that TV Broadcasting Rights are sold to the highest bidders, in purely competitive marketing settings. Therefore, such sharing of revenue as observed in the activities of the assessee and its parental body are nothing but commercial activity in the garb of charity. Receipt of IPL Subvention from the BCCI: The IPL is nothing but crass commercialization of cricket. IPL is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the TV Broadcasting Rights were in the nature of income and these were to be shared between the BCCI and its affiliates. This position has been made amply clear by Mr. I.S. Bindra, the then president of BCCI and same is well borne from the minutes which have been reproduced by the ld. CIT(A) in the said case. Thus, it is submitted that all the revenue generation activity of BCCI which is shared by the BCCI with assessee i.e. JSCA is in the nature of Income and therefore the AO has rightly and correctly applied the provisions of section 2(15) of the Act, for bringing the assessee income to tax. 6. In addition to the submissions made on merits, for the Assessment Year 2010-11, the ld. Counsel for the assessee argued that the re-opening is bad in law for the reason that there was no new tangible material based on which the re-opening was made by the Assessing Officer and that the reopening was made merely on a change of opinion. He relied on the judgment of the Hon'ble Supreme Court in the case of Income Tax Officer, ward No. 16(2) v. TechSpan India (P.) Ltd.; [2018] 92 taxmann.com 361 (SC) in support of his arguments. 6.1. In reply, the ld. D/R, submitted that sufficiency of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Assessment Year 2010-11 in ITA No. 158/Ran/2017. 9. The first issue that arises before us is the validity of reopening of assessment. The reasons of re-opening are as follows:- "1. Jharkhand State Cricket Association, hereinafter referred to as the assessee is an AoP involved in the Business of Cricket in the State of Jharkhand. The assessee is an affiliated member of the BCCI. One of the objects of the assessee is promotion, encouragement, organization and control of the game of cricket throughout the state of Jharkhand. The assessee had had filed its Return of Income for the A.Y. 2010-11 on 30-09-2010, in the office of the Addl. CIT, Range-2, Jamshedpur, bearing Acknowledgment Number- 200289. The assessee is registered u/s 12A/12AA of the Income-tax Act vide F.No. Technical /JSR/VIII-69/03-04/1275-78 31-03-2004. The RoI has been filed in ITR-7 by the assessee. 2. Perusal of the RoI, Income and Expenditure Statement and Computation of Income of the assessee reveals that the assessee has received an amount of Rs. 22,16,10,595/- during the breakup of receipts includes Rs. 18,89,54,447/- as Administrative Receipts, Rs. 2,84,26,148/-as Interest on Deposits and Rs. 42,30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year. Only some matches have been arranged by the assessee. In the garb of charitable activities the assessee has indulged in commercial activities. This is also evident from the fact that the assessee has utilized only 7.49% of its receipts on cricketing activities. Perusal of the Schedule-C of the Income and Expenditure account of the assessee reveals that the assessee has only spent an amount of Rs. 45,721/- on Summer Coaching Camp. This represents 0.013% of the Total Receipts of the assessee. An assessee that spends only 0.013% of its Total Receipts on its own declared objects cannot be said to be charitable. 7. The total receipts of the assessee during the year was Rs. 34,58,60,595/-. Out of this amount Rs. 2,84,26,148/- has been on account of Interest. Therefore the receipts of the assessee out of commercial activities had been 91.78% of its total receipts. 8. The reason and the scope of the proviso to section 2(15) have been explained by Circular 11 of 2008 and Circular 1 of 2009. 9. Reliance is placed on the decision of the Hon'ble Calcutta High Court in the case of Cricket Association of Bengal V/s CIT (37 ITR 277). 10. Further reliance is also place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of the Assessing Officer, after completion of the original assessment u/s 143(3) of the Act on 22/03/2013. We find that the Assessing Officer, after passing the assessment order for the Assessment Year 2012-13, based on his conclusions drawn therein, came to a conclusion that the assessment order for the earlier Assessment Year 2010-11, passed u/s 143(3) of the Act on 22/03/2013, granting exemption to the assessee needs to be revised. Such a reopening is not permissible under law. The Hon'ble Supreme Court in the case of TechSpan India (P.) Ltd. (supra), held as follows:- "11. It is well settled and held by this court in a catena of judgments and it would be sufficient to refer CITv. Kelvinator of India Ltd. [2010] 320 ITR 561/187 Taxman 312 (SC) wherein this Court has held as under:- '5....where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re- open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe"..... Section 147 would give arbitrary powers to the Assessing Officer to re-open asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which it has declared income separately. However, a bare perusal of notice dated 09.03.2004 which was issued in the original assessment proceedings under Section 143 makes it clear that the point on which the re-assessment proceedings were initiated, was well considered in the original proceedings. In fact, the very basis of issuing the show cause notice dated 09.03.2004 was that the assessee was not maintaining any separate books of account for the said two categories and the details filed do not reveal proportional allocation of common expenses be made to these categories. Even the said show cause notice suggested how proportional allocation should be done. All these things leads to an unavoidable conclusion that the question as to how and to what extent deduction should be allowed under Section 10A of the IT Act was well considered in the original assessment proceedings itself. Hence, initiation