TMI Blog2019 (7) TMI 1825X X X X Extracts X X X X X X X X Extracts X X X X ..... these issues. We, therefore, remit the matter to the file of the CITI(A) for fresh adjudication in the light of our observations in the case of Gujarat Cricket Association (supra) and the findings on the said aspect of the matter. Withdrawing exemption u/s 11(1)(d) as sum received in the form of Corpus donation - TV subsidies receipts - HELD THAT:- There is no dispute that the TV subsidy in question is sent under this resolution. On these facts, and in the light of the provisions of 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in the event of this event being organized by the appellant cricket association on its own, rather than under arrangements and planning by the BCCI, that this could be put against the assessee as an adventure in the nature of trade, commerce or business. Thus we allow the appeal of the assessee. - ITA. No. 1435/AHD/2017 - - - Dated:- 10-7-2019 - Shri Mahavir Prasad, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Appellant : Shri Bandish Soparkar, A.R. For the Respondent : Shri O.P. Sharma, CIT/D.R. Per Mahavir Prasad, Judicial Member 1. This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-9, Ahmedabad dated 19.04.2017 pertaining to A.Y. 2013-14 and have taken following grounds of appeal: 1. The learned Commissioner of Income Tax (Appeals) - 9, Ahmedabad [ the CIT(A) ] erred in fact and in law in confirming the action of the Deputy Commissioner of Income Tax (Exemptions), Circle - 2, Ahmedabad ( the AO ), in holding that the activities carried out by the Appellant are not in the nature of charitable activities and thereby disallowing exemption u/s. 11 of the Income Tax Act, 1961 ( the Act ). 2.Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 881/Baroda dated 04.11,1996 with Asstt. Charity Commissioner, Baroda. The assessee trust is registered u/s.!2AA of the I.T. Act vide order EXEMPTION/I 10-23-13/2000-01 dated 25-06-2001. 4. The Baroda Cricket Association (BCA) is engaged in promoting, developing and encouraging the game of cricket within its region and do all other incidental objects associated with the main objects of the associations through power vested to the managing committee duly elected by the members of the association. It was seen that BCA earns income out of sale of tickets, sale of space, rent of ground etc. out of the cricket matches conducted at the grounds of BCA at Baroda. Thus, it was evident that BCA is involved in carrying on the activity of advancement of others objects of general public utility and such activity is in the nature of trade, commerce or business. Further, as per CBDT Circular No. 395 dated 24/09/1984, it was held that promotion sports and games is advancement of objects of general public utility'. 4.1 In this regard, vide office letter dated 26/11/2015 07.03.2016, the assessee was requested to show-cause why activities of the assessee are not covered by the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. (m) To collect all the cricket statistics of different players and, clubs so as to give guidance in the selection of players for important matches. (n)To do any other acts in furtherance of the above objects not inconsistent there with. (ii) From the above, your kind office will appreciate the Assessee has been focusing on development and promotion of cricket and identifying new talents who can represent cricket at the national and international levels. There has been a constant endeavor to encourage the upcoming and budding cricketers and provide them opportunity to participate in competitive form of cricket by adding the new tournaments. With a view to sharpen the skills of players specialized coaches are invited to impart training across all age groups. In order to ensure the fitness and. skills of the players, teams of juniors and seniors are sent to outstation ' tournaments. We have witnessed many players in past who are from Vadodara and have represented cricket at International Level, This has Happened only due to the contribution of BCA. The BCA also facilitates the present and past cricketers who represent Baroda in Ranji trophy giving them the cash reward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coaches, Mr. T A She/car (Fast Bowler Coach) and Mr. R. Shridhar (Fielding Coach), were invited to impart training across all the age group. d.) During the year, the senior team participated in. Shaft Darashah (KSCA) Tournament and Buchi Babu Tournaments. L/-25 participated in. J.P.AAray Memorial Cricket Tournament at Chandigarh. Tour of LI-19 team was organized for playing practice matches at Hyderabad and Bangalore. U-16 Three Day Invitation Tournament was also organized, where four states teams i.e. Ha.ma.chal Pradesh, Gujarat, Madhya Pradesh and Maharashtra participated along with 2 BCA teams'. e.) In order to encourage the upcoming local and distinct cricketers and to provide them with opportunity to participate in competitive form oj cricket, enhanced number of matches mere organized, to provide good, platform. One of such initiative being that during the year BCA has added new tournament in the form of Challenger Trophy for sessions and U-19 age group. This has tremendously improved the confidence