TMI Blog2019 (1) TMI 1652X X X X Extracts X X X X X X X X Extracts X X X X ..... prayed for adjudication on merits, even though, as it appears to us, there was no specific ground of appeal on this issue. There was, however, no adjudication on this aspect. Learned counsel now urges us to admit the specific ground of appeal, as above, in terms of Hon ble Supreme Court s judgment in the case of National Thermal Power Corp Ltd Vs CIT [ 1996 (12) TMI 7 - SUPREME COURT] and remit the matter to the file of the Assessing Officer for adjudication on merits - we admit this ground of appeal, and remit the matter to the file of the Assessing Officer for adjudication on merits. Donation to corpus from BCCI is not exempt, since the provisions of section 11(1)(d) were not complied by the appellant - Section 11(1)(d) which only require the income to be by way of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or the institution , we are of the considered view that any payments made by the BCCI, without a legal obligation and with a specific direction that it shall be for corpus fund- as admittedly the present receipt is, is required to be treated as corpus donation not includible in total income. We are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fact that section 11 was held to be inapplicable as registration under section 12AA was cancelled. There was no other reason for denial of benefit under section 11. Learned representatives, therefore, fairly agree that since the registration has been restored, vide order dated 31st March 2012 passed by a coordinate bench of this Tribunal, the applicability of Section 11 will follow. We, therefore, uphold the plea of the assessee, and direct the Assessing Officer to grant the consequential relief. 6. Ground no. 2 is thus allowed. 7. In ground no. 3, the assessee has raised the following grievance: The learned A.O. and Hon ble CIT(A) has erred in law and on facts in not granting deduction of capital expenditure of ₹ 93,20,615/ - as claimed in the statement of income attached to the return of income. 8. Learned counsel for the assessee points out that this claim was made by way of a note on the statement of income and the matter but the Assessing Officer did not deal with the same. In appeal, the assessee pointed out this fact to the CIT(A) in paragraph 7.1 of the written submissions (@ page 28 of paper b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me by way of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or the institution . The Assessing Officer was of the view that what has been paid to the assessee is a share out of earnings by the BCCI, out of proceeds of sale of TV right s, and is, as such, taxable as income of the assessee. It was observed that it cannot be said to be voluntary contribution by the BCCI . The Assessing Officer also shows that as accepted by the auditor of the company the amount is relatable to the TV right s and it cannot, therefore, be treated as voluntary contribution in the nature of corpus donations. He also noted that as registration of the assessee, under section 12AA, stands cancelled, the assessee is anyway not eligible for the benefit of Section 11(1)(d). On the basis of this line of reasoning, the Assessing Officer treated the said amount of ₹ 1,58,00,000 as income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. It was pointed out to th e CIT(A) that the BCCI has passed a specific resolution that the amount computed as TV subsidy is given to the Member associations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith specific direction that it will form corpus of the trust . These conditions are cl early satisfied. Any payment which the assessee is not under an obligation to make, whatever be the mode of its computation, is a voluntary payment, and, any payment which is with a specific direction that it for corpus fund is a corpus donation. In our considered view, even without the two specific confirmations filed by the assessee, in the light of the BCCI resolution under which the payment is made and in the light of the payment not being under any legal obligation, the conditions under section 11(1)(d) are satisfied. We, therefore, uphold the plea of the assessee. The Assessing Officer is accordingly directed to delete this addition of ₹ 1,58,00,000. 16. Ground no. 4 is thus allowed. 17. In ground no. 5, the assessee has raised the following grievance: The learned CIT(A) has erred in law and on facts in not granting deduction of 15% of income being ₹ 32,38,724/- as computed after making the additions. 18. As regards this grievance, all that learned counsel prays is that a direction may be given to compute the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed, the entire expenditure incurred for acquisition of capital assets was treated as application of income for charitable purposes under Section 11(1)(a) of the Act. The view taken by the Assessing Officer in disallowing the depreciation which was claimed under Section 32 of the Act was that once the capital expenditure is treated as application of income for charitable purposes, the assessees had virtually enjoyed a 100 per cent write off of the cost of assets and, therefore, the grant of depreciation would amount to giving double benefit to the assessee. Though it appears that in most of these cases, the CIT (Appeals) had affirmed the view, but the ITAT reversed the same and the High Courts have accepted the decision of the ITAT thereby dismissing the appeals of the Income Tax Department. From the judgments of the High Courts, it can be discerned that the High Courts have primarily followed the judgment of the Bombay High Court in 'CIT v. Institute of Banking Personnel Selection (IBPS)'[2003] 131 Taxman 386. In the said judgment, the contention of the Department predicated on double benefit was turned down in the following manner: 3. As sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was held that income of a Charitable Trust derived from building, plant and machinery and furniture was liable to be computed in normal commercial manner although the Trust may not be carrying on any business and the assets in respect whereof depreciation is claimed may not be business assets. In all such cases, section 32 of the Income-tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust. In view of the aforesatated judgment of the Bombay High Court, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the Department. 