of the reassessment proceedings under Section 147 by issuing a notice under Section 148 merely because of the fact that now the Assessing Officer is of the view that the deduction under Section 10A was allowed in excess, was based on nothing but a change of opinion on the same facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue in its entirety at para 35, 36 & 40 held as follows:- "35. Let us take a pause here and examine as to what are the activities of the assessee cricket associations so as to be brought within the ambit of trade, commerce or business. We have seen objects of the association, which are reproduced earlier in our order, and it is not even the case of the revenue that these objects have anything to do with any trade, commerce or business; these objects are simply to promote cricket. The trigger for invoking proviso to Section 2(15), as Shri Soparkar rightly contends, has to an activity of the assessee which is in the nature of trade, commerce or business. However, the case of the revenue authorities hinges on the allegation that the way and manner in which cricket matches are being organized, particularly the IPL matches, the activity of organizing cricket matches is nothing but brute commerce. Undoubtedly, it would appear that right from the time Kerry Packer started his World Series Cricket in 1977, there has been no looking back in commercialization of cricket and the impact of this commercialization has not left Indian cricket intact. The Indian Premier League and the rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits will arise in the hands of the BCCI and not the end beneficiaries. Even in such a case the point of taxability of these profits is the BCCI and not the cricket associations, because, even going by learned Commissioner's arguments, these receipts in the hands of the cricket associations is nothing but appropriation of profits. What can be taxed is accrual of profits and not appropriation of profits. In any event, distinction between the cricket associations and the BCCI cannot be ignored for the purposes of tax treatment. There is no dispute that the matches were organized by the BCCI, and the assessee cannot thus be faulted for the commercial considerations said to be inherent in planning the matches. As we make these observations, and as we do not have the benefit of hearing the perspective of the BCCI, we make it clear that these observations will have no bearing on any adjudication in the hands of the BCCI. Suffice to say that so far as the cricket associations are concerned, the allegations of the revenue authorities have no bearing on the denial of the status of 'charitable activities' in the hands of the cricket associations before us- particularly as learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such similarly placed cricket associations. Respectfully following the same, and also for the detailed reasons set out above, we uphold the plea of the assessee. We are not reproducing extracts from these decisions, for the sake of brevity, but we adopt, and concur with, the reasoning of these decisions. When proviso to Section 2(15) cannot be invoked on the facts of these cases, the benefits of Section 11 and 12, which were declined only by invoking the proviso to Section 2 (15), could not have been declined on the facts of these cases." (Emphasis ours) 41. We have noted that all the learned representatives have advanced detailed arguments on the proposition that since the assessee cricket associations are engaged in educational activities, it is not really material whether or not the assessee has engaged itself in the activities in the nature of trade, commerce or business. However, in the light of our categorical finding that the assessee cricket associations were not really engaged in the activities in the nature of trade, commerce or business, it is not really necessary to adjudicate on this plea. We leave the question open for adjudication in a fit case. Conclusions on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived from BCCI, Rs. 20,69,60,338/- is towards corpus donation. Hon. CIT (Appeals) has erred in not considering the BCCI AGM resolution which provides that all future payments by BCCI shall be towards corpus by using word 'Henceforth'. (b) Alternatively, the learned CIT(A) has erred in law and on facts when the status of the assessee is held to be AOP and Section 2(15) held to be not applicable, then as per the provisions of Sec.2(24) (iia) r.w.s. 13(8) and 56, the corpus donation of Rs. 20,69,60,338/- cannot be added as income. 49. As regards grievance raised by the assessee in ground no. 3(a), we have already decided this issue in favour of the assessee, vide our order of even date for the assessment years 2004-05 to 2007-08, and we have observed as follows: 12. So far as this grievance of the assessee is concerned, the relevant material facts are like this. The assessee before us is a cricket association, registered under the Societies Registration Act 1860, and is engaged in promotion of cricket in specified areas of Gujarat State. In the course of the reassessment proceedings, the Assessing Officer noted that assessee has received a sum of Rs. 1,58,00,000 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation as a corpus donation, a written document with specific direction from the donor should be obtained and should accompany the donation from the donor. In absence of written direction, for a donation in a given assessment year, a donation would not be considered as a corpus donation and the organization (in this case, GCA) would not be entitled to claim full exemption. To add, donation covered by a written document but without any specific direction cannot be claimed as corpus donation 13. The assessee is not satisfied and is in further appeal before us. 14. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 15. We find that, at pages 46 and 47 of the paperbook, the assessee has filed specific confirmations to the effect that these amounts were corpus donations. We have also perused the BCCI resolution no 5 dated 29th September 2001 which specifically states that the TV subsidies should henceforth be sent to the Member Associations towards "corpus funds". There is no dispute that the TV subsidy in question is sent under this resolution. On these facts, and in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, are in the nature of commercial receipts and are couched in the shape of subsidies. The contention that the nature of the income has not changed even after the receipt of such amounts in the hands of the affiliate as the source of the amounts and activities remain the same, has not been accepted. The Tribunal has taken the view that what is distributed is appropriation of profits. 13. The Delhi Bench of the Tribunal in the case of Delhi & District Cricket Association vs. DIT (Exemption) [2015] 58 taxmann.com 292, under identical circumstances held as follows:- 10.2 The Hon'ble Madras High Court in Tamil Nadu Cricket Association's case (supra), on identical facts held as follows : "29. Sec. 12AA of the Act prescribes procedure for registration. As per this, on receipt of the application for registration, the CIT is to call for such documents or information from the trust or institution in order to satisfy himself about the genuineness of activities of the trust or institution. The section further empowers the CIT to make such enquiry as he deems necessary in this regard. Once the CIT is satisfied himself about the objects of the trust or institution and the genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, even if the trust is a genuine one, i.e., the objects are genuine, if the activities are not genuine and the same not being carried on in accordance with the objects of the trust, this will offer a good ground for cancellation. Thus, in every case, grant of registration as well as cancellation of registration rests on the satisfaction of the CIT on findings given on the parameters given in ss. 12AA(1) and 12AA(3) of the Act, as the case may be. 51. As already noted in the preceding paras, considering the provision under s. 12AA(3) of the Act, the cancellation or registration in a given case could be done only under the stated circumstances under s. 12AA(3) of the Act and in the background of the definition relevant to the particular year of registration. As rightly pointed out by the assessee, Revenue does not allege anything against the genuineness of the objects of the assessee or its activities. It rests its order only on the ground of the assessee receiving income from holding of matches which according to the assessee were not held by it. Thus, as regards the question as to whether the particular income qualified under s. 11 of the Act or not is not the same as activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of advertisement revenue. 54. The 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 s. 12AA(3) of the Act stood attracted. 55. As seen from the observation of the 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 Tribunal and the Revenue to come to the conclusion that the activities are commercial and hence by s. 2(15) proviso to the Act, the receipt from BCCI could not be called as subsidy. As for the observation of the Tribunal that the twin conditions stood satisfied is concerned, it is not denied by the Revenue that at the time of granting registration, the CIT had satisfied himself about the objects of the trust and the genuineness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal that IPL matches and Celebrity Cricket Matches are also being held by the association and hence it is an entertainment industry, we need not go into these aspects, for, the order of the Director of IT (Exemption) casts no doubt on the genuineness of the objects of the trust. Hence, it is for the AO to take note of all facts, while considering the same under s. 11 of the IT Act, 1961. We disapprove the approach of the Tribunal in this regard. In the above-said circumstances, we set aside the order of the Tribunal. 58. In the result, the tax case (appeal) stands allowed. No costs. Consequently, connected MP is closed. (Emphasis, italicized in print, ours)." 10.3 The activities of the assessee, on facts, are similar to the activities of Tamil Nadu Cricket Association and hence the case law applies on all fours. 10.4 From a reading of the above case law, the following propositions emerge : (a) For the cancellation of registration under s. 12AA(3), the CIT should record a satisfaction that the activities of the trust or institution are not genuine or that the activities are not being carried on in accordance with the objects of the trust. In the absence of such a findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f self-interest. Charity is driven by altruism and desire to serve others, though element of selfpreservation may be present. For charity, benevolence should be omnipresent and demonstratable but it is not equivalent to self-sacrifice and abnegation. (g) The antiquated definition of charity, which entails giving and receiving nothing in return is outdated. (h) Enrichment of oneself or self-gain should be missing and the predominant purpose of the activity should be to serve and benefit others, the mandatory features being, selflessness or illiberal spirit. (i) The quantum of fee charged, the economic status of the beneficiaries who pay, commercial values in comparison to the fee, purpose and object behind the fee, etc. are several factors which decide seminal question, is it business ? (j) The Revenue cannot take a contradictory stand that the assessee carries on charitable activity under the residuary head "general public utility", but, simultaneously record the said activity as business. (k) There is no statutory mandate that a charitable institution falling under the residuary clauses, should be wholly, substantially or in part be funded by voluntary contributions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is to promote, regulate and control the game of cricket in and around Delhi. The undisputed fact is that over the years this activity has been recognized by the IT Department as a charitable activity and registration under s. 12A was granted to the assessee. A number of assessment orders under s. 143(3) were passed wherein the assessee was held as eligible for exemption under s. 11/12 of the Act. Hence, this fact of the assessee being a charitable institution is not in dispute. 