levels of all the players. f). Various initiative and orientation programs were undertaken by Head Coach, seniors from BCC1 and other professions from this field to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the first and second proviso to section 2(15). Without admitting we submit that no material is brought on record, by your kind office to state that the activities carried out by the Assessee are in the nature of business activities. In view of the same we submit that no adverse view may please he taken. However, we submit that the proviso is not applicable and as of now on this issue direct, decisions are available. We rely on: a. In the case of Delhi District Cricket Association v. DIT (E) IT A No. 3095/Del/201J2 decision dated 13-1-2015 the registration u/s. 12A was cancelled on the ground that the income of the Trust included. income from ground booking charges, health club charges, income from corporate boxes, lawn booking income, league entry fees, playing card, receipts, sponsorship money, sale of tickets, advertisement, souvenirs, IPL matches etc. It was held that the core activity of the. assessee was undisputedly charitable in nature. Hence it. is not the case of revenue that the assessee was carrying on trade, commerce or business''' under the garb of the activity being general public utility' . As regard the nature of various receipts it was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticket from ODI Matches. It is stated by the assessee,s representative that I PL subsidy have been received by them from BCCI. 4.3.2 Whenever a foreign team visits India, the international matches such as Test arid ODI are allotted by BCCI to the state cricket associations by a rotation policy. The matches are conducted and managed by the respective state associations. It is not possible for BCCI to conduct all these matches with its own limited personnel. It is dependent on the state associations, their office bearers, their employees and their network and resources at the local center to conduct the matches. The association manages the entire match right from provision of security to players, spectators in co-ordination \vith respective state police personnel taking other security measures like fire prevention etc. The association incurs a good chunk of expenditure in conducting an international Test/ODI/T20/IPL/CL T20 matches. In ordcr io have fair and equitable sharing of the revenues, arrangements have evolved over time, about the respective responsibilities, rights, share of revenue etc. of BCCI and the State associations. The state association is entitled to the ticket re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; acceptable. The assessee has relied on various decisions to explain its stand that, the said activity of conducting cricket matches is not a business activity. The same have been considered and the facts of the instant case are quite different from the decisions cited by the assessee and are hence distinguishable. 4.5 In view of the above, the issue on hand is to decide whether the activities carried out by the assessee are charitable in nature. Hence, it is pertinent to examine the issue in the light of the provisions of Sec.2 (15) r.w. proviso (1) (2) of the l.T Act. Charitable objects defined in the section 2(15) of the Act. 4,6.1 Section 2(15) of the Act defines 'charitable purposes'. First proviso, thereto with effect from assessment year 2009-10 laid down that, if any trust etc. (a) is engaged in pursuing objects of general public utility for other objects') and (b) carries on any activity in the nature of trade, business or commerce or provides any services in relation to the trade, commerce services or business and (c) aggregate receipts there from exceed ₹ 25 lacs, it shall be considered that advancement of other objects is not a charitable purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, during the year under consideration, the provisions of the second proviso to Sec.2 (15) of the I.T Act arc also satisfied. Thus, the assessee is clearly covered by the provisions of Sec 2(15) read with the proviso 1 2 to the said section. 4.7.1 In this regard reliance is placed on the decision of the High Court of Calcutta in the case of Cricket Association of Bengal V/s CIT(37 1TR 277) wherein it was held that a club formed for the development of promotion of sports or games or entertainment is not a charitable institution. The head note of the decision is as under:- Section 1 I of the Income-tax Act, 1961 (Corresponding to section 4(3)(i) of the Indian Income-tax Act, 1922) - Charitable or religious trust - Exemption of income from property held under - Assessment years 1950-51 to 1952-53 - Whether while promotion of games as a part of education of those who participate in them may be a charitable purpose, promotion of practice of game in general either for entertainment of public or for advancement of game itself could not be held to be charitable - Held, yes - Assessee was an association whose mam object, was to promote game of cricket - Another object: authorized a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lebrity matches, etc. These are all commercial activities. Therefore, it is crystal clear that even though cricket