4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Income-tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the Trust. It derived its income from depreciable assets. The assessee took into account d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision, and decline to interfere in the matter. 25. Ground nos. (i) to (iv) are thus dismissed. 26. In ground no. (v) the Assessing Officer has raised the following grievance: Although the issue of T.V. Rights received from BCCI has been decided by the CIT(A) in favour of the Department and has been held as the income of the Assessee, however, the letter of the BCCI dated 21/01/2013, filed before its Assessing Officer, ACIT, Central Circle-32, Mumbai, clearly states that the said payment of TV Rights to the GCA and the various State cricket associations is part of the revenue sharing arrangement between BCCI and the State Cricket Associations on sale of media rights, was not considered which makes department stand even stronger. The relevant portion of the abovereferred letter is as under:- PAYMENT TO STATE ASSOCIATIONS During the year, BCCI has paid amounts to the state associations under the head T.V. Subventions to Associations . This represents payment of 70% of the revenue from sale of media rights to the state associations. (emphasis supplied) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed by the Assessee. Therefore, the above-referred letter should also be considered to decide the issue of TV Rights received from BCCI. 27. This issue was decided by the CIT(A) in favour of the Assessing Officer and this ground of appeal does not, therefore, call for any adjudication. As regards the argument raised therein, suffice to say, as we have said in so many words while dealing with the grievance of the assessee on this point, that mechanism of computing voluntary contribution is irrelevant and as long as the contribution is not under any legal obligation, it is required to be treated as voluntary contribution. This letter, even though it makes out a case for higher contribution, does not create a legal obligation. We, therefore, even on merits, reject the plea of the appellant Assessing Officer. 28. Ground no. v is thus dismissed as infructuous. 29. Ground nos vi and vii are general in nature and donot call for any adjudication. 30. In the result, the appeal of the Assessing Officer for the assessment year 2004-05 is dismissed. 31. To sum up, while the appeal of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Thermal Power Corp Ltd Vs CIT (229 ITR 383) and remit the matter to the file of the Assessing Officer for adjudication on merits. 40. Having heard the rival contentions and having perused the material on record, we see merits in the plea of the learned counsel. In the light of Hon ble Supreme Court s judgment in the case of NTPC (supra), we admit this ground of appeal, and remit the matter to the file of the Assessing Officer for adjudication on merits. 41. Ground no. 3 is thus allowed for statistical purposes. 42. In ground no. 4, the assessee has raised the following grievance: The learned CIT(A) has erred in law and on facts in holding that amount of ₹ 1,60,00,000 received as donation to corpus from BCCI is not exempt, since the provisions of section 11(1)(d) were not complied by the appellant. 43. An identical grievance also came up for our adjudication in the assessment year 2004-05 earlier in this consolidated order. We have upheld the plea of the assessee and observed as follows: 12. So far as this grievance of the assessee is concerned, the relevant material fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s whether the specific direction once issued is sufficient for the purpose of section 11(1)(d) or specific direction is required for each year individually . He then proceeded to answer this question by observing as follows: As per section 11(1)(d), a written specific direction is necessary to claim it as corpus donation. For a donation 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 speci fic 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. 47. As regards this grievance, all that learned counsel prays is that a direction may be given to compute the income as per provisions of section 11 of the Act, after giving deduction of 15%. Learned Departmental Representative does not oppose the prayer. We, therefore, direct the Assessing Officer accordingly. 48. Ground no. 5 is allowed in the terms indicated above. 49. The appeal of the assessee for the assessment year 2005-06 is thus partly allowed in the terms indicated above. 50. We now take up the appeal of the Assessing Officer for the assessment year 2005-06. 51. We find the grievances raised in this appeal are exactly the same as in the assessment year 2004-05. Learned representatives fairly agree that whatever we decide for the assessment year 2004-05 will apply mutatis mutandis here as well. 52. While dealing with these grievances for the assessment year 2004-05, and for the detailed reasons set out earlier in this order, we have rejected the appeal of the assessee. The grievances of the appellant being verbatim the same, we see no reasons to take any other view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut this fact to the CIT(A) in the written submissions and prayed for adjudication on merits , even though, as it appears to us, there was no specific ground of appeal on this issue. There was, however, no adjudication on this aspect. Learned counsel now urges us to admit the specific ground of appeal, as above, in terms of Hon ble Supreme Court s judgment in the case of National Thermal Power Corp Ltd Vs CIT (229 ITR 383) and remit the matter to the file of the Assessing Officer for adjudication on merits. 