M/S JHARKHAND STATE CRICKET ASSOCIATION, JAMSHEDPUR V. DCIT EXEMPTION, RANCHI

ITA 157/RAN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1731 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDRAJEET SINGH
• Keywords: Reopening of assessment; Business income; Revision of order; Charitable institution; Opportunity of being heard; Rule of consistency; Tangible material; Difference of opinion; Capital receipt; Benefit of exemption; Cancellation of registration; Reason to believe; Change of opinion; Reassessment proceedings; Capital expenditure; Set aside
• Section: 143(3); 12A; 12AA; 250; 147; 148; 263; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCHES, RANCHI (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER) ITA NO. 157/RAN/2017 ASSESSMENT YEAR: 2010-11 ITA NO. 158/RAN/2017 ASSESSMENT YEAR: 2012-13 ITA NO. 159/RAN/2017 ASSESSMENT YEAR: 2013-14 ITA NO. 108/RAN/2018 ASSESSMENT YEAR: 2014-15 M/S. JHARKHAND STATE CRICKET ASSOCIATION......................................APPELLANT KEENAN STADIUM, SAKCHI JAMSHEDPUR-831011 [PAN : AAAAB 0279 M] VS. DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS), RANCHI...... RESPONDENT APPEARANCES BY: SHRI C.S. AGRAWAL, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE . SHRI INDRAJEET SINGH, CIT, D/R, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : FEBRUARY 21 ST , 2019 DATE OF PRONOUNCING THE ORDER : MARCH 15 TH , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- ALL THESE APPEALS ARE FILED BY THE ASSESSEE AND ARE DIRECTED AGAINST SEPARATE BUT IDENTICAL ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - JAMSHEDPUR, (LD. CIT(A)) PASSED U/S. 250 OF THE INCOME TAX ACT, 1961, (THE ACT), FOR THE ASSESSMENT YEARS 2010-11, 2012-13, 2013-14 & 2014-15. 2. AS THE ISSUES ARISING IN ALL THESE APPEALS ARE COMMON, FOR THE SAKE OF CONVENIENCE THEY ARE HEARD TOGETHER AND BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. 3. THE ASSESSEE, M/S. JHARKHAND STATE CRICKET ASSOCIATION, IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, IN THE STATE OF JHARKHAND VIDE REGISTRATION NUMBER-107 OF 2003-04. THE ASSESSEE IS ALSO REGISTERED U/S 12A/12AA OF THE ACT, BY 2 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 OTHERWISE. (C) TO FOSTER A SPIRIT OF SPORTSMANSHIP AND CO-OPERATION AMONG THE MEMBERS, OFFICIALS AND PLAYERS. (D) TO ADVANCE AND SAFEGUARD THE INTEREST OF THE GAME OF CRICKET. (E) TO HOLD AND MAINTAIN THE LAWS OF CRICKET AND THE RULES AND REGULATIONS OF THE BOARD OF CONTROL FOR CRICKET IN INDIA. (F) TO PUBLISH CRICKET JOURNALS, MAGAZINES AND LITERATURE ON CRICKET FOR THE BENEFIT OF THE AFFILIATED UNITS AND THE CRICKET LOVING PUBLIC OF THE STATE. (G) TO SPREAD THE GAME OF CRICKET THROUGHOUT THE STATE BY ORGANIZING COACHING SCHEMES, TOURNAMENTS AND EXHIBITION MATCHES. 3 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION (H) TO PROMOTE, ENCOURAGE, ORGANIZE AND DEVELOP THE GAME OF CRICKET IN SCHOOLS AND COLLEGES IN THE STATE. (I) TO MAINTAIN A PANEL OF APPROVED UMPIRES AND TO DO SUCH ACTS AS MAY BE DEEMED NECESSARY FOR THE PURPOSE. (J) TO ACQUIRE, BY LAWFUL MEANS, MOVABLE AND IMMOVABLE PROPERTIES ON BEHALF OF THE ASSOCIATION AND TO UTILIZE THE INCOME, FUNDS AND PROPERTIES OF THE ASSOCIATION FOR THE PROMOTION AND FULFILLMENT OF ALL OR ANY OF THE OBJECTS OF THE ASSOCIATION. (K) TO ENCOURAGE THE FORMATION OF DISTRICT ASSOCIATIONS FOR THE CONTROL OF THE GAME OF CRICKET IN SUCH TERRITORY AS MAY BE ASSIGNED TO THEM BY THE ASSOCIATION AND TO ASSIST AND CO-ORDINATE THEIR ACTIVITIES. (L) TO ADD, ALTER, MAINTAIN AND ENFORCE OF RULES AND REGULATIONS FOR THE CONTROL OF THE GAME OF CRICKET AND GOVERNANCE OF THE SAME IN THE STATE OF JHARKHAND AND TO MAINTAIN DISCIPLINE AMONG ITS MEMBERS, PLAYERS AND OFFICIALS. (M) TO DO ALL SUCH ACTS AND THINGS AS SHALL BE DEEMED BY THE ASSOCIATION TO BE LAWFUL, INCIDENTAL OR CONDUCIVE TO THE CARRYING OUT OF THE OBJECTS OF THE ASSOCIATION. 3. FROM THE PERUSAL OF THE AFORESAID OBJECTS OF THE APPELLANT SOCIETY, AS APPEARING IN ITS MEMORANDUM OF ASSOCIATION, IT IS EVIDENT THAT THE OBJECTS OF THE APPELLANT SOCIETY SEEKS TO PROMOTE, ENCOURAGE, ORGANIZE AND CONTROL THE GAME OF CRICKET, TO ARRANGE, ORGANIZE AND REGULATE REPRESENTATIVE MATCHES IN THE STATE, TO FOSTER A SPIRIT OF SPORTSMANSHIP AND CO-OPERATION AMONG THE MEMBERS, OFFICIALS AND PLAYERS, TO ADVANCE AND SAFEGUARD THE INTEREST OF THE GAME OF CRICKET ETC. IT IS ALSO EMPOWERED TO IMPLEMENT THE LAWS OF THE GAME OF CRICKET AND RULES AND REGULATIONS FORMULATED BY THE BOARD OF CONTROL FOR CRICKET IN INDIA, TO PUBLISH CRICKET JOURNALS, MAGAZINES AND LITERATURE ON CRICKET, TO SPREAD THE GAME OF CRICKET THROUGHOUT THE STATE, TO PROMOTE, ENCOURAGE, ORGANIZE AND DEVELOP THE GAME OF CRICKET IN SCHOOLS AND COLLEGES 4 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 OBJECT OF GENERAL PUBLIC UTILITY. 2. THE QUESTION WHETHER PROMOTION OF SPORTS AND GAMES CAN BE CONSIDERED AS BEING A CHARITABLE PURPOSE HAS BEEN EXAMINED. THE BOARD ARE ADVISED THAT THE ADVANCEMENT OF ANY OBJECT BENEFICIAL TO THE PUBLIC OR SECTION OF THE PUBLIC AS DISTINGUISHED FROM AN INDIVIDUAL OR GROUP OF INDIVIDUALS WOULD BE AN OBJECT OF GENERAL PUBLIC UTILITY. IN VIEW THEREOF, PROMOTION OF SPORTS AND GAMES IS CONSIDERED TO BE A CHARITABLE PURPOSE WITHIN THE MEANING OF SECTION 2(15).THEREFORE, AN ASSOCIATION OR INSTITUTION ENGAGED IN THE PROMOTION OF SPORTS AND GAMES CAN CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT, EVEN IF IT IS NOT APPROVED UNDER SECTION 10(23) RELATING TO EXEMPTION FROM TAX OF SPORTS ASSOCIATIONS AND INSTITUTIONS HAVING THEIR OBJECTS AS THE PROMOTION, CONTROL, REGULATION AND, ENCOURAGEMENT OF SPECIFIED SPORTS AND GAMES. 5. AS THE OBJECTS OF THE APPELLANT ARE CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME TAX ACT, 1961 AND FALLS UNDER THE HEAD ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, THEREFORE, LEARNED COMMISSIONER OF 5 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION INCOME TAX, JAMSHEDPUR GRANTED REGISTRATION U/S 12A OF THE ACT VIDE REGISTRATION NUMBER VIII-69/03-04/4879-82, DATED 31.03.2004. IT IS SUBMITTED THAT THE REGISTRATION GRANTED TO THE APPELLANT IS IN FORCE TILL DATE, AND SAME HAS NOT BEEN DISPUTED. 6. IT IS SUBMITTED THAT SINCE THE GRANT OF THE REGISTRATION U/S 12A OF THE ACT, APPELLANT WAS FILING ITS RETURN OF INCOME, AND TILL AY 2012-13, EXEMPTION CLAIMED U/S 11/12 OF THE ACT WAS DULY ALLOWED TO THE APPELLANT. HOWEVER, FOR THE FIRST TIME, IN THE ASSESSMENT YEAR 2012-13, LEARNED AO IN THE ORDER OF ASSESSMENT ARBITRARILY TOOK A VIEW THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF CRICKET AND DISALLOWED THE EXEMPTION CLAIMED U/S 11/12 OF THE ACT. SIMILARLY FOR THE AY 2013-14 SAME VIEW WAS TAKEN. FURTHER, FOR THE AY 2010-11, PROCEEDINGS WERE INITIATED U/S 147 OF THE ACT, AND EXEMPTION CLAIMED U/S 147 OF THE ACT WAS DISALLOWED. IT IS RELEVANT TO STATE HERE THAT SUBSEQUENT TO THE PASSING OFF THE ORDER FOR THE AY 2010-11 AND 2013-14, ASSESSMENT FOR THE AY 2014-15 WAS PASSED ON 05.12.2016, WHEREIN AGAIN REVENUE HAS ACCEPTED THAT APPELLANTS ACTIVITIES ARE CHARITABLE IN NATURE AND EXEMPTION CLAIMED U/S 11/12 OF THE ACT WAS ALLOWED (SEE PAGE 374-375 OF PB). 8 IT IS SUBMITTED THAT IN ALL THE THREE ASSESSMENT YEARS I.E. AY 2010-11, 2012-13 AND 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. 6 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 THE CONSISTENCY, DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT IS WHOLLY UNSUSTAINABLE. THE APPELLANT IN SUPPORT, SEEKS TO RELY UPON THE JUDGMENT OF THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. EXCEL INDUSTRIES LTD [2013] 358 ITR 295 (SC) HAS HELD THATREVENUE CANNOT BE ALLOWED TO FLIP-FLOP ON THE ISSUE AND HAVING ACCEPTED THE ORDER OF THE TRIBUNAL IN PRECEDING YEARS, REVENUE CANNOT BE ALLOWED TO TAKE A CONTRARY VIEW IN SUBSEQUENT ASSESSMENT YEARS. FURTHER, CONSTITUTION BENCH OF THE APEX COURT IN THE CASE OF CIT VS. J.K. CHARITABLE TRUST REPORTED IN 308 ITR 161(SC), WHEREIN IT HAS BEEN HELD THAT, IF THE FACTS FOR THE YEAR UNDER ASSESSMENT ARE IDENTICAL TO THE FACTS OF THE IMMEDIATELY PRECEDING YEAR THEN IN SUCH A SITUATION, THE REVENUE WOULD NOT BE PERMITTED TO DEVIATE FROM THE POSITION IT HAD ACCEPTED IN THE PRECEDING ASSESSMENT YEAR. IT HAS BEEN CONSISTENTLY DECIDED TIME AND AGAIN BY THE HONBLE APEX COURT AND THE HONBLE HIGH COURTS THAT CLAIMS ONCE ALLOWED IN ANY ASSESSMENT YEAR MUST BE ALLOWED IN SUCCEEDING ASSESSMENT YEARS BY FOLLOWING RULES OF CONSISTENCY UNLESS AND UNTIL THERE IS CHANGE IN THE POSITION OF LAW OR CHANGE IN FACTS OF THE CASE. THERE IS NEITHER CHANGE IN FACTS OF THE CASE NOR ANY CHANGE IN THE POSITION OF LAW. IT IS SUBMITTED THAT THOUGH THE DOCTRINE OF RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS BUT WHERE THE REVENUE HAS TAKEN A PARTICULAR STAND ON AN ISSUE ON SIMILAR/IDENTICAL FACTS IN THE CASE OF THE ASSESSEE, FOR THE SAKE OF CONSISTENCY THE SAME VIEW SHOULD CONTINUE TO PREVAIL IN THE CASE OF ASSESSEE UNLESS THERE IS MATERIAL DIFFERENCE IN THE FACTS. THE APPELLANT SEEKS TO PLACE FURTHER RELIANCE ON THE FOLLOWING CASES, WHERE IT HAS BEEN HELD THAT THE REVENUE SHOULD FOLLOW THE RULE OF CONSISTENCY: 7 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION I. STATE OF ANDHRA PRADESH V. A.P. JAISWAL (2001) 1SCC 748 II. CIT V. BERGER PAINTS 266 ITR 99 (SC) III. RADHA SAOMI SATSANG V CIT 193 ITR 321 (SC) IV. CIT V. NEO POLY PACK 245 ITR 492 (DEL) V. COMMISSIONER OF WEALTH TAX VS. R.K.K.R INTERNATIONAL 145 TAXMAN 322(DELHI) VI. CIT V. SHRI RAM MEMORIAL FOUNDATION 158 ITR 3 (DEL) VII. DHANSIRAM AGGARWALLA V. CIT 217 ITR 4 (GAU) VIII. CIT V. GODAVARI CORPORATION LTD. 156 ITR 835 (MP) IX. UOI V KUOMIDINI NARAYAN DALAL AND ANOTHER 249 ITR 219 (SC) X. UOI V SATISH PANNA LAL SHAH 249 ITR 221 (SC) 10. IT IS SUBMITTED THAT ADMITTEDLY AND UNDISPUTEDLY, 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: 8 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 LESS IN THE PREVIOUS YEAR; 10.1 IT IS SUBMITTED THAT AFORESAID SECTION PROVIDES THAT CHARITABLE PURPOSE INCLUDES 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. IT IS THEREFORE SUBMITTED THAT ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL BE CHARITABLE UNLESS 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, AND IF IT IS NOT IN THE NATURE OF 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, PROVISO TO SECTION 2(15) OF THE ACT WOULD BE INAPPLICABLE. 