matches are conducted by the assessee, they are not conducted in accordance with the objects as stated in its Memorandum of Association and those activities are not for 'advancement of any other object of general public utility1, as explained in the proviso to section 2(15). [Para 53 ....... -1.7.3 Further reliance 4.3.5 is placed on the decision of the Hon'ble ITAT, Panaji Bench, in the case of Entertainment Society of Goa [34 taxrnan.com 214] wherein it was held that proviso to section 2(15) would be attracted if activity carried on by institutions are similar to trade, commerce or business; for this purpose use or application or retention of consideration received is not relevant at all. The proviso clearly states that the advancement of any other object of general public utility shall not be charitable purpose and subsequent to that it gives certain conditions. If the institution fulfils those conditions as are stipulated in the proviso, the institution will not be regarded to have been engaged for the advancement of any other object of general p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is in the nature of business, trade, commerce and not education as claimed by the assessee. Therefore, the assessee is covered by the provisions of Sec 2(15) r.w. proviso 1 2 of the I.T. Act. 5. During the year, ₹ 27.09,948/- was received by BCA from BCC! under the head corpus fund in the name of infrastructure subsidy. The assessee has treated the said receipt as 'corpus donation' and claimed it as exempt u/s 1 l(l)fd) of the Act. 5.1 In this regard, showcause dated 26.11.2015, the assessee was requested to showcause as to why said donation should not be treated as its income for the period under consideration. 5.2 In response to the above showcause letter dated 26.11,2015, a letter-dated 06,02.2016 received from the assessee is kept on record. The relevant portion of the above reply is reproduced as under. Vide point no. (6) of the notice dated 26.! 1.2015, your kind office has referred subsidy of ₹ 27,09,948/- received from BCCJ. Your kind office has stated that we have failed to prove that this donation is towards corpus. Thus, we have been show caused as to why the donation should not he treated as income for the period under consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mention that the assessee could not produce any particular direction from the BCCJ in the form of documentary evidence either for the year under consideration or in any of the earlier assessments. In this case, that specific direction is clearly missing. Therefore, the-said receipt of subsidy has to be income of the assessee Trust and it cannot: be exempt u/s. 11(l)(d) of the I.T. Act. Thus, the infrastructure subsidy received by the assessee from BCCI of ₹ 27,09,948/'- in the form of is treated as income of the assessee as no evidence was furnished to show that the voluntary contribution was made with a specific direction that they shall form part of the corpus of the trust so as to qualify for the exemption u/s l](l)(d) of the Act. On the contrary, if is evident from the letter dated 25.03.2013 of the BCCI that the said infrastructure subsidy is only on account of transfer of umpiring assessment program Equipments to the Affiliated Unit's inventory under the internal transfer of capital goods between BCCI and BCA. Assuming, but not accepting that the amount of ₹ 27,09,948/- received as 'infrastructure subsidy is 'corpus donation' as claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income earned from corpus funds, surplus funds as non charitable income. The dispute before us also involves the treatment of ₹ 7,21,22,353 received on account of corpus donation described as TV subsidy. 134. In view of our findings on the core issue in these appeals before us, as set out earlier in this order at pages 2 to 55 and in view of our decision above in the case of Gujarat Cricket Association on the issue of TV subsidy- as set out at pages 56 to 58 earlier in this order, the assessee must succeed on these points. Learned representatives fairly agree that whatever we decide in the case of Gujarat Cricket Association, the same will equally apply in this case as well. We, therefore, uphold the plea of the assessee and allow these grounds of appeal to that extent. 135. Ground nos. 4 to 9 are allowed in the terms indicated above. 136. In ground no 9, the assessee has raised an alternative plea to that effect that promoting cricket is covered by educational activities, and, for this reason, the proviso to Section 2 (15) cannot be invoked. 137. As we have allowed the main plea of the assessee, as set out in ground nos. 4 to 9, this plea is rendered academic and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e file of the CIT(A) for fresh adjudication, and the eventual decision on the same will also have the impact on these issues. We, therefore, remit the matter to the file of the CITI(A) for fresh adjudication in the light of our observations in the case of Gujarat Cricket Association (supra) and the findings on the said aspect of the matter. 143. Ground nos. 1,4,5 and 7 are allowed in the terms indicated above. 