63. Having heard the rival contentions and having perused the material on record, we see merits in the plea of the learned counsel. In the light of Hon ble Supreme Court s judgment in the case of NTPC (supra), we admit this ground of appeal, and remit the matter to the file of the Assessing Officer for adjudication on merits. 64. Ground no. 3 is thus allowed for statistical purposes. 65. In ground no. 4, the assessee has raised the following grievance: The learned CIT(A) has erred in law and on facts in holding that amount of ₹ 3,45,00,000 received as donation to corpus from BCCI is not exempt, since the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved, assessee carried the matter in appeal before the CIT(A) but without any success. It was pointed out to the CIT(A) that the BCCI has passed a specific resolution that the amount computed as TV subsidy is given to the Member associations as corpus donation. The CIT(A), identified the core issue for adjudication as follows: the fundamental question which now arises is whether the specific direction once issued is sufficient for the purpose of section 11(1)(d) or specific direction is required for each year individually . He then proceeded to answer this question by observing as follows: As per section 11(1)(d), a written specific direction is necessary to claim it as corpus donation. For a donation 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 claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of ₹ 1,97,51,723. The assessee gets the relief accordingly. 68. Ground no. 4 is thus allowed. 69. In ground no. 5, the assessee has raised the following grievance: The learned CIT(A) has erred in law and on facts in not granting deduction of 15% of income being ₹ 1,37,66,116 as computed after making the additions. 70. As regards this grievance, all that learned counsel prays is that a direction may be given to compute the income as per provisions of section 11 of the Act, after giving deduction of 15%. Learned Departmental Representative does not oppose the prayer. We, therefore, direct the Assessing Officer accordingly. 71. Ground no. 5 is allowed in the terms indicated above. 72. The appeal of the assessee for the assessment year 2006-07 is thus partly allowed in the terms indicated above. 73. We now take up the appeal of the Assessing Officer for the assessment year 2006-07. 74. We find the grievances raised in this appeal are exactly the same as in the assessment year 2004-05. Learned representatives fairly agree that whatever we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per return of income at Rs.NIL instead of loss Rs.( -)2,49,17,267/- as stated in first para of the original Assessment Order. 85. All that the learned counsel seeks, as a relief on this ground, is that the Assessing Officer be directed to computed the income after giving appeal effect for this and earlier year. This grievance is too general to call for any adjudication and what it seeks as relief is something to which the assessee is lawfully entitled anyway. Grievance is thus dismissed as infructuous. 86. Ground no. 3 is dismissed as infructuous. 87. In ground no. 4, the assessee appellant has raised the following grievance: The learned A.O. and Hon ble CIT(A) has erred in law and on facts in not granting deduction of capital expenditure of ₹ 13,63,23,403 as claimed in the statement of income attached to the return of income. 88. Learned counsel for the assessee points out that this claim was made by way of a note on the statement of income and the matter but the Assessing Officer did not deal with the same. In appeal, the assessee pointed out this fact to the CIT(A) in the written submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , though termed as TV Rights, is not taxable. The Assessing Officer noted this contention as also the fact that under section 11(1)(d), what cannot be included as total income of the assessee is income by way of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or the institution . The Assessi ng Officer was of the view that what has been paid to the assessee is a share out of earnings by the BCCI, out of proceeds of sale of TV rights, and is, as such, taxable as income of the assessee. It was observed that it cannot be said to be voluntary contribution by the BCCI. The Assessing Officer also shows that as accepted by the auditor of the company the amount is relatable to the TV rights and it cannot, therefore, be treated as voluntary contribution in the nature of corpus donations. He also noted that as registration of the assessee, under section 12AA, stands cancelled, the assessee is anyway not eligible for the benefit of Section 11(1)(d). On the basis of this line of reasoning, the Assessing Officer treated the said amount of ₹ 1,58,00,000 as income of the assessee. Aggrieved, assessee carried the matter in appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income. We are unable to find any legal support for learned CIT(A) s stand that each donation must be accompanied by a separate written document. The contribution has to be voluntary and it has to be with specific direction that it will form corpus of the trust . These conditions are clearly satisfied. Any payment which the assessee is not under an obligation to make, whatever be the mode of its computation, is a voluntary payment, and, any payment which is with a specific direction that it for corpus fund is a corpus donation. In our considered view, even without the two specific confirmations filed by the assessee, in the light of the BCCI resolution under which the payment is made and in the light of the payment not being under any legal obligation, the conditions under section 11(1)(d) are satisfied. We, therefore, uphold the plea of the assessee. The Assessing Officer is accordingly directed to delete this addition of ₹ 1,58,00,000. 93. Consistent with our stand on the same issue for the earlier assessment year, we uphold the plea of the assessee and direct the Assessing Officer to delete the impugned addition of ₹ 17,58,00,000. The assessee gets ..... X X X X Extracts X X X X X X X X Extracts X X X X
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