10.8 The core activity of the assessee is undisputedly, charitable in nature. Hence, it is not the case of the Revenue that the assessee is carrying on "trade, commerce or business" under the. garb of the activity being "general public utility". As regards the various receipts of the assessee, we find that in the case of Tamil Nadu Cricket Association (supra), the receipts were from :- 1. Subscription 2. Renting for hiring cricket ground rooms and premises 3. Fee for providing services for IPL 4. Income from advertisement 5. Subsidy from BCCI 6. Sale of tickets for conducting the matches and 7. Restaurant and catering income. Such receipts of money by the Tamil Nadu Cricke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity done by assessee, would tantamount to business activity or not. This has to be viewed, from view-point of the assessee. The other person with whom the assessee has an agreement, may have its own object and reason for doing transaction and accordingly, the nature of transaction and the resultant activity would be determined in the other person's hands. However, that by itself, should not have any bearing at all on the nature of the transaction, as well as resultant activity in the hands of assessee. To carry out a transaction in an organized manner and to ensure that the transaction would help the assessee in achieving its charitable object, it is imperative that the terms and conditions of the transactions are clearly defined, to avoid any confusion or chaos. It will be further good, if these terms and conditions are reproduced in writing, in the form of an agreement. Merely because an activity is performed in an organized manner, that alone will not make these activities as business/commercial activity. Profit motive is one essential ingredient, which is apparently missing in this case. In carrying out an activity, one may earn profit, or one may incur loss. But for mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, to meet global standards these facilities are required and these are not independent of the activity of providing food and refreshments to members and associated persons. Running of a canteen is an incidental and necessary activity as is in every organization. This cannot be termed as business activity. It is part and parcel of the charitable activity and the receipt in question cannot be termed as exempt (sicarising) from activity which is in the nature of "trade, commerce or business". 11.6 On advertising and contractual receipts the same explanation as was given by the assessee, as in the case of sponsorship money. Consistent with the view expressed by us, when we were dealing with sponsorship money, we hold that these contractual receipts go to reduce part of the cost incurred by the assessee for its charitable activity and hence, cannot be termed as business or that the assessee has undertaken activity in the nature of "trade, commerce or business". 11.7 On receipts from IPL an elaborate Explanation was given, the pith and substance is that expenditure has to be incurred by the DDCA on various items, as co-ordination has to be done and the aggregate of expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ultimate beneficiary is either the cricketer or the game of the cricket. 5. The assessee is not charging any fees or revenue from the cricketer who is ultimate beneficiary. Thus, there is no quid pro quo relationship with the cricketer. The assessee is promoting cricket on charitable basis as far as real beneficiary is concerned. 6. Whenever the revenue is earned these are not earned on commercial lines and these are earned without any commercial attributes. The revenue is generated for recovering the cost, at least partly if not fully. 7. The assessee has not entered any transaction with any person on profit motive. The other person may be an entrepreneur or may be doing business but the assessee has entered (into) the transaction only for the sole and dedicated purpose i.e. for the promotion of cricket. 8. These facts are worth noting that (a) the assessee has not diverted its funds for any purpose other than promotion of cricket; (b) the assessee has not done any activity or transaction with profit motive; (c) the assessee has not done any activity beyond and outside its objects; and (d) there is no change in facts so as to deviate from the stand taken by learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law." 13.1. In this decision, the Delhi Bench of the Tribunal had considered the following receipts:- 1) Subscription 2) Renting for hiring cricket ground rooms and premises 3) Fee for providing services for IPL 4) Income from advertisement 5) Subsidy from BCCI 6) Sale of tickets for conducting the matches and 7) Restaurant and catering income and has come to a conclusion that the proviso to Section 2(15) of the Act, cannot be invoked on the ground that these receipts are in the nature of trade, commerce and business. 14. The argument of the ld. D/R which is brought out above has been considered in this above referred decision and the issue under adjudication was in favour of the assessee. Consistent with the view taken by the Ahmedabad and Delhi Benches of the ITAT, under similar circumstances, we come to a conclusion that the proviso to Section 2(15) of the Act has been wrongly invoked. The assessee is eligible for exemption u/s 11 & 12 of the Act. The grounds are allowed accordingly. 15. The next issue that comes for our adjudication is whether the infrastructural subsidy received from BCCI is a revenue receipt or a capital receipt. This issue was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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