144. In ground no. 2, the assessee has raised the following grievance: 2. The C.I.T. (Appeals) erred in withdrawing exemption u/s 11(1)(d) of the Income Tax Act, 1961 of ₹ 4 Cr. received in the form of Corpus donation. 145. 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 reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide in the said case will equally apply in the present case as well. 150. Vide our decision earlier in this order, we have upheld similar claim of Gujarat Cricket Association and observed, inter alia, as follows: 51. On a perusal of the BCCI Infrastructure Subsidy rules, we find that what is given to the assessee as infrastructure subsidy is reimbursement of 50% of costs in respect of certain expenditure on infrastructure which is inherently in the capital field. The mere fact that it is not a reimbursement to an outside party, such as a district cricket association, does not really matter. As long as the subsidy is relatable to a capital asset created by the assessee on his own or by an eligible district cricket association, as the present subsidy undisputedly is, it is outside the ambit of revenue receipt and taxable income. The very foundation of the stand of the Assessing Officer is thus devoid of legally sustainable merits. As such, there can hardly be an occasion, in principle, to hold such a subsidy as a revenue receipt or taxable income. There is not even a whisper of a discussion by the Assessing Officer to the effect that infrastructure subsidy is revenue in nature. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income Tax 1961 and therefore it does not attract proviso to section 2(15) of the Act accordingly provisions of section 13(8) of the Income Tax Act, 1961 are not applicable. 157. As we have allowed the main plea of the assessee, as set out in ground nos. 4 to 9, this plea is rendered academic and does not call for our adjudication as on now. 158. Ground no. 8 is dismissed as infructuous. 159. In the result, ITA No 2957/Ahd/14, i.e. assessee s appeal for the assessment year 2010-11 is partly allowed in the terms indicated above. ITA No. 337/Ahd/ 15 160. By way of this appeal, the assessee has challenged correctness of the order dated 10th November 2014 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2011-12. 161. In ground no. 1, the grievance raised by the assessee was as follows: The ld. CIT(A) erred in upholding addition of ₹ 1,77,788/- of interest in Income Tax Refund which was already shown as income on 31.03.2013 i.e. in Financial Year 2012-13, as necessary intimation has been received in F.Y. 2012-2013. 162. As no specific arguments have been addressed in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the assessee organizing a one day international match, on commercial scale, for fund raising. That issue is dealt with in a separate ground of appeal. In case, it is held that the said one day international match is in the nature of commercial adventure, it will have the impact on section 2(15) being invoked. That ground is separately being remitted to the file of the CIT(A) for fresh adjudication, and the eventual decision on the same will also have the impact on these issues. We, therefore, remit the matter to the file of the CITI(A) for fresh adjudication in the light of our observations in the case of Gujarat Cricket Association (supra) and the findings on the said aspect of the matter. 166. Ground nos. 2,3,4,7,8 and 9 are allowed in the terms indicated above. 167. In ground no. 5, the assessee has raised the following grievance: The ld. CIT(A) erred in upholding view of ld. AO of withdrawing exemption u/s 11(1)(d) of the Income Tax Act, 1961 of ₹ 10.53 Cr. received in the form of Corpus donation. 168. The above grievance, which pertains to the TV subsidy received as corpus donation, is also a covered issue now in assessee s own cases for the preceding asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 claimed as corpus donation 13. The assessee is not satisfied and is in further appeal before us. 14. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated above. 172. In ground no. 6, the assessee has raised the following grievance: The ld. CIT(A) erred in upholding view of ld. AO of withdrawing exemption u/s 11(1)(d) of the Income Tax Act, 1961 of ₹ 1.92 Cr. received in the form of Corpus donation. 173. This amount of ₹ 1.92 crores, as evident from the orders of the authorities below, is in respect of infrastructure subsidy. Learned representatives fairly agree that this issue is also covered by our decision in the case of Gujarat Cricket Association, and whatever we decide in the said case will equally apply in the present case as well. 174. Vide our decision earlier in this order, we have upheld similar claim of Gujarat Cricket Association and observed, inter alia, as follows: 51. On a perusal of the BCCI Infrastructure Subsidy rules, we find that what is given to the assessee as infrastructure subsidy is reimbursement of 50% of costs in respect of certain expenditure on infrastructure which is inherently in the capital field. The mere fact that it is not a reimbursement to an outside party, such as a district cricket association, does not really matter. As long as the subsidy is relatable to a capit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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