11. THAT EVEN AFTER THE SUBSTITUTION OF THE SUBSECTION 2(15) BY THE FINANCE ACT, 2008, IF THE ACTIVITY OF THE TRUST DOES NOT 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, THEN EVEN IN RESPECT OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, WILL BE CHARITABLE AND BENEFIT OF SECTION 11 AND SECTION 12 CANNOT BE DENIED. FOR THE APPLICABILITY OF PROVISO TO SECTION 2(15), THE ACTIVITIES OF THE SOCIETY SHOULD BE CARRIED OUT ON 9 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION COMMERCIAL LINES WITH INTENTION TO MAKE PROFIT. WHERE THE SOCIETY IS CARRYING OUT ITS ACTIVITIES ON NON-COMMERCIAL LINES WITH NO MOTIVE TO EARN PROFITS, FOR FULFILMENT OF ITS AIMS AND OBJECTIVES, WHICH ARE CHARITABLE IN NATURE, THE SAME WOULD NOT BE HIT BY PROVISO TO SECTION 2(15). THE AIMS AND OBJECTS OF THE ASSESSEE-TRUST ARE ADMITTEDLY CHARITABLE IN NATURE. 11.1 IT IS SUBMITTED THAT THE TERM 'OBJECTS OF GENERAL PUBLIC UTILITY' HAD BEEN DEFINED, TO MEANT THAT WHERE THE OBJECTS OF AN INSTITUTION COVER THE PUBLIC AT LARGE OR A SECTION OF PUBLIC THE OBJECTS ARE TO BE HELD TO THE 'OBJECTS OF GENERAL PUBLIC UTILITY' AS MEANT IN SECTION 2(15) OF THE ACT. IN FACT, IN THE CASE OF CIT V. GUJARAT MARITIME BOARD [2007] 295 ITR 561 (SC) , HONBLE APEX COURT 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 OR PREDOMINANT OBJECT OF AN INSTITUTION IS CHARITABLE, ANY OTHER OBJECT WHICH MIGHT NOT BE CHARITABLE BUT WHICH IS ANCILLARY OR INCIDENTAL TO THE DOMINANT PURPOSE, WOULD NOT PREVENT THE INSTITUTION FROM BEING A VALID CHARITY [ADDL. CIT V. SURAT ART SILK CLOTH MFRS. ASSOCIATION [1980] 121 ITR 1 (SC) ].' 10 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 11.2 THAT HONBLE HIGH COURT OF DELHI IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DIRECTOR GENERAL OF INCOME-TAX (EXEMPTIONS) REPORTED IN [2015] 371 ITR 333 (DELHI) HAS HELD AS UNDER: 58 . IN CONCLUSION, WE MAY SAY THAT THE EXPRESSION 'CHARITABLE PURPOSE', AS DEFINED IN SECTION 2(15) CANNOT BE CONSTRUED LITERALLY AND IN ABSOLUTE TERMS. IT HAS TO TAKE COLOUR AND BE CONSIDERED IN THE CONTEXT OF SECTION10(23C)(IV) OF THE SAID ACT. IT IS ALSO CLEAR THAT IF THE LITERAL INTERPRETATION IS GIVEN TO THE PROVISO TO SECTION2(15) OF THE SAID ACT, THEN THE PROVISO WOULD BE AT RISK OF RUNNING FOWL OF THE PRINCIPLE OF EQUALITY ENSHRINED IN ARTICLE 14 OF THE CONSTITUTION OF INDIA. 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 TO CLAIM ITS OBJECT TO BE A 'CHARITABLE PURPOSE'. ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIVEN PRIMARILY BY A DESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO CHARITY THROUGH THE ADVANCEMENT OF 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 11 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 HONBLE 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 HONBLE HIGH COURT IS REPRODUCED HEREUNDER: 31. THERE IS ANOTHER CHALLENGE TO THE REGISTRATION, WHICH HAS NEITHER BEEN ADVERTED TO IN THE IMPUGNED ORDER NOR RAISED BY THE RESPONDENT DURING ARGUMENTS. FIRST PROVISO TO SECTION 2(15) OF THE ACT EQUALLY BARS RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS WHEN IT GENERATES RECEIPTS FOR AN AMOUNT EXCEEDING THE FIGURE MENTIONED IN SECOND PROVISO. THE STIPULATION BROADENS AND WIDENS THE NEGATIVE STIPULATION [SEE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA CASE (SUPRA)].THE PETITIONER IS PROVIDING SERVICES TO PERSONS ENGAGED IN TRADE, COMMERCE OR BUSINESS WHO ARE THE BENEFICIARIES. QUESTION IS WHETHER THE LEGISLATIVE INTENT IS TO EXCLUDE FROM DEFINITION OF CHARITABLE PURPOSE ANY ACTIVITY WHICH HAS THE AIM AND OBJECT OF PROVIDING SERVICES TO TRADE, COMMERCE OR BUSINESS. THE MATTER IS NOT FREE FROM DOUBT BUT THERE ARE GOOD REASONS TO HOLD THAT THE BAR OR PROBATION IS NOT WITH REFERENCE TO ACTIVITY OF THE BENEFICIARY BUT THE ACTIVITY OF THE ASSESSEE UNDER THE RESIDUARY CLAUSE. THE INTENT IS TO EXCLUDE AN ASSESSEE WHO CARRIES ON BUSINESS, TRADE OR COMMERCE TO FEED THE CHARITABLE ACTIVITIES UNDER THE LAST LIMB. APPLICATION OF INCOME EARNED FROM BUSINESS IS NO LONGER RELEVANT AND CANNOT HELP AN ASSESSEE. CIRCULAR NO.11 OF 2008 IS TO THE SAID EFFECT AND DOES NOT PROMOTE CONTRARY INTERPRETATION. THE SAID CIRCULAR CLEARLY STIPULATES THAT THE OBJECT OF 'GENERAL PUBLIC UTILITY' SHOULD NOT BE A MASK OR A DEVICE TO HIDE THE TRUE PURPOSE, WHICH IS TRADE, COMMERCE OR BUSINESS OR RENDERING ANY SERVICE IN RELATION TO TRADE, 12 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION COMMERCE OR BUSINESS. DIRECTOR GENERAL (EXEMPTION) HAS NOT INTERPRETED THE FIRST PROVISO IN THIS MANNER IN THIS CASE. EVEN IN THE CASE OF BUREAU OF INDIAN STANDARDS (SUPRA) NO SUCH CONTENTION WAS RAISED. 7TH PROVISO TO SECTION 10(23C) OF THE ACT SUPPORTS OUR INTERPRETATION AND THE LEGISLATURE HAS NOT OMITTED OR SUITABLY AMENDED THE SAID PROVISO TO SUPPORT THE CONTRARY INTERPRETATION. EVEN OTHERWISE, THE BENEFICIARIES OF GS1 SYSTEM ARE NOT CONFINED OR RESTRICTED TO PERSONS FROM TRADE, COMMERCE OR BUSINESS. THE BENEFICIARIES ARE PRESENT EVERYWHERE AND THE ADVANTAGES ARE PERMEATING AND UNIVERSAL AND WOULD INCLUDE CONSUMERS, GOVERNMENT, BENEFICIARIES OF PDS ETC. 32. THE SECOND PROVISO, WHICH REFERS TO THE AGGREGATE VALUE OF RECEIPT OF ACTIVITIES OF RS. 10 LACS (NOW ENHANCED RS. 25 LACS VIDE FINANCE ACT 2011 WITH EFFECT FROM 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 THE COURSE OF ACTIVITY WHICH IS NOT A BUSINESS BUT CLEARLY CHARITY FOR WHICH THEY ARE ESTABLISHED AND THEY UNDERTAKE .[EMPHASIS SUPPLIED] 11.4 THAT THE HONBLE HIGH COURT OF DELHI IN THE CASE OF PHD CHAMBER OF COMMERCE & INDUSTRY V. DIRECTOR OF INCOME-TAX [2013] 357 ITR 296 (DELHI) HAS HELD THAT RECEIPTS DERIVED BY A CHAMBER OF COMMERCE AND INDUSTRY FOR 13 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION PERFORMING SPECIFIC SERVICES TO ITS MEMBERS AND NON MEMBERS, CANNOT BE TREATED AS BUSINESS INCOME, AS THERE WAS NO PROFIT MOTIVE. IT IS SUBMITTED THAT IN THE CASE OF THE APPELLANT SINCE THERE IS NO PROFIT MOTIVE AS SUCH, EXEMPTION UNDER SECTION 11 OF THE ACT CANNOT BE DISALLOWED. 11.5 FURTHER RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: I. AHMEDABAD URBAN DEVELOPMENT AUTHORITY V. ASSISTANT COMMISSIONER OF INCOME-TAX (EXEMPTION) REPORTED IN [2017] 396 ITR 323 (GUJARAT) II. CIT VS. LUCKNOW DEVELOPMENT AUTHORITY REPORTED IN [2014] 265 CTR 433 (ALLAHABAD) III. CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION [2017] 83 TAXMANN.COM 366 (GUJARAT) IV. CIT VS. KANDLA PORT TRUST [2014] 364 ITR 164 (GUJARAT) V. DELHI BUREAU OF TEXT BOOKS VS. DIT(E) [2017] 394 ITR 387 (DELHI) 12 IT IS SUBMITTED THAT SINCE THE OBJECTS OF THE APPELLANT ARE IN THE NATURE OF GENERAL PUBLIC UTILITY, AND IT DOES NOT 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, AS SUCH, IN VIEW OF THE AFORESAID JUDICIAL PRONOUNCEMENTS, EXEMPTION CLAIMED BY THE APPELLANT IS NOT HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT AND HENCE EXEMPTION DENIED BY THE LEARNED AO IS UNSUSTAINABLE IN LAW. 13 IT IS SUBMITTED THAT ADMITTEDLY AND UNDISPUTEDLY, APPELLANT IS ENGAGED IN THE ACTIVITY OF PROMOTION OF SPORTS AND CONDUCTING OF SPORT OF CRICKET, AND AFORESAID OBJECTS OF THE APPELLANT IS IN THE NATURE OF GENERAL PUBLIC UTILITY FALLING UNDER SECTION 2(15) OF THE ACT. FURTHER, SINCE THE ACTIVITIES OF THE APPELLANT HAS NOT BEEN CARRIED WITH AN OBJECT OF PROFIT, AS SUCH SAME WOULD NOT BE HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT. IN THE CASE OF RAJASTHAN CRICKET ASSOCIATION V. ADDITIONAL COMMISSIONER OF INCOME-TAX 14 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION REPORTED IN [2017] 164 ITD 212 (JAIPUR - TRIB.) , IT HAS BEEN HELD THAT WHERE IN CASE OF ASSESSEE ASSOCIATION REGISTERED UNDER SECTION 12A, PREDOMINANT ACTIVITY OF ASSESSEE WAS CONDUCTING 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. HONBLE 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 BUSINESS SUCH MOTIVE MUST PERVADE THE WHOLE SERIES OF TRANSACTION EFFECTED BY THE PERSON IN COURSE OF HIS ACTIVITY. THE CHARACTERISTIC OF VOLUME, FREQUENCY TO CONTINUITY AND REGULARITY OF THE ACTIVITY ACCOMPANIED BY PROFIT MOTIVE. ON THE PART OF THE ASSESSEE HAVE BEEN HELD TO INDICATE AN INTENTION TO CONTINUE THE ACTIVITY AS BUSINESS. IN THIS BACKDROP OF ALLEGATION WE NEED TO EXAMINE WHETHER THE ALLEGATION OF THE ASSESSING OFFICER IS IN CONSONANCE WITH THE STATUTORY PROVISION GOVERNING THE ISSUE AND JUDICIAL PRONOUNCEMENT MADE IN THIS RESPECT. THE REVENUE HAS NOT DOUBTED THAT THE ASSESSEE HAS CONDUCTED MATCHES OF THE CRICKET. THE ONLY SUSPICION WITH REGARD TO THE ACTIVITY IS THAT DURING THE ONE-DAY INTERNATIONAL PLAYED BETWEEN INDIA AND PAKISTAN, THERE WAS HUGE SURPLUS AND THE ASSESSEE HAD RENTED OUT ROOMS TO BELONGING TO THE SOCIETY AT A VERY HIGHER RATE. THEREFORE, IT CAN BE INFERRED THAT THE ASSESSING OFFICER IS SWAYED BY THE VOLUME OF RECEIPTS. THESE IDENTICAL FACTS, WERE ALSO BEFORE THE HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA) WHEREIN THE HON'BLE 15 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION COURT OPINED THAT BY THE VOLUME OF RECEIPT INFERENCE THAT ACTIVITY IS COMMERCIAL CANNOT BE DRAWN. IT WAS OBSERVED BY THE HON'BLE HIGH COURT, THAT THE BASIS OF THE DECISION OF THE TRIBUNAL WAS ON IRRELEVANT CONSIDERATION. IT WAS HELD THAT THESE CONSIDERATIONS ARE NOT GERMANE IN CONSIDERING THE QUESTION WHETHER THE ACTIVITIES ARE GENUINE OR CARRIED ON WITH THE OBJECT OF THE ASSOCIATION. IT IS ALSO NOTEWORTHY THAT AS PER SECTION 11(4A) SUBSTITUTED BY THE FINANCE ACT, 1983 WITH EFFECT FROM 1/4/1984 SUB-SECTION 1 OR SUB-SECTION 2 OR SUB-SECTION 3 OR SUB- SECTION 3A SHALL NOT APPLY IN RELATION TO ANY INCOME OF A TRUST OR AN INSTITUTION, BEING PROFIT AND GAINS OF BUSINESS, UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR, AS THE CASE MAY BE INSTITUTIONS AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED BY SUCH TRUST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. NOW, COMING TO THE ALLEGATION OF THE ASSESSING OFFICER THAT THE MAJOR SOURCE OF INCOME ARE TV SUBSIDY, SALE OF ADVERTISEMENT SURPLUS FROM ODI BETWEEN INDIA AND PAKISTAN INCOME FROM RCA CRICKET ACADEMY AND INTEREST INCOME. IT IS NOT IN DISPUTE THAT TV SUBSIDY, SALE ON ADVERTISEMENT SURPLUS FROM ODI BETWEEN INDIA AND PAKISTAN INCOME FROM RCA CRICKET ACADEMY ARE ALL RELATING TO THE CONDUCT 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 ASSESSEE HAS EARNED SURPLUS OF RS. 5.88 CRORES OUT OF 16 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION RECEIPTS IN THE SHAPE OF ADVERTISEMENT, CANTEEN, AND TICKETS OF RS.7.81 CRORES WHICH AMOUNTS TO SUPER NORMALLY PROFIT. THE OTHER HAND, CONTENTION OF THE ASSESSEE IS THAT THE ARGUMENT OF THE REVENUE IS MISPLACED AS THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACTS THAT EXPRESSION TRADE, COMMERCE OR BUSINESS IS TO BE UNDERSTOOD AS A REGULAR AND SYSTEMATIC ACTIVITY WITH THE PRIME MOTIVE TO EARN PROFIT. WHEREAS THE ASSOCIATION NEVER ACTED AS A PROFESSIONAL ADVERTISER, TV PRODUCER ETC. NO MATCHES OR ANY GAME OTHER THAN CRICKET OR NO OTHER EVENTS ARE ORGANIZED TO ATTRACT AUDIENCE RATHER ONLY CRICKETMATCHES ARE BEING ORGANIZED WHETHER THE SAME RESULT INTO PROFIT OR LOSS. IT IS CONTENTED THAT ALL CRICKET MATCHES DO NOT ATTRACT AUDIENCE BUT DUE TO HISTORICAL BACKGROUND IN THE CASE OF MATCH BETWEEN INDIA AND PAKISTAN AUDIENCE FOR SUCH MATCH REMAINS ABNORMALLY HIGH. THEREFORE, UNDER THESE PECULIARITY OF FACT IT MAKING INFERENCE THAT THE ASSESSEE IS ENGAGED INTO COMMERCIAL ACTIVITIES IS NOT JUSTIFIED. 14 FURTHER RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS, WHEREIN IT HAS BEEN HELD THAT ENCOURAGEMENT OF SPORTS AND GAMES, IS CLEARLY A CHARITABLE OBJECT IN TERMS OF SECTION 2(15) OF THE INCOME TAX ACT AND HAS BEEN SO HELD IN THE FOLLOWING CASES: (I) SURAT CITY GYMKHANA VS. ACIT (2001) 19 DTC 5 (AHD.-TRIB) (II) SOUTH INDIAN ATHLETIC ASSOCIATION LTD. VS. CIT (1977) 107 ITR 108 (MAD.) (III) CIT VS. OOTACAMUND GYMKHANA CLUB (1977) 110 ITR 392(MAD.) (IV) CIT VS. ANDHRA PRADESH RIDING CLUB (1987) 168 ITR 393 (AP). (V) BOARDS CIRCULAR NO. 395, DATED 24.09.1984 (1984) 150 ITR 74. (VI) TAMIL NADU CRICKET ASSOCIATION V. DIT (E) [2014] 360 ITR 633 (MAD HC) (VII) LD. CIT(A) V. DELHI GOLF CLUB LTD. (IT APPEAL NO.1757 OF 2010, ORDER DATED 30.03.2011) (VIII) ITO (EXEMPTIONS) V. CHEMBUR GYMKHANA [2017] 164 ITD 279 (MUM.-TRIB) (IX) BOMBAY PRESIDENCY GOLF CLUB LTD. V. DIT(E) [2012] 52 SOT 149 (MUM.) 17 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION (X) DELHI & DISTRICT CRICKET ASSOCIATION V. DIT(E) [2015] 69 SOT 101 (DELHI- TRIB) (XI) TAMIL NADU CRICKET ASSOCIATION V. DY. DIT(EXEMPTIONS) [2015] 70 SOT 242/60 TAXMANN.COM 287 (CHENNAI-TRIB) (XII) DY. DIT(E) V. ALL INDIA FOOTBALL FEDERATION [2015] 62 TAXMANN.COM 362 (DEL-TRIB) 15 IT IS SUBMITTED THAT THE IN THE INSTANT APPEALS, LEARNED CIT(A) HAS PLACED RELIANCE ON THE ORDER OF THE HONBLE 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 OF PROFIT ARE DELETED FROM SECTION 2(15). AS A CONNECTED AMENDMENT, A DISQUALIFICATION CLAUSE WAS INSERTED BY WAY OF SECTION 11(4A) WHICH ALSO CAME INTO FORCE WITH EFFECT FROM 1- 4-1984. ACCORDING TO THIS DISQUALIFICATION CLAUSE, THE PROVISIONS OF SECTION 11(1), (2), (3) AND (4), WHICH DEAL WITH THE EXEMPTION OF INCOMES OF THE CHARITABLE INSTITUTION, ARE NOT TO APPLY TO ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS, UNLESS SUCH BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF MAIN OBJECTS 18 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION AND UNLESS THE SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED IN RESPECT OF SUCH BUSINESS ACTIVITY. 17 THE DISABILITY CLAUSE SET OUT IN SECTION 11(4A) REFERS TO THE INCOME WHICH CAN BE TAXED AS BUSINESS INCOME. THEREFORE, SO FAR AS INCOME UNDER OTHER HEADS IS CONCERNED, THE SAME WILL BE ELIGIBLE FOR EXEMPTION UNDER SECTION 11. THE NET EFFECT OF THE AMENDMENTS IN SECTION 2(15) AND INSERTION OF SECTION 11(4A), WITH EFFECT FROM 1-4-1984, THUS IS THAT EVEN WHEN A TRUST OR INSTITUTION IS HELD TO BE CARRYING OUT AN ACTIVITY FOR PROFIT, AND THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF MAIN OBJECTS AND SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED IN RESPECT OF SUCH BUSINESS ACTIVITY, THE EXEMPTION OF INCOME UNDER SECTION 11 WILL BE AVAILABLE IN RESPECT OF PROFITS FROM SUCH AN ACTIVITY. IT IS HOWEVER SUBMITTED THAT THIS DISABILITY CLAUSE, HOWEVER, DOES NOT AFFECT THE INCOMES WHICH MAY BE TAXABLE UNDER A HEAD OF INCOME OTHER THAN THE PROFITS AND GAINS FROM BUSINESS OR PROFESSION. THE FALL OUT OF THE AFORESAID DISCUSSION IS THAT IF A TRUST OR INSTITUTION IS CARRYING OUT ANY ACTIVITY WHICH ARE CHARITABLE IN THE NATURE, EVEN IF THERE IS SOME SURPLUS FROM THAT ACTIVITY, EXEMPTION UNDER SECTION 11 OF THE ACT CANNOT BE DENIED. 18 IT IS SUBMITTED WITH RESPECT THAT EVEN AFTER THE SUBSTITUTION OF THE SUBSECTION 2(15) BY THE FINANCE ACT, 2008, IF THE ACTIVITY OF THE TRUST DOES NOT 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, THEN EVEN IN RESPECT OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, WILL BE CHARITABLE AND BENEFIT OF SECTION 11 AND SECTION 12 CANNOT BE DENIED. 19 AT THIS STAGE RELIANCE IS PLACED ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF QUEEN'S EDUCATIONAL SOCIETY VS. CIT REPORTED IN [2015] 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 19 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 INTRODUCING THE PROVISO TO SECTION 2(15) OF THE ACT CAN BE UNDERSTOOD FROM THE BUDGE SPEECH OF THE FINANCE MINISTER WHILE INTRODUCING THE FINANCE BILL, 2008. . THE EXPRESSION 'BUSINESS', 'TRADE' OR 'COMMERCE' AS USED IN THE FIRST PROVISO MUST, THUS, BE INTERPRETED RESTRICTIVELY AND WHERE THE DOMINANT OBJECT OF AN ORGANISATION IS CHARITABLE ANY INCIDENTAL ACTIVITY FOR FURTHERANCE OF THE OBJECT WOULD NOT FALL WITHIN THE EXPRESSIONS 'BUSINESS', 'TRADE' OR 'COMMERCE'.' (EMPHASIS SUPPLIED) 20 FURTHER IN THE CASE OF VENU CHARITABLE SOCIETY VS. DGIT REPORTED IN [2017] 393 ITR 63 (DELHI), IT HAS BEEN HELD AS UNDER: 21. COMING BACK TO WHAT A CHARITABLE PURPOSE IS, AN EDUCATIONAL INSTITUTION MAY QUALIFY FOR RELIEF UNDER SECTION 10 (23C) OF THE ACT, AS WELL AS, SECTION 11. IN THE PRESENT CASE, THE PETITIONER PROVIDES TRAINING COURSES TO STUDENTS AND NURSING STAFF, WHICH QUALIFY FOR EXEMPTION. THE MAIN OBJECTIVE OF THE PROGRAM MUST BE THE AVAILABILITY OF SUCH A TRAINING TO THE PUBLIC AT LARGE AND IMPARTING SOME KIND OF KNOWLEDGE THROUGH IT. THE FACT THAT SOME OF THE BENEFICIARIES PAY FOR THE BENEFITS THEY GET FROM THE INSTITUTION WOULD NOT BE FATAL TO THE CHARITABLE CHARACTER OF THE INSTITUTION. ACCORDINGLY, WHERE AN ASSOCIATION, WHICH WAS IN CHARGE OF A NURSING HOME AND HOSPITAL, CHARGED ITS PATIENTS FOR THE SERVICES RENDERED, IT WAS HELD IT WOULD NOT CEASE TO BE CHARITABLE. IN IRC V. PEEBLESHIRE NURSING ASSN. 11 TC 335 (HL), IT WAS HELD THAT 20 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION WHERE A HOSPITAL RUNS A PRIVATE WARD WHERE PATIENTS PAY IN FULL FOR THE SERVICES RENDERED TO THEM, IT WOULD NOT MAKE THE HOSPITAL INCONSISTENT WITH ITS CHARITABLE OBJECTS. LIKEWISE, THE PETITIONER'S PROVIDING MEDICAL FACILITIES ON WHOLLY CHARITABLE, OR PARTLY SUBSIDIZED BASIS TO SOME PATIENTS AND CHARGING OTHERS AT RATES PAR WITH OTHER INSTITUTIONS PER SE CANNOT DEBAR IT FROM THE BENEFIT OF BEING TREATED AS CHARITABLE. THE DOMINANT PURPOSE TEST PRESUPPOSES THAT AS LONG AS THE ACTIVITY ANSWERS THE DESCRIPTION OF CHARITY AND CONFORMS TO THE OBJECTS OF THE TRUST OR SOCIETY, THAT PROFITS OR SURPLUSES ARE GENERATED, INCIDENTALLY CANNOT ROB IT OF THE BENEFITS. IF THE PROFITS FROM BUSINESS FEED CHARITABLE OBJECTS, THEN IT IS NOT AN ACTIVITY FOR PROFIT, SO THE EXEMPTION NEED NOT BE LOST. THEREFORE, TOTAL CHARITY TO SOME POOR AND DESERVING PATIENTS, PARTIAL SUBSIDIZATION OF SOME OTHERS AND CHARGING OF FULL RATES FROM SOME, 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, HONBLE 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 BE DENIED U/S 11 OF THE INCOME TAX ACT. 22 IN VIEW OF THE AFORESAID, IT IS SUBMITTED THAT CLAIM OF EXEMPTION DENIED BY THE LEARNED AO AND UPHELD BY THE LEARNED CIT(A) IS WHOLLY UNSUSTAINABLE IN LAW, AND IT IS THEREFORE PRAYED THAT EXEMPTION CLAIMED BY THE APPELLANT U/S 11 OF THE ACT MAY KINDLY BE ALLOWED AND DISALLOWANCE MADE BY THE LEARNED AO AND UPHELD BY THE LEARNED CIT(A) MAY KINDLY BE DELETED. 21 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 5. THE LD. D/R, ON THE OTHER HAND SUBMITTED AS FOLLOWS:- JHARKHAND STATE CRICKET ASSOCIATION (JSCA) IS AN AFFILIATE ENTITY OF BOARD OF CRICKET FOR CONTROL IN INDIA ( BCCI), WHICH IS AN APEX CRICKETING BODY IN INDIA, AND IT HOLDS THE MONOPOLISTIC POSITION TO PROMOTE , ENCOURAGE, ORGANISE AND CONTROL THE GAME OF CRICKET THOUGH OUT INDIA. AS THE CRICKET HAS GROWN FROM THE TRADITIONAL FORMAT OF TEST CRICKET AND ONE DAY INTERNATIONAL CRICKET TO THE NEW ERA OF LEAGUE MATCHES FIN THE SHAPE OF INDIAN PREMIER LEAGUE (IPL) , WHICH HAS PROVED TO BE A GAME CHANGER IN TERMS OF SCALES OF OPERATIONS AND REVENUE GENERATION WHICH IS QUITE REFLECTED FROM THE WIDE RANGING REVENUE AUGMENTING ACTIVITIES THAT HAS BECOME PREDOMINANTLY THE MAIN FEATURE, AND DUE TO WHICH THE APEX BODY AND ITS AFFILIATES, THE STATE CRICKET ASSOCIATIONS ( SCAS) ARE GEARED UP TO RUN AND CONDUCT EVENTS OF T20 MATCHES PURELY ON COMMERCIAL LINES, AND WHICH PRESENT TO BE THE MAIN STAY FEATURE OF CRICKET WORLD IN INDIA. THE EFFECT OF THIS EXPONENTIAL GROWTH HAS BEEN SUCH THAT CRICKET WATCHING CONTINUES TO BE SLIPPING OUT OF THE HANDS OF A COMMON MAN. A PERSON HAVING AN AVID INTEREST IN CRICKET MAY HAVE BEEN RESIGNED TO WATCH CRICKET AT HOME TV. HOWEVER, THE MAMMOTH SCALE OF OPERATIONS IN THE EVER CHANGING CRICKETING ARENA, THE COMMERCIAL CONSIDERATIONS OUTWEIGHS THE CONSIDERATIONS OF PROVIDING OPPORTUNITY TO THE COMMON MAN, AS THE HUGE EARNINGS FROM THE SALE OF TV BROADCASTING RIGHTS BY BCCI AMPLY SHOWS THAT IT IS DRIVEN BY PURE COMMERCIAL CONSIDERATIONS FOR DERIVING MAXIMUM PROFITS IN THE COMPETITION IN A MARKET ECONOMY. IN THE ABOVE BACKDROP, IT BECOMES IMPORTANT TO KNOW THE REVENUE SHARING BASIS WHICH IS EMPLOYED BY THE APEX BODY I.E., BCCI WITH ITS AFFILIATES, AS ALL THE OPERATIONS OF BCCI ARE IN UNISON FOR ITSELF AND FOR ITS AFFILIATES. THEREFORE, THE RELATIONSHIP OF ASSESSEE , THE JSCA WITH THAT OF BCCI HAS TO BE TREATED AND UNDERSTOOD NOT IN ISOLATION BUT IN CONJUGATION SO AS TO BETTER APPRECIATE 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. 22 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 HONBLE 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 SUBSIDIES, HOWEVER, FACTS REMAINS THAT SUCH RECEIPTS AS BEING PASSED ON, AS PER REVENUE SHARING RATIO, TO THE AFFILIATE ENTITY I.E., JSCA, ARE ESSENTIALLY ARISING OUT OF PROFIT GENERATIONS ACTIVITIES OF BCCI AND ITS AFFILIATES, AND ARE THEREFORE PURELY COMMERCIAL IN NATURE. IT IS PERTINENT TO MENTION HERE THAT 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 REMAINING TO BE SAME. THE FOLLOWING STREAMS OF REVENUE ARE NOTABLES IN THE CASE OF THE INSTANT ASSESSEE:- TV RIGHTS SUBSIDY RECEIVED BY THE JSCA FROM THE BCCI BCCI MAKES PAYMENT TO THE JSCA UNDER THE HEAD OF TV SUBVENTION. THESE REPRESENTS THE PAYMENT OF 70% OF REVENUE FROM THE SALE OF MEDIA RIGHTS TO THE STATE ASSOCIATIONS. A.Y. ( 2010-11) A.Y. ( 2012-13) A.Y. (2013-14) TV RIGHTS 18,63,99,133/- 8,14,53,834/- 12,86,99,200/- 23 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION SUBSIDY IN RESPECT OF REVENUE FROM SALE OF MEDIA RIGHTS I.E., TV BROADCASTING RIGHTS, THE ARRANGEMENT HAS BEEN EVOLVED OVERTIME. UNTIL 1991-92, THE INCOME FROM THE SALE OF MEDIA RIGHT WAS MEAGRE. WITH THE GROWTH OF INCOME FROM MEDIA RIGHTS, IT BECAME NECESSARY TO OPTIMISE THE ARRANGEMENT OF SALE OF MEDIA RIGHTS. IT WAS FOUND THAT IF EACH STATE ASSOCIATION WERE TO NEGOTIATE THE SALE OF RIGHT TO EVENTS IN CENTRE, ITS NEGOTIATING STRENGTH WOULD BE LOW. IT WAS THEREFORE AGREED THAT BCCI WOULD NEGOTIATE THE SALE OF MEDIA RIGHTS FOR THE INTER COUNTRY TO OPTIMISE THE INCOME UNDER THE HEAD. IT WAS FURTHER DECIDED THAT OUT OF THE RECEIPTS FROM THE SALE OF MEDIA RIGHTS, 70% OF THE GROSS REVENUE LESS PRODUCTION COST WOULD BELONG TO THE STATE ASSOCIATION. IN THIS REGARD, IT MAY BE STATED THAT SUCH AN ACTIVITY OF BCCI FOR THE GENERATION OF INCOME/ REVENUE FROM TV BROADCASTING RIGHTS IS QUITE DEPENDENT UPON THE ACTIVITIES WHICH ARE PERFORMED BY ANY AFFILIATE ENTITY I.E., JSCA IN ACTUALLY CONDUCTING THE MATCHES. THUS, THE INCOME OF BCCI PER SE IS DEPENDENT IS THE EFFORTS THE STATE ASSOCIATION IN CONDUCTING THE MATCHES FROM WHICH THE MEDIA RIGHTS ACCRUE. THUS, IT SHOULD MAKE IT AMPLE CLEAR THAT RECEIPTS OF SUCH REVENUE OR SHARING OF SUCH REVENUE WITH THE SCAS OR THE JSCA FOR THAT MATTER IN THIS CASE, IS NOTHING BUT THE COMMERCIAL PROFIT/ INCOME OF JSCA. IN SUCH AN ARRANGEMENT, THE BCCI WORKS AND OPERATES AS AN UMBRELLA PLATFORM, HOWEVER, THE CRICKET MATCHES AS SUCH 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 24 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 A CONCEPT WHERE SPORTS AND BUSINESS MERGE TOGETHER TO REAP MAXIMUM PROFIT. EVERY YEAR THE ASSESSEE RECEIVES IPL SUBVENTION FROM THE BCCI. THE RECEIPTS OF THE ASSESSEE FROM THE IPL SUBVENTION AMOUNTS TO ALMOST OVER 60% OF ITS TOTAL RECEIPTS. A.Y. ( 2010-11) A.Y. ( 2012-13) A.Y. (2013-14) IPL SUBVENTION 17,16,32,490/- 10,08,90,881/- THE EVER INCREASING BIDDING BY THE FRANCHISES OF IPL AND BRAND MARKETING RIGHTS, DUE TO WHICH SUBSTANTIAL AMOUNTS OF REVENUES ARE GARNERED BY THE BCCI, AMPLY SHOWS THE TRUE NATURE OF THE INCOME WHICH IS PARKED WITH THE BCCI AND FURTHER DISTRIBUTED BY BCCI AMONGST ITS AFFILIATES LIKE JSCA. IT MAY BE MENTIONED HERE THAT IPL SUBVENTION AMOUNTS TO ALMOST OVER 60% OF RECEIPTS OF ASSESSEE. IT MAY BE OBSERVED THAT THE SCALE OF OPERATIONS AS PUT UP IN IPL T20 MATCHES BOTH BY BCCI AND SCAS ARE NOTHING SHORT OF ENTERTAINMENT EXTRAVAGANZA, WHERE THE COMMERCIAL STAKES OF THE CORPORATE HOUSES, THE FRANCHISE HOLDERS HAD LED TO SPORTING ENTERTAINMENT OF HIGHEST COMMERCIAL ORDER. THE VERY SCHEME OF IPL IS RECOGNISED BY THE BCCI AS A COMMERCIAL VENTURE, WHERE THE AFFILIATES LIKE JSCA ARE PARTNERS WITH FULL STAKES. THUS, UNMISTAKEABLY, IT MAY BE APPRECIATED THAT THE VERY NATURE OF HOLDING OF CRICKET MATCHES AND THE TRANSACTIONS ENTERED INTO BY THE BCCI ARE COMMERCIAL IN THEIR TRUE ESSENCE, AS WITH THE AFFILIATE ENTITIES LIKE JSCA. 25 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION INFRASTRUCTURE SUBSIDY : AY A.Y. ( 2010 - 11) A.Y. ( 2012-13) RECEIVED DURING THE YEAR A.Y. (2013 - 14) AS ON 31.03.2013 AY 2014-15 AS ON 31.03.2014 INFRASTRUCTURE SUBSIDY 12,42,50000/- 14,60,14,928/- 48,59,47411 48,59,47411 VIRTUAL ADVERTISEMENTS : SUCH AN ACTIVITY IS SOLELY PUT TO PLACE DURING THE INTL. ONE DAY AND T20 MATCHES. THUS, APART FROM THE MATCHES WHERE BCCI HAS DIRECT CONTROL OVER THE ADVERTISEMENTS, THE JSCA HAS INCLUDED ALL OTHER MATCHES. SUCH AN ACTIVITY IS ESSENTIALLY ARISING OUT OF COMMERCIAL ACTIVITIES AND , HENCE COMMERCIAL IN NATURE. EVEN THE CHARITABLE ACTIVITIES CLAIM IS ALSO NOT DULY SUBSTANTIATED BY THE ASSESSEE BEFORE THE AO IT IS ALSO PERTINENT TO REFER TO THE DECISION OF HONBLE ITAT AHMEDABAD BENCH, AHMEDABAD WHICH IS RENDERED RECENTLY AND RELIED UPON ON THE ISSUE BY THE ASSESSEE. AT PAGE 32 OF THE SAID DECISION, WHICH IS REPRODUCED PART OF THE DECISION OF THE CIT(A) IN THE SAID CASE, THE BCCI HAS ITSELF ADMITTED THAT THE AMOUNTS ACCRUING FORM 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 26 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 HONBLE 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 REASONS IS NOT JUSTICIABLE WHILE EXAMINING THE VALIDITY OF REOPENING. HE ARGUED THAT TANGIBLE MATERIAL WAS IN POSSESSION OF THE ASSESSING OFFICER, WHICH WAS CONSIDERED AND BASED ON WHICH REOPENING WAS DONE. HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. VS. ITO [1999] 236 ITR 34 (SC), FOR THE PROPOSITION THAT, WHAT IS TO BE SEEN IS AS TO WHETHER THERE WAS SOME PRIMA FACIE MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE AND THAT AS FAR THE ISSUE OF CORRECTNESS OF A MATERIAL IS NOT A THING TO BE CONSIDERED AT THAT STAGE. 6.2. IN HIS REJOINDER, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT, THE LD. D/R HAS NOT POINTED OUT ANY MATERIAL THAT HAD COME INTO THE POSSESSION OF THE ASSESSING OFFICER BASED ON WHICH THE REOPENING WAS MADE. HE REITERATED THAT THE REASONS OF REOPENING WERE MERELY A CHANGE OF OPINION, ON THE SAME SET OF FACTS AND MATERIAL BEFORE THE DEPARTMENT. 7. FOR THE ASSESSMENT YEAR 2014-15, THE LD. COUNSEL FOR THE ASSESSEE DISPUTED THE ORDER PASSED U/S 263 OF THE ACT. HE SUBMITTED THAT A CRYPTIC NOTICE WAS GIVEN BY THE LD. CIT AND THE DETAILED REPLY GIVEN BY THE ASSESSEE WAS NOT CONSIDERED. HE POINTED OUT THAT THE ASSESSING OFFICER HAS PASSED AN ELABORATE ORDER U/S 143(3) OF THE ACT, TAKING A POSSIBLE VIEW THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 11 & 12 OF THE ACT AND THAT THE LD. CIT WAS WRONG IN REVISING THIS ORDER BY INVOKING HIS POWER U/S 263 OF THE ACT. HE FURTHER ARGUED THAT NO ERROR IN THE ASSESSMENT ORDER WAS NOT POINTED OUT BY THE LD. CIT 27 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION AND IT WAS ONLY ON WRONG ASSUMPTION OF FACTS BASED ON WHICH THE ORDER U/S 263 OF THE ACT WAS PASSED. HE RELIED ON A NUMBER OF CASE-LAW IN SUPPORT OF HIS CONTENTIONS. 7.1. THE LD. CIT D/R, ON THE OTHER HAND SUBMITTED THAT THE ASSESSING OFFICER PASSED AN ORDER WITHOUT APPLICATION OF MIND AND WITHOUT ENQUIRY ON THE FACTUAL ASPECTS AND HENCE THE LD. CIT HAS RIGHTLY HELD THAT THE ORDER IS NOT ONLY ERRONEOUS BUT PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE TOOK THIS BENCH THROUGH THE ORDER OF THE LD. CIT AND SUBMITTED THAT COGENT REASONS WERE GIVEN THEREIN FOR THE REVISION. 7. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 8. WE FIRST TAKE UP THE APPEAL FOR 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.42,30,000/-. APART FROM THE ABOVE AMOUNT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.12,42,50,000/- AS INFRASTRUCTURE SUBSIDY FROM BCCI. THE TOTAL EXPENDITURE DURING THE YEAR HAS BEEN RS.2,59,25,660/-. 3. THE ASSESSEE HAD FILED ITS IN ROI IN ITR-7. THE ASSESSEE HAD CLAIMED EXEMPTION U/S 11 AND U/S 12 OF THE ACT. PERUSAL OF THE COMPUTATION OF INCOME REVEALS THAT THE ASSESSEE HAD CLAIMED CAPITAL EXPENDITURE OF RS.7,76,24,006/-, 28 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION EXEMPTION U/S 11(1)(A) OF RS.4,52,08,589/- AND EXEMPTION U/S 11(2) OF RS.15,30,00,000/- 4. THE TOTAL EXPENSE OF THE ASSESSEE IS 7.49% OF ITS TOTAL RECEIPTS DURING THE YEAR. 5. THE ASSESSEE IS ENGAGED IN OBJECTS OF GENERAL PUBLIC UTILITY AS STATED IN SECTION 2(15) OF THE ACT. THE ASSESSEE IS NOT INVOLVED IN ANY EDUCATIONAL ACTIVITY WITHIN THE MEANING OF THE TERMS EDUCATION AS HELD BY THE HONBLE APEX COURT IN THE CASE OF SOLE TRUSTEE LOKA SHIKHSANA TRUST VS. CIT [1975] 101 ITR 134 (SC). THEREFORE THE PROVISO TO SECTION 2(15) AS INSERTED BY THE FINANCE ACT 2008, W.E.F 01-04-2009 IS SQUARELY IS SQUARELY APPLICABLE TO THE ASSESSEE. SECTION 2(15) OF THE ACT AS IN FORCE TODAY IS REPRODUCED BELOW: 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, YOGA, 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 TWENTY- FIVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR; 6. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CRICKET. THE ASSESSEE HAS ALSO RECEIVED AN AMOUNT OF RS.18,63,99,133/- AS TV RIGHTS SUBSIDY FROM BCCI. THIS AMOUNT REPRESENTS THE RECEIPTS FROM THE COMMERCIAL ACTIVITIES OF THE ASSESSEE IN ASSOCIATION WITH BCCI. THE ASSESSEE HAS NOT CARRIED OUT PROMOTION OF CRICKET 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 29 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 HONBLE CALCUTTA HIGH COURT IN THE CASE OF CRICKET ASSOCIATION OF BENGAL V/S CIT (37 ITR 277). 10. FURTHER RELIANCE IS ALSO PLACE ON THE DECISION OF THE HONBLE ITAT, PANAJI BENCH, IN THE CASE OF ENTERTAINMENT SOCIETY OF GOA [34 TAXMAN.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. 11. IN VIEW OF THE ABOVE, I, HAVE NO REASON TO BELIEVE, WITHIN THE MEANING OF SECTION 147 OF THE INCOME-TAX ACT, THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE TOTAL INCOME CHARGEABLE TO TAX THAT HAS ESCAPED ASSESSMENT IS RS.31,99,34,935/-. 12. IN THE CASE OF THE ASSESSEE THE ASSESSMENT ORDER FOR THE A.Y. 2010-11 WAS PASSED U/S 143(3) ON 22-03-2013 ASSESSING TOTAL INCOME AT RS. NIL. THE PROVISIONS OF SECTION 151(1) ARE APPLICABLE TO THE INSTANT A.Y. THE PROVISIONS ARE REPRODUCED AS UNDER: (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB- SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER, UNLESS THE DEPUTY COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE]: PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. 13. IN VIEW OF THE ABOVE THERE IS NO LEGAL REQUIREMENT TO SEEK THE SANCTION OF THE JOINT/ADDL. COMMISSIONER OF INCOME-TAX AS THE NOTICE U/S 148 OF THE ACT IS BEING ISSUED FOR THE A.Y. 2010-11 AND FOUR YEARS FROM THE END OF THE RELEVANT A.Y. HAVE NOT EXPIRED. 14. ISSUE NOTICE U/S 148 OF THE ACT TO THE ASSESSEE. 30 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 10. A PERUSAL OF THESE REASONS DEMONSTRATE THAT NO NEW TANGIBLE MATERIAL CAME INTO THE POSSESSION OF THE ASSESSING OFFICER, BASED ON WHICH HE FORMED A BELIEF THAT INCOME SUBJECT TO TAX HAS ESCAPED ASSESSMENT THE ENTIRE REASONS ARE BASED ON A PERUSAL OF THE RETURN OF INCOME, INCOME AND EXPENDITURE STATEMENT AND COMPUTATION OF INCOME AS EVIDENT FROM PARA 2 OF THE REASONS RECORDED. THE REOPENING IS DONE MERELY ON A CHANGE OF OPINION THAT TOO, IT IS NOT BASED ON ANY TANGIBLE MATERIAL COMING INTO THE 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 HONBLE 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 CIT V. 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 ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO RE-OPEN. 6. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE-ASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE-ASSESS. BUT RE-ASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE-OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. 7. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, ASSESSING OFFICER HAS POWER TO RE-OPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF.' 12. BEFORE INTERFERING WITH THE PROPOSED RE-OPENING OF THE ASSESSMENT ON THE GROUND THAT THE SAME IS BASED ONLY ON A CHANGE IN OPINION, THE COURT OUGHT TO VERIFY WHETHER THE ASSESSMENT EARLIER MADE HAS EITHER EXPRESSLY OR BY NECESSARY IMPLICATION EXPRESSED AN OPINION ON A MATTER WHICH IS THE BASIS OF THE ALLEGED ESCAPEMENT OF INCOME THAT WAS TAXABLE. IF THE ASSESSMENT ORDER IS NON-SPEAKING, CRYPTIC OR PERFUNCTORY IN NATURE, IT MAY BE DIFFICULT TO ATTRIBUTE TO THE ASSESSING OFFICER ANY 31 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION OPINION ON THE QUESTIONS THAT ARE RAISED IN THE PROPOSED RE-ASSESSMENT PROCEEDINGS. EVERY ATTEMPT TO BRING TO TAX, INCOME THAT HAS ESCAPED ASSESSMENT, CANNOT BE ABSORBED BY JUDICIAL INTERVENTION ON AN ASSUMED CHANGE OF OPINION EVEN IN CASES WHERE THE ORDER OF ASSESSMENT DOES NOT ADDRESS ITSELF TO A GIVEN ASPECT SOUGHT TO BE EXAMINED IN THE RE-ASSESSMENT PROCEEDINGS. 13. THE FACT IN CONTROVERSY IN THIS CASE IS WITH REGARD TO THE DEDUCTION UNDER SECTION 10A OF THE IT ACT WHICH WAS ALLEGEDLY ALLOWED IN EXCESS. THE SHOW CAUSE NOTICE DATED 10.02.2005 REFLECTS THE GROUND FOR RE-ASSESSMENT IN THE PRESENT CASE, THAT IS, THE DEDUCTION ALLOWED IN EXCESS UNDER SECTION 10A AND, THEREFORE, THE INCOME HAS ESCAPED ASSESSMENT TO THE TUNE OF RS. 57,36,811. IN THE ORDER IN QUESTION DATED 17.08.2005, THE REASON PURPORTEDLY GIVEN FOR REJECTING THE OBJECTIONS WAS THAT THE ASSESSEE WAS NOT MAINTAINING ANY SEPARATE BOOKS OF ACCOUNTS FOR THE TWO CATEGORIES, I.E., SOFTWARE DEVELOPMENT AND HUMAN RESOURCE DEVELOPMENT, 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 RE- ASSESSMENT 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 AND CIRCUMSTANCES WHICH WERE ALREADY IN HIS KNOWLEDGE EVEN DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. 10.1. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. (SUPRA) , IS NOT APPLICABLE TO THE FACTS OF THE CASE. IN THIS CASE THERE IS NO TANGIBLE MATERIAL BASED ON WHICH THE RE-OPENING OF ASSESSMENT WAS MADE. THE REOPENING HAS BEEN MADE ON A CHANGE OF OPINION. THE ASSESSING OFFICER HAS NO POWER OF REVIEW. HENCE WE HAVE NO HESITATION IN HOLDING THAT THE REOPENING IS BAD IN LAW. 11. THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE OBJECTIONS TO THE REOPENING, MADE BY THE ASSESSEE WAS NOT DISPOSED OFF BY THE ASSESSING OFFICER AND HENCE THE REASSESSMENT IS BAD IN LAW, NEED NOT BE GONE INTO, AS IT WOULD MERELY BE AN ACADEMIC EXERCISE, AS OUR DECISION IS THAT, THE REOPENING IS BAD IN LAW. 12. WE NOW TAKE UP THE ISSUE AS TO WHETHER THE PROVISO TO SECTION 2(15) OF THE ACT, CAN BE APPLIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ADMITTEDLY, THE MAIN AND PREDOMINANT OBJECT OF THE ASSESSEE COMPANY IS TO PROMOTE THE GAME OF CRICKET. THERE IS 32 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION NO DISPUTE BETWEEN THE PARTIES THAT THIS OBJECT FALLS UNDER THE FOURTH LIMB OF THE DEFINITION OF CHARITABLE PURPOSE GIVEN U/S 2(15) OF THE ACT I.E. OBJECT OF GENERAL PUBLIC UTILITY. THE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE ASSESSEE IS CARRYING ON COMMERCIAL ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AS THE ASSESSEE HAS RECEIVED AMOUNTS FROM BCCI ON ACCOUNT OF IPL SUBVENTION, TV RIGHTS SUBSIDY FROM BCCI, INSTEDIA ADVERTISEMENT ETC. IN OUR CONSIDERED OPINION, THESE RECEIPTS FROM BCCI CANNOT BE CONSIDERED AS INCOME RECEIVED FROM ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE PITH AND SUBSTANCE OF THE ARGUMENT OF THE LD. D/R IS THAT THE NATURE OF RECEIPT IN THE HANDS OF BCCI IS BUSINESS OR COMMERCIAL RECEIPTS ON ACCOUNT OF IPL SUBVENTION, T.V. RIGHTS ETC. AND WHERE THESE RECEIPTS ARE SHARED WITH THE STATE ASSOCIATION ON AN 30:70 RATIO BASIS, THE NATURE OF RECEIPT DOES NOT CHANGE AND IT WOULD BE BUSINESS RECEIPTS IN THE HANDS OF THE STATE ASSOCIATIONS ALSO. THE ALLEGATION OF REVENUE IS THAT THESE RECEIPTS ARE COUCHED IN THE FORM OF SUBSIDIES. 12.1. THESE ISSUES HAVE COME UP BEFORE THE AHMEDABAD D BENCH OF THE ITAT IN THE CASE GUJARAT CRICKET ASSOCIATION VS. JCIT (EXEMPTIONS) [2019] 101 TAXMANN.COM 453 (AHMEDABAD TRIB.) AND AFTER CONSIDERING THE 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 OF THE GAME BEING GOVERNED BY THE DICTATES OF COMMERCIAL CONSIDERATIONS MAY SEEM TO BE ONE SUCH EXAMPLE OF COMMERCIALIZATION OF INDIAN CRICKET. THE DIFFICULTY FOR THE CASE OF THE REVENUE BEFORE US, HOWEVER, IS THAT THESE MATCHES ARE NOT BEING ORGANIZED BY THE LOCAL CRICKET ASSOCIATIONS. WE ARE TOLD THAT THE MATCHES ARE BEING ORGANIZED BY THE BOARD OF CRICKET CONTROL OF INDIA, BUT THEN, IF WE ARE TO ACCEPT THIS CLAIM AND INVOKE THE PROVISO TO SECTION 2(15) FOR THIS REASON, IT WILL AMOUNT TO A SITUATION IN WHICH PROVISO TO SECTION 2(15) IS BEING INVOKED 33 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION ON ACCOUNT OF ACTIVITIES OF AN ENTITY OTHER THAN THE ASSESSEES- SOMETHING WHICH LAW DOES NOT PERMIT. WE ARE NOT REALLY CONCERNED, AT THIS STAGE, WHETHER THE ALLEGATIONS ABOUT COMMERCIALIZATION OF CRICKET BY THE BCCI ARE CORRECT OR NOT, BECAUSE THAT ASPECT OF THE MATTER WOULD BE RELEVANT ONLY FOR THE PURPOSE OF PROVISO TO SECTION 2(15) BEING INVOKED IN THE HANDS OF THE BCCI. WE DONOT WISH TO DEAL WITH THAT ASPECT OF THE MATTER OR TO MAKE ANY OBSERVATIONS WHICH WOULD PREJUDGE THE CASE OF THE BCCI. SUFFICE TO SAY THAT THE VERY FOUNDATION OF REVENUE'S CASE IS DEVOID OF LEGALLY SUSTAINABLE BASIS FOR THE SHORT REASON THAT THE COMMERCIALIZATION OF CRICKET BY THE BCCI, EVEN IF THAT BE SO, CANNOT BE REASON ENOUGH TO INVOKE THE PROVISO TO SECTION 2(15). WE ARE ALIVE O LEARNED COMMISSIONER (DR)'S SUGGESTION THAT THE CRICKET ASSOCIATIONS CANNOT BE SEEN ON STANDALONE BASIS AS THE BCCI IS NOTHING BUT AN APEX BODY OF THESE CRICKET ASSOCIATIONS AT A COLLECTIVE LEVEL AND WHATEVER BCCI DOES IS AT THE BEHEST OF OR WITH THE CONNIVANCE OF THE LOCAL CRICKET ASSOCIATIONS, AND THAT IT IS NOT THE CASE THAT ANYONE CAN BECOME A MEMBER OF THE BCCI BECAUSE ONLY A RECOGNIZED CRICKET ASSOCIATION CAN BECOME A MEMBER OF THE BCCI. WE ARE ALSO ALIVE TO LEARNED COMMISSIONER'S ARGUMENT THAT WHAT IS BEING SOUGHT TO BE PROTECTED BY THE CHARITABLE STATUS OF THESE ASSOCIATIONS IS THE SHARE OF THESE CRICKET ASSOCIATIONS FROM THE COMMERCIAL PROFITS EARNED BY THE BCCI BY ORGANIZING THE CRICKET MATCHES. THE PROBLEM, HOWEVER, IS THAT THE ACTIVITIES OF THE APEX BODY, AS WE HAVE EXPLAINED EARLIER, CANNOT BE REASON ENOUGH TO TRIGGER PROVISO TO SECTION 2(15) IN THESE CASES. WHETHER THESE CRICKET ASSOCIATIONS COLLECTIVELY CONSTITUTE BCCI OR NOT, IN THE EVENT OF BCCI BEING INVOLVED IN COMMERCIAL ACTIVITIES, THE TAXABILITY OF SUCH COMMERCIAL PROFITS 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 LEARNED COMMISSIONER HAS NOT BEEN ABLE TO POINT OUT A SINGLE OBJECT OF THE ASSESSEE CRICKET ASSOCIATIONS WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, AND, AS IT IS NOT EVEN IN DISPUTE THAT THE OBJECTS BEING PURSUED BY THE ASSESSEE CRICKET ASSOCIATIONS ARE 'OBJECTS OF GENERAL PUBLIC UTILITY' UNDER SECTION 2(15). ALL THE OBJECTS OF THE ASSESSEE CRICKET ASSOCIATIONS, AS REPRODUCED EARLIER IN THIS ORDER, UNAMBIGUOUSLY SEEK TO PROMOTE THE CRICKET, AND THIS OBJECT, AS HAS BEEN ALL ALONG ACCEPTED BY THE CBDT ITSELF, AN OBJECT OF GENERAL PUBLIC UTILITY. 36. CRICKET IS INDEED AN IMMENSELY POPULAR GAME IN THIS PART OF THE WORLD, AND ANYTHING TO DO WITH CRICKET RESULTS IN MASS INVOLVEMENT OF PUBLIC AT LARGE. THE SHEER STRENGTH OF THESE NUMBERS RESULTS IN HIGHER VISIBILITY OF CRICKETING ACTIVITIES AND THE SCALE OF OPERATIONS ON WHICH THE WORK FOR DEVELOPMENT OF CRICKET IS TO BE CARRIED OUT. THESE FACTS, BY ITSELF, AND WITHOUT THE ASSESSEES BEFORE US DEVIATING FROM THEIR OBJECTS OR VENTURING INTO TRADE, COMMERCE OR BUSINESS, CANNOT REQUIRE THE ACTIVITIES TO BE TREATED AS COMMERCIAL ACTIVITIES. WHEN A CRICKET STADIUM IS TO BE BUILT, IT HAS TO ACCOMMODATE A VERY LARGE NUMBER OF PERSONS BUT THE SIZE OF THE STADIUM WOULD NOT MEAN THAT THE ACTIVITY IS FOR ANYTHING OTHER THAN PROMOTION OF CRICKET.. WHEN THE 34 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION NUMBERS ARE LARGE, THE SCALE OF OPERATIONS IS LARGE, AND WHEN SCALE OF OPERATIONS ARE LARGER, EVEN THE SURPLUS OR DEFICIT COULD BE LARGE, BUT THEN THE SCALE OF OPERATIONS MAY BE A SCALE ON WHICH COMMERCIAL ACTIVITIES COULD BE CARRIED OUT BUT THAT FACT CANNOT CONVERT AN OBJECT OF GENERAL PUBLIC UTILITY INTO A COMMERCIAL ACTIVITY. WE HAVE CAREFULLY ANALYSED THE ANNUAL REPORTS AND THE ANNUAL FINANCIAL STATEMENTS OF THE ASSESSEE, AND WE DO NOT FIND ANY OBJECTS, OTHER THAN OBJECTS OF THE CRICKET ASSOCIATIONS, BEING PURSED BY THESE CRICKET ASSOCIATIONS. THE OBJECTS OF THESE CRICKET ASSOCIATIONS CLEARLY DEMONSTRATE THAT THESE CRICKET ASSOCIATIONS EXIST AND OPERATE PURELY FOR THE PURPOSE OF PROMOTING CRICKET. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE PROVISO TO SECTION 2(15) HAS BEEN WRONGLY INVOKED IN THESE CASES. 40. WE HAVE NOTED THAT THERE ARE A LARGE NUMBER OF JUDICIAL PRECEDENTS, IN THE CASES OF VARIOUS OTHER CRICKET ASSOCIATIONS- DETAILS OF WHICH ARE SET OUT EARLIER IN THIS ORDER, HOLDING THAT THE PROVISO TO SECTION 2(15) CANNOT BE INVOKED IN THE CASES OF 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 THIS ISSUE: 42. FOR THE DETAILED REASONS SET OUT ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW WERE IN ERROR IN INVOKING THE PROVISO TO SECTION 2(15) AND THUS IN DECLINING THE BENEFIT OF SECTION 11 AND 12 TO THE APPELLANT CRICKET ASSOCIATIONS. TO THIS EXTENT, PLEA OF THE APPELLANTS MUST BE UPHELD. WE UPHOLD THE PLEA. INDIVIDUAL APPEALS 43. LET US NOW TAKE UP EACH APPEAL AND EACH GROUND OF APPEAL INDIVIDUALLY. ITA NO 1257/ AHD/ 2013 44. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 5TH MARCH 2013 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009-10. 45. IN GROUND NOS. 1 AND 2, THE GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS: THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DENYING THE APPLICABILITY OF SEC. 11 INCLUDING 11(1)(B) AND HOLDING THAT THE ASSESSEE IS NOT CARRYING ON CHARITABLE ACTIVITY. 35 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION (A) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE IS CARRYING ON 'EDUCATIONAL ACTIVITY', AND HENCE THE AMENDMENT TO SECTION 2(15) W.E.F 01-04-2009, VIS-A-VIS 'BUSINESS' IS NOT APPLICABLE TO ASSESSEE. (B) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT ON THE FACTS OF CASE OF THE ASSESSEE PROVISO TO SEC. 2(15) INSERTED W.E.F. 01-04-2009 IS APPLICABLE, AND IS CARRYING ON BUSINESS. 46. SO FAR AS THESE GROUNDS OF APPEAL ARE CONCERNED, WE HAVE, IN OUR DETAILED ANALYSIS EARLIER IN THIS ORDER, HELD THAT THE PROVISO TO SECTION 2(15) DOES NOT COME INTO PLAY ON THE FACTS OF THESE CASES. ACCORDINGLY, WE UPHOLD THE PLEA OF THE ASSESSEE TO THIS EXTENT. THE ASSESSEE IS THUS HELD TO BE CARRYING OUT 'CHARITABLE ACTIVITY' WITHIN THE MEANINGS OF THAT EXPRESSION UNDER SECTION 2(15) AND, ACCORDINGLY, THE ASSESSEE IS ENTITLED TO RELIEF UNDER SECTION 11. AS TO WHETHER THE ASSESSEE IS CARRYING OUT EDUCATIONAL ACTIVITIES OR NOT, GIVEN OUR ABOVE FINDING, THAT ASPECT OF THE MATTER IS WHOLLY ACADEMIC AS ON NOW AND WE DECLINE TO ADDRESS THAT ISSUE. 47. GROUND NOS. 1 AND 2 ARE THUS ALLOWED IN THE TERMS INDICATED ABOVE. 48. IN GROUND NO. 3, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCES: (3) (A) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE SUBMISSIONS OF THE ASSESSEE WITH RELEVANT EVIDENCES IN RESPECT OF THE CLAIM THAT THE AMOUNT RECEIVED 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 FROM THE BOARD OF CRICKET CONTROL OF INDIA (BCCI, IN SHORT) AS TOWARDS THE TV RIGHTS. WHEN HE PROBED THE MATTER FURTHER, IT WAS EXPLAINED BY THE ASSESSEE THAT NOMENCLATURE OF THE RECEIPT APART, WHAT HAS BEEN RECEIVED BY THE ASSESSEE IS A CORPUS DONATION AND THE ASSESSEE DID NOT HAVE ANY RIGHT TO GET THE SAID MONEY FROM THE BCCI, UNDER A CONTRACT OR OTHERWISE. IT WAS ALSO EXPLAINED THAT SIMILAR AMOUNTS RECEIVED IN THE EARLIER YEARS HAVE BEEN TREATED ALL ALONG AS CORPUS DONATIONS, AND, THEREFORE, THE CORPUS DONATION RECEIVED BY THE ASSESSEE, 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 ASSESSING OFFICER WAS OF THE VIEW THAT WHAT HAS BEEN PAID TO THE ASSESSEE IS A SHARE 36 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 RS 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 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 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 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 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 RS 1,58,00,000. 37 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 50. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN IN ASSESSEE'S OWN CASE. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE PLEA OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO TREAT THE TV SUBSIDY OF RS 20,69,60,338 RECEIVED FROM THE BCCI AS A CORPUS DONATION. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. AS WE HAVE DECIDED THE MAIN GRIEVANCE OF THE ASSESSEE, AS SET OUT IN GROUND NO. 3 (A), WE SEE NO NEED TO ADJUDICATE ON THE ALTERNATIVE PLEA SET OUT IN GROUND 3 (B). THAT ASPECT OF THE MATTER IS RENDERED ACADEMIC AND DOES NOT CALL FOR ANY ADJUDICATION AS ON NOW. 12.2. THE AHMEDABAD BENCH, IN THIS ORDER HAS NOT AGREED WITH THE ARGUMENTS OF THE REVENUE THAT BCCI WITH ITS AFFILIATES HAVE TO BE VIEWED TOGETHER IN UNISON AND NOT SEPARATELY. IT ALSO REJECTED THE CONTENTION THAT, RECEIVING SUBSTANTIAL REVENUE SHARING AMOUNTS IN THE NATURE OF :- 1) IPL SUBVENTION, 2) T.V. BROADCASTING RIGHTS & 3) SPONSORSHIP RIGHTS, 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 GENUINENESS OF THE ACTIVITIES OF THE TRUST, HE HAS TO PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; IF HE IS NOT SO SATISFIED, HE HAS TO PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION. 30. SEC. 12AA(3) OF THE ACT INSERTED W.E.F. 1ST OCT., 2004, UNDER THE FINANCE (NO. 2) ACT, 2004, AND THE AMENDMENT INSERTED BY THE FINANCE ACT, 2010, W.E.F. 1ST JUNE, 2010, THEREIN EMPOWERING THE CIT TO CANCEL THE REGISTRATION GRANTED UNDER THE STATED CIRCUMSTANCES, READS AS UNDER : PROVISION INSERTED UNDER THE FINANCE ACT, 2004 : '12AA. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CL. (B) OF SUB-S. (1) AND SUBSEQUENTLY THE CIT IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS 38 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION : PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD.' 31. AFTER THE AMENDMENT IN THE YEAR 2010, S. 12AA(3) OF THE IT ACT READS AS FOLLOWS : '12AA. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CL. (B) OF SUB-S. (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER S. 12A AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1996) AND SUBSEQUENTLY THE CIT IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION : PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD.' 32. THUS, IN CONTRAST TO S. 12AA(1)(B) OF THE IT ACT, 1961, WHERE THE GRANT OF REGISTRATION REQUIRES SATISFACTION ABOUT THE OBJECTS OF THE TRUST AS WELL AS THE GENUINENESS OF THE ACTIVITIES, FOR THE CANCELLATION OF THE REGISTRATION UNDER S. 12AA(3), ALL THAT IT IS INSISTED UPON IS THE SATISFACTION AS TO WHETHER THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE GENUINE OR NOT AND WHETHER THE ACTIVITIES ARE BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THUS, 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 BEING GENUINE OR NOT. IN THE CIRCUMSTANCES, WE DO NOT AGREE WITH THE VIEW OF THE TRIBUNAL THAT THE ORDER PASSED BY THE DIRECTOR OF IT (EXEMPTION) WAS IN ACCORDANCE WITH THE PROVISIONS OF THE IT ACT, 1961. HE VIEWED THAT THE CONDUCT OF TEST MATCHES AND ODI ARE IN THE NATURE OF COMMERCE OR BUSINESS. THOUGH THE ASSESSEE CLAIMED THEIR ACTIVITIES FOR PROMOTION OF SPORTS, HE HELD THAT THE DOMINANT FEATURE IS EVIDENT FROM THE HUGE PROFITS RECEIVED AND HENCE THE AMOUNT RECEIVED FROM BCCI AS SUBSIDY IS COMMERCIAL. AS REGARDS CONDUCTING OF IPL MATCHES, HE POINTED OUT THAT THOUGH NO SERVICES ARE RENDERED BY THE ASSESSEE FOR CONDUCTING THE MATCHES, THE GROUND WHERE THE MATCHES ARE PLAYED ARE GIVEN FOR RENT WHICH IS A COMMERCIAL VENTURE. THE SUBSIDY RECEIVED FROM BCCI INCLUDED MAINLY TV ADVERTISEMENTS SOLD BY BCCI FOR THE CONDUCT OF IPL AND THEIR COMMERCIAL RECEIPTS ARISING FOR IPL TRANSACTIONS. THEREFORE, THE NATURE OF RECEIPT WAS IMPORTANT THAN THE NAME OF ACCOUNT UNDER WHICH IT WAS ACCOUNTED. THUS HE VIEWED THAT THE OBJECTS AND 39 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION ACTIVITIES WOULD NO LONGER COME WITHIN THE DEFINITION OF S. 2(15) OF THE ACT AFTER THE AMENDMENT COME IN EFFECT FROM 1ST APRIL, 2009. 52. AS RIGHTLY POINTED OUT BY THE ASSESSEE, THE REVENUE DOES NOT QUESTION THE OBJECTS OF THE ASSOCIATION AS NOT GENUINE OR ARE IN ACCORDANCE WITH THE OBJECTS. ALL THAT THE REVENUE STATED WAS THAT THE NATURE OF RECEIPT COULD NOT BE CALLED A SUBSIDY. THUS REVENUE CAME TO THE CONCLUSION THAT THE OBJECTS AND ACTIVITIES COULD NOT COME WITHIN THE MEANING OF 'CHARITABLE PURPOSE' UNDER S. 2(15) OF THE ACT. 53. ON GOING THROUGH THE MATERIALS, THE TRIBUNAL POINTED OUT THAT INSTEAD OF PROMOTING AND DEVELOPING THE GAME OF CRICKET, THE ASSESSEE WAS PROMOTING AND DEVELOPING CRICKET AS AN ENTERTAINMENT AND THE TICKETS ARE HIGHLY PRICED; HERE, THE ASSESSEE HAS SHIFTED THE ACTIVITIES OF GENERAL PUBLIC UTILITY TO COMMERCIAL ACTIVITY FOR GENERATING REVENUE; THE PUBLIC MERELY PARTICIPATE TO VIEW COSTLY MATCHES; HENCE THE CONDITIONS OF S. 12AA(3) WERE SATISFIED. THE TRIBUNAL AGREED WITH THE DIRECTOR OF IT (EXEMPTION) THAT THE EXPRESSION 'SUBSIDY FROM BCCI' WAS A MISLEADING NOMENCLATURE AND IT WAS A SHARE FROM THE REVENUE COLLECTED BY BCCI FROM THE SALE OF TELECAST RIGHTS. THE SURPLUS FROM IPL SEASON-I WORKED OUT TO 8.5 PER CENT OF THE TOTAL RECEIPTS. IT FURTHER HELD THAT 78 PER CENT OF THE TOTAL RECEIPT CAME OUT 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 OF THE ACTIVITIES AS FALLING WITHIN THE MEANING OF 'CHARITABLE PURPOSE', AS IT STOOD IN 2003. THE REVENUE DOES NOT DENY AS A MATTER OF FACT THAT THE OBJECTS REMAIN AS IT WERE IN 2003 AND THERE IS NO CHANGE IN ITS CONTENT TO CALL THE ASSESSEE'S OBJECT AS NOT GENUINE. THERE ARE NO MATERIALS TO INDICATE THAT THE GRANT OF REGISTRATION WAS NOT BASED ON MATERIALS INDICATING OBJECTS OF GENERAL PUBLIC UTILITY. 56. THE ASSESSEE IS A MEMBER OF BOARD OF CONTROL FOR CRICKET IN INDIA (BCCI), WHICH IN TURN IS A MEMBER OF ICC (INTERNATIONAL CRICKET COUNCIL). BCCI ALLOTS TEST MATCHES WITH VISITING FOREIGN TEAM AND ONE DAY INTERNATIONAL MATCHES TO VARIOUS MEMBER CRICKET ASSOCIATIONS WHICH ORGANISE THE MATCHES IN THEIR STADIA. THE FRANCHISEES CONDUCT MATCHES IN THE STADIA BELONGING TO THE STATE CRICKET ASSOCIATION. THE STATE ASSOCIATION IS ENTITLED TO ALL IN-STADIA SPONSORSHIP ADVERTISEMENT AND BEVERAGE REVENUE AND IT INCURS EXPENSES FOR THE CONDUCT OF THE MATCHES. BCCI EARNS REVENUE BY WAY OF SPONSORSHIP AND MEDIA RIGHTS AS WELL AS FRANCHISEE REVENUE FOR IPL AND IT DISTRIBUTES 70 PER CENT OF THE REVENUE TO THE MEMBER CRICKET ASSOCIATION. THUS THE ASSESSEE IS ALSO THE RECIPIENT OF THE REVENUE. THUS, FOR INVOKING S. 12AA R/W S. 2(15) OF THE ACT, REVENUE HAS TO SHOW THAT THE ACTIVITIES ARE NOT FITTING WITH THE OBJECTS OF THE ASSOCIATION AND 40 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION THAT THE DOMINANT ACTIVITIES ARE IN THE NATURE OF TRADE, COMMERCE AND BUSINESS. WE DO NOT THINK THAT BY THE VOLUME OF RECEIPT ONE CAN DRAW THE INFERENCE THAT THE ACTIVITY IS COMMERCIAL. THE TRIBUNAL'S VIEW THAT IT IS AN ENTERTAINMENT AND HENCE OFFENDED S. 2(15) OF THE ACT DOES NOT APPEAR TO BE CORRECT AND THE SAME IS BASED ON ITS OWN IMPRESSION ON FREE TICKET, PAYMENT OF ENTERTAINMENT TAX AND PRESENCE OF CHEER GROUP AND GIVEN THE IRRELEVANT CONSIDERATION. THESE CONSIDERATIONS ARE NOT GERMANE IN CONSIDERING THE QUESTION AS TO WHETHER THE ACTIVITIES ARE GENUINE OR CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE ASSOCIATION. WE CAN ONLY SAY THAT THE TRIBUNAL RESTED ITS DECISION ON CONSIDERATIONS WHICH ARE NOT RELEVANT FOR CONSIDERING THE TEST SPECIFIED UNDER S. 12AA(3) TO IMPOSE COMMERCIAL CHARACTER TO THE ACTIVITY OF THE ASSOCIATION. IN THE CIRCUMSTANCES, WE AGREE WITH THE ASSESSEE THAT THE REVENUE HAS NOT MADE OUT ANY GROUND TO CANCEL THE REGISTRATION UNDER S. 12AA(3) OF THE ACT. 57. AS REGARDS THE OBSERVATION OF THE TRIBUNAL 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 FINDING, REGISTRATION GRANTED UNDER S. 12A OR UNDER S. 12AA CANNOT BE CANCELLED. CANCELLATION OF REGISTRATION OF A CHARITABLE TRUST, IN A GIVEN CASE, IS PERMISSIBLE ONLY UNDER THE CIRCUMSTANCES STATED UNDER S. 12AA(3) OF THE ACT. (B) FOR AN ASSESSEE TO BE CLASSIFIED AS CHARITABLE UNDER THE RESIDUARY CATEGORY I.E. 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' UNDER S. 2(15) OF THE ACT, THE FOLLOWING FOUR FACTORS HAVE TO BE SATISFIED : (I) ACTIVITY SHOULD BE FOR ADVANCEMENT OF 'GENERAL PUBLIC UTILITY'. (II) ACTIVITY SHOULD NOT INVOLVE ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE AND BUSINESS. (III) ACTIVITY SHOULD NOT INVOLVE RENDERING OF SERVICES IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. 41 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION (IV) ACTIVITIES IN CLAUSES (B) AND (C) ABOVE, SHOULD NOT BE FOR A FEES, CESS OR OTHER CONSIDERATION, THE AGGREGATE VALUE OF WHICH SHOULD NOT EXCEED THE AMOUNT SPECIFIED IN THE SECOND PROVISO TO S. 2(15). (C) THE EARLIER TEST THAT IF THE INCOME SO COLLECTED, IS APPLIED TOWARDS THE CHARITABLE ACTIVITY, THEN THE TRUST CANNOT BE HELD AS NON-CHARITABLE, IS NO LONGER RELEVANT AFTER THE STATUTORY AMENDMENT. (D) THE SCOPE OF THE TERM 'ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS' WOULD MEAN THAT : (I) IT IS UNDERTAKEN WITH THE PROFIT MOTIVE; (II) THE ACTIVITY IS CONTINUED ON SOUND AND RECOGNIZED BUSINESS PRINCIPLES AND IS PURSUED WITH REASONABLE CONTINUITY; (III) THERE SHOULD BE FACTS AND OTHER CIRCUMSTANCES WHICH JUSTIFY AND SHOW THAT THE ACTIVITY UNDERTAKEN IS IN FACT, IN THE NATURE OF BUSINESS; (IV) THE FIVE TESTS PROPOUNDED IN THE CASE OF CCE V. LORD FISHER (1981) STC 238 AND THE PROPOSITIONS IN THE CASE OF CST V. SAI PUBLICATION FUND [2002] 258 ITR 70/122 TAXMAN 437 (SC) APPLY. (V) BUSINESS ACTIVITY IS AN IMPORTANT PREVAILING ELEMENT OF SELF INTEREST. (E) FROM A PERUSAL OF CIRCULAR NO. 11 OF 2008 [[2009] 17 DTR (ST) 1 : [2009] 221 CTR (ST) 1] ISSUED BY THE CBDT, IT IS CLEAR THAT THE NEW PROVISO OF S. 2(15) OF THE ACT IS APPLICABLE TO THE ASSESSEES WHO ARE ENGAGED IN COMMERCIAL ACTIVITIES I.E. CARRYING OF TRADE, COMMERCE OR BUSINESS IN THE GARB OF 'PUBLIC UTILITY' TO AVOID TAX LIABILITY, AND WHERE THE OBJECT OF 'GENERAL PUBLIC UTILITY' WAS SOMETIMES ONLY TO MASK OR DEVICE TO HIDE THE TRUE PURPOSE, WHICH WAS 'TRADE, COMMERCE OR BUSINESS'. (F) CHARITABLE ACTIVITY IS ANTITHESIS OF ACTIVITY HAVING AN ELEMENT OF SELF-INTEREST. CHARITY IS DRIVEN BY ALTRUISM AND DESIRE TO SERVE OTHERS, THOUGH ELEMENT OF SELF- PRESERVATION 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. 42 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION (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. (L) A PRAGMATIC VIEW IS REQUIRED WHEN WE EXAMINE THE DATA, WHICH SHOULD BE ANALYSED OBJECTIVELY. A NARROW AND COLOURED VIEW WILL BE COUNTERPRODUCTIVE AND CONTRARY TO S. 2(15) OF THE ACT. (M) ACCUMULATION OF MONEY/FUNDS OVER A PERIOD OF TWO TO THREE YEARS MAY NOT BE RELEVANT IN DETERMINING THE NATURE AND CHARACTER OF ACTIVITY AND WHETHER THE SAME SHOULD BE TREATED INDICATIVE OF PROFIT MOTIVE I.E. DESIRE OR INTENTION TO CARRY ON BUSINESS OR COMMERCE. (N) THE SO-CALLED BUSINESS ACTIVITIES, WHEN INTRINSICALLY WOVEN INTO AND IS PART OF THE CHARITABLE ACTIVITY UNDERTAKEN, THE BUSINESS ACTIVITY IS NOT FEEDING CHARITABLE ACTIVITIES, AS THEY ARE INTEGRAL TO THE CHARITY/CHARITABLE ACTIVITY. (O) WHAT HAS TO BE SEEN IS AS TO WHAT IS THE CORE/MAIN ACTIVITY OF THE ASSESSEE. THE PREDOMINANT ACTIVITY SHALL BE THE BASIS OF DECISION MAKING. 10.5 APPLYING THESE PROPOSITIONS TO THE FACTS OF THIS CASE, WE OBSERVE THAT : (A) THE DIRECTOR OF IT (EXEMPTION) AT PARA 9 OF HIS ORDER AGREES THAT THE ASSESSEE IS CARRYING ON ACTIVITY OF 'GENERAL PUBLIC UTILITY', WHICH MEANS THAT THE CHARITABLE NATURE OF ASSESSEE'S ACTIVITY IS NOT DISPUTED BY THE REVENUE. THUS THE DIRECTOR OF IT (EXEMPTION) HAS CONTRADICTED HIMSELF BY HOLDING ON ONE HAND, THAT THE ASSESSEE IS A CHARITABLE INSTITUTION CARRYING OUT CHARITABLE ACTIVITY AND ON ANOTHER HAND, COMING TO A CONCLUSION THAT THE ASSESSEE IS DOING BUSINESS. IT IS ALSO NOT THE CASE OF THE DIRECTOR OF IT (EXEMPTION) THAT, THE ASSESSEE IS NOT CARRYING ON ITS ACTIVITIES IN ACCORDANCE WITH THE OBJECTS FOR WHICH IT IS FOUNDED. NO SUCH FINDING IS RECORDED IN THE ORDER. THUS, THE TWIN CONDITIONS MANDATORILY REQUIRED FOR INVOKING THE JURISDICTION UNDER S. 12AA(3) BY THE LEARNED DIRECTOR OF IT (EXEMPTION), TO CANCEL THE REGISTRATION GRANTED UNDER S. 12AA I.E., THE SATISFACTION OF THE DIRECTOR OF IT (EXEMPTION) THAT (A) THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE, OR (B) THAT THE ACTIVITIES OF TRUST OR INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION ARE NOT EXISTING IN THIS ORDER. 43 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 10.6 THUS APPLYING THE PRINCIPLES LAID DOWN IN THE JUDGEMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA), THE IMPUGNED ORDER CANCELLING THE REGISTRATION UNDER S. 12A IS QUASHED. 10.7 EVEN OTHERWISE THE MAIN AND PREDOMINANT OBJECT AND ACTIVITY OF THE 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 CRICKET ASSOCIATION WERE NOT CONSIDERED BY THE HON'BLE MADRAS HIGH COURT, AS ACTIVITIES IN THE NATURE OF 'TRADE, COMMERCE OR BUSINESS'. THERE IS NO CONTRARY DECISION CITED BY THE REVENUE. THUS NONE OF THE ABOVE STREAMS OF INCOME, WHEN RECEIVED BY THE ASSESSEE WOULD CONSTITUTE BUSINESS ACTIVITY FOR THE ASSESSEE. 10.9 THUS RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA), WE HAVE TO HOLD THAT THE AMOUNTS RECEIVED BY THE ASSESSEE FROM (A) GROUND BOOKING CHARGES, (B) HEALTH CLUB CHARGES, (C) INCOME FROM CORPORATE BOXES, (D) LAWN BOOKING INCOME, (E) SPONSORSHIP MONEY AND SALE OF TICKETS, ADVERTISEMENT, SOUVENIRS AND OTHER SUCH RECEIPTS DO NOT RESULT IN THE ASSESSEE BEING HELD AS UNDERTAKING ACTIVITIES IN THE NATURE OF 'TRADE, COMMERCE OR BUSINESS'. THESE RECEIPTS ARE INTRINSICALLY RELATED, INTERCONNECTED AND INTERWOVEN WITH THE CHARITABLE ACTIVITY AND CANNOT BE VIEWED SEPARATELY. THE ACTIVITIES RESULTING IN THE SAID RECEIPTS ARE ALSO CHARITABLE ACTIVITIES AND NOT 'TRADE, COMMERCE OR BUSINESS' ACTIVITIES. 44 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 11. WE NOW TAKE UP EACH OF THE ISSUES RAISED BY THE LEARNED DIRECTOR OF IT (EXEMPTION) IN HIS ORDER. 11.1 ON THE ISSUE OF SPONSORSHIP INCOME FROM M/S TWENTY FIRST CENTURY MEDIA (P) LTD. (TFCM), IT WAS EXPLAINED THAT DESPITE THE RECEIPT OF SPONSORSHIP MONEY DURING THE YEAR OF RS. 31,01,038 AND RECEIVING A SUM OF RS. 14,20,000 FROM BCCI AS SUBSIDY, THERE WAS A SHORTFALL OF RS. 29,84,835, WHICH WAS MET BY THE ASSESSEE. IT WAS SPECIFICALLY ARGUED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE AGREEMENT WITH 'M/S TWENTY FIRST CENTURY MEDIA (P) LTD.' IS COMMERCIAL IN NATURE. THE REPLY OF THE ASSESSEE IS THAT IT SHOULD BE APPRECIATED THAT FOR ANY ORGANIZATION TO RUN AND SURVIVE IT IS ESSENTIAL THAT IT SHOULD AUGMENT SOME FUNDS TO MEET THE COST/EXPENDITURE, AS REQUIRED TO BE INCURRED, TO CARRY OUT THE ACTIVITIES MEANT TO ACHIEVE ITS OBJECT. WE AGREE WITH THE SUBMISSIONS OF THE ASSESSEE. 11.2 THE ASSESSEE HAS TO PERFORM MANY ACTIVITIES AND FOR THIS PURPOSE IT HAS TO ENTER INTO TRANSACTIONS WITH VARIOUS TYPES OF PERSONS. THESE PERSONS CAN BE COMMERCIAL OR NON-COMMERCIAL ORGANIZATIONS, PROFESSIONALS, VENDORS OF GOODS, VENDORS OF SERVICES AND SO FORTH AND SO ON. MERELY ENTERING INTO SUCH AGREEMENT DOES NOT TANTAMOUNT TO THE ASSESSEE BEING A BUSINESS ENTITY. THE QUESTION IS WHETHER THE ACTIVITY 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 MAKING IT AS BUSINESS ACTIVITY, THE PRESENCE OF PROFIT MOTIVE IS A SIN QUA NON I.E. CONDITION PRECEDENT AT THE TIME OF ENTERING INTO TRANSACTION. IN THIS CASE THE FACTS DEMONSTRATE THAT DESPITE THE RECEIPT OF AMOUNT FROM SPONSORSHIP AND SUBSIDY FROM BCCI, THERE WAS DEFICIT, WHICH WAS MET BY THE ASSESSEE. THUS THIS ADJUSTMENT RESULTED IN SUBSIDIZING THE COST OF THE ASSESSEE AND HENCE THERE IS NO PROFIT MOTTO. THIS CANNOT BE TERMED AS BUSINESS ACTIVITY. SIMILAR IS THE VIEW OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA). 11.3 ON THE ISSUE OF SALE OF LIQUOR, IT WAS SUBMITTED THAT INITIALLY DDCA WAS FORMED AS A CLUB TO TAKE OVER THE ASSETS AND LIABILITIES OF THE ASSOCIATION CALLED, 'DELHI CRICKET ASSOCIATION'. HE REFERRED TO THE OBJECTS AND SUBMITTED AS FOLLOWS : 'ONE OF THE OBJECTS AS GIVEN IN THE MOA OF DDCA IS TO LAY GROUND FOR PLAYING GAME OF CRICKET AND TO PROVIDE PAVILION, REFRESHMENT ROOMS AND OTHER FACILITIES IN CONNECTION THEREWITH. THEREFORE, AN EATERY WAS ESTABLISHED WHICH WAS EVENTUALLY SHAPED AS A CANTEEN FOR THE BENEFIT OF THE MEMBERS AS WELL AS FEW OTHER PERSONS ASSOCIATED WITH DDA E.G. PLAYERS, COACHES, STAFF, OTHER GUESTS, ETC.' 11.4 IN OUR VIEW, FOR THE PURPOSE OF MAKING THIS CANTEEN SELF-SUSTAINABLE. IT HAS TO FOLLOW GLOBAL STANDARDS AND INTERNATIONAL PROTOCOLS, SINCE CRICKET IS PLAYED AT 45 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION INTERNATIONAL LEVEL. CANTEEN KEEPS VARIOUS ITEMS AS PER MENU. LIQUOR IS JUST PART OF THIS MENU. IT IS NOT SOLD INDEPENDENTLY AS TRADING ITEM. THE EATERY IS AVAILABLE FOR THE USE ONLY OF MEMBERS, PLAYERS, STAFF, OTHER GUESTS OF DDCA. IT IS NOT OPEN FOR PUBLIC. A WALK- IN CUSTOMER/GUEST CANNOT ENJOY THE FACILITY OF THIS EATERY. THE BASIC FACT IS THAT THIS CANTEEN HAS DIRECT AND INEXTRICABLE LINK WITH ONE OF THE CORE ACTIVITIES OF DDCA I.E., MAINTAINING SUCH A HUGE CRICKET STADIUM AND PROMOTING THE GAME OF CRICKET. THE REVENUE, IN THIS CASE IS TRYING TO PROJECT THAT THE ASSESSEE IS A LIQUOR DEALER. THIS IS NOT CORRECT. INTERNATIONALLY, WHEN FACILITIES ARE PROVIDED TO PLAYERS, LIQUOR IS PART OF THE MENU. THIS IS JUST INCIDENTAL TO PROVIDING FOOD AND BEVERAGES. WHEN THE LEARNED DIT(E) DOES NOT FIND ANYTHING WRONG IN THE ASSESSEE SUPPLYING FOOD AND BEVERAGES IN THE CANTEEN TO THE MEMBERS, WE CANNOT FIND FAULT WITH LIQUOR BEING PART OF THE MENU CARD AND BEING SERVED AS PER INTERNATIONAL CUSTOMS AND REQUIREMENTS. 11.5 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 (SIC- ARISING) 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 EXPENDITURE INCURRED FOR THE SAME IS RS. 238 LAKHS. IT WAS SUBMITTED THAT THE DDCA INITIALLY MEETS THIS EXPENDITURE OUT OF ITS OWN SOURCES AND THEREAFTER THE BCCI AND LEGAL FRANCHISEE CONTRIBUTE AND COMPENSATE PART OF THIS EXPENSES. THE SAME ARGUMENTS AS WERE ADVANCED BY THE ASSESSEE IN THE CASES WHERE SPONSORSHIP MONEY RECEIVED, WERE MADE HERE ALSO. THE SUMMARY OF THE SUBMISSIONS ARE AS FOLLOWS : 'OUR RESPECTFUL SUBMISSION IS THAT, AS WE HAVE GIVEN DETAILED SUBMISSION IN EARLIER PART OF OUR SUBMISSIONS WHEREIN WE HAVE MADE ANALYSIS OF RECEIPTS AS WELL AS OF THE EXPENSES INCURRED BY THE ASSESSEE. THE ANALYSIS OF EXPENSES HAS REVEALED THAT THE EXPENSES HAVE BEEN INCURRED ON THE PROMOTION OF THE GAME OF CRICKET. THESE EXPENSES HAVE BEEN INCURRED EITHER FOR THE DEVELOPMENT OF GAME OF CRICKET OR THE DEVELOPMENT OF PLAYERS. THERE IS NO OTHER CAUSE OR ITEM FOR WHICH ANY AMOUNT HAS BEEN SPENT BY THE ASSESSEE. SIMILARLY, WHEN WE ANALYSE THE RECEIPT SIDE, WE WOULD FIND THAT THE RECEIPTS ARE DIRECTLY OR INEXTRICABLY LINKED WITH THE ORGANIZING OF MATCHES AND TOURNAMENTS OR FOR PROMOTION OF GAME OF CRICKET IN ANY OTHER MANNER OR FOR MAINTENANCE OR BUILDING UP THE INFRASTRUCTURE MEANT FOR THE PROMOTION OF THE GAME OF CRICKET. THUS, IT CAN BE SAFELY SAID THAT THE DDCA EXISTS FOR CRICKET AND CRICKET ONLY. THE CBDT HAS ALREADY CLARIFIED THAT SPORTS IS A MATTER OF GENERAL PUBLIC UTILITY. THEREFORE DDCA SATISFIES THE CONDITION OF HAVING A CHARITABLE OBJECT AS MENTIONED IN S. 46 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 2(15) OF THE IT ACT, 1961. IT DOES NOT VIOLATE ANY CONDITION AS MENTIONED IN PROVISO TO S. 2(15). THE APPREHENSION THAT CERTAIN INCOME RECEIVED BY THE ASSESSEE DURING THE YEAR PARTAKES THE CHARACTER OF BUSINESS INCOME, IS ILL-FOUNDED. IN THIS REGARD WE HAVE SUBMITTED IN DETAIL THAT THIS APPREHENSION IS MISPLACED ON ACCOUNT OF VARIOUS SUBMISSIONS AS PER DETAILS GIVEN BELOW : 1. THE ENTIRE RECEIPTS HAVE BEEN RECEIVED FOR THE PROMOTION OF GAME OF CRICKET. 2. THE ASSESSEE IS NOT FREE TO USE IT AS PER ITS CONVENIENCE FOR ANY PURPOSE OTHER THAN FOR PROMOTION OF CRICKET. THUS, THE AMOUNTS RECEIVED IN THIS MANNER CANNOT BE CHARACTERIZED AS BUSINESS RECEIPTS. 3. THE AMOUNT HAS BEEN RECEIVED AS THE VOLUNTARY CONTRIBUTION ON DISCRETION OF THE CONTRIBUTOR (FOR E.G. BCCI). THESE HAVE BEEN RECEIVED FOR RAISING THE FUNDS FOR MEETING ITS COSTS AND EXPENSES. 4. IN NONE OF THE CASES THERE IS ANY QUID PRO QUO. 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 LEARNED AO IN ALL THE PAST YEARS ACCEPTING THE CLAIM OF THE ASSESSEE ALL ALONG ON FACTS AS WELL AS ON LAW.' 11.8 IN VIEW OF OUR DECISION OF SPONSORSHIP AND SUCH OTHER RECEIPTS, WE AGREE WITH THE ARGUMENTS MADE BY THE ASSESSEE. REGARDING SALE OF TICKETS, THE ASSESSEE EXPLAINED THAT NO TICKETS ARE SOLD FOR RANJI TROPHY AND ONLY IN CASE OF INTERNATIONAL MATCHES, RS. 200 PER TICKET ARE LEVIED, WITH A SOLE INTENTION TO CONTROL THE CROWDS AND THAT THE COST INCURRED PER TICKET IS MUCH MORE THAN THE AMOUNT WHICH IS CHARGED FOR TICKET. UNDER 47 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION THESE CIRCUMSTANCES, THE SALE OF TICKETS CANNOT BE CONSIDERED AS AN ACTIVITY OF 'TRADE, COMMERCE OR BUSINESS'. WE AGREE WITH THE SUBMISSIONS OF THE ASSESSEE. 11.9 REGARDING PLAYING CARDS, IT IS AN INCIDENTAL RECREATION ACTIVITY UNDERTAKEN IN MOST CLUBS AND WHAT IS CHARGED BY THE ASSESSEE GOES TO RECOVER THE COSTS FOR PROVIDING SUCH RECREATION FACILITY TO ITS MEMBERS. THE RECEIPTS ARE MINISCULE AND HENCE, NEGLIGIBLE. 11.10 SIMILARLY AS FAR AS RECEIPT FROM HEALTH CLUB IS CONCERNED, WE FIND THAT ONLY A PART OF THE EXPENDITURE INCURRED ON HEALTH CLUB IS RECOVERED BY WAY OF CHARGES FROM MEMBERS WHO ARE USING THE HEALTH CLUB FACILITY. THESE ARE ALL, AT BEST BE CALLED USER CHARGES. IN OUR VIEW THESE RECEIPTS CANNOT BE TERMED AS AN ACTIVITY IN THE NATURE OF 'TRADE, COMMERCE OR BUSINESS'. IN FACT, HEALTH CLUB FACILITY IS RECOGNIZED TO PROMOTE THE GAME OF CRICKET. 11.11 ALL THE RECEIPTS OF THE ASSESSEE ARE INTRINSICALLY LINKED WITH THE ACTIVITY OF ORGANIZING MATCHES AND TOURNAMENTS FOR THE PROMOTION OF CRICKET. USER CHARGES ARE REQUIRED FOR MAINTAINING THE FACILITIES THAT ARE PROVIDED AS PART OF THE INFRASTRUCTURE FOR CONDUCTING THE ACTIVITIES OF THE ASSESSEE. 11.12 ON CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND WHEN VIEWED IN TOTALITY, WE HAVE TO COME TO A CONCLUSION THAT THE ASSESSEE IS NOT CARRYING ON THE ACTIVITIES WITH ANY PROFIT MOTIVE OR WITH ANY SELF-INTEREST. THE CONTRIBUTIONS RECEIVED BY WAY OF SPONSORSHIP, ADVERTISEMENT, SALE OF TICKETS, ETC. AND USER CHARGES ON THE FACTS OF THIS CASE, DO NOT CONVERT THE CHARITABLE ACTIVITY INTO 'TRADE, COMMERCE OR BUSINESS' ACTIVITY. 11.13 IN VIEW OF THE ABOVE DISCUSSION AND IN VIEW OF THE BINDING JUDGEMENTS CITED ABOVE, WE HAVE TO NECESSARILY QUASH THE IMPUGNED ORDER PASSED BY THE DIRECTOR OF IT (EXEMPTION) UNDER S. 12AA(3) R/W S. 12A OF THE ACT, AS IT IS BAD IN 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. 48 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION 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 ALSO CONSIDERED BY THE AHMEDABAD D BENCH OF THE TRIBUNAL AND IT WAS ADJUDICATED THAT THE RECEIPTS IN QUESTION ARE IN THE CAPITAL FIELD. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE ALLOW THIS GROUND OF THE ASSESSEE. 16. WE NOW TAKE UP THE APPEAL FOR THE ASSESSMENT YEAR 2014-15 IN ITA NO. 108/RAN/2017. 17. IN VIEW OF THE ABOVE DECISION ON MERITS, THE ORDER OF THE LD. CIT U/S 263 OF THE ACT, HAS TO BE NECESSARILY VACATED. THE ASSESSING OFFICER HAS PASSED A DETAILED AND REASONED ORDER U/S 143(3) OF THE ACT, GRANTING EXEMPTION TO THE ASSESSEE U/S 11 & 12 OF THE ACT. THIS IS NOT A CASE OF NON-APPLICATION OF MIND BY THE ASSESSING OFFICER. THE VIEW TAKEN IS A PLAUSIBLE VIEW. THE LD. CIT IN HIS ORDER U/S 263 OF THE ACT, HAS NOT POINTED OUT, AS TO THE ERROR COMMITTED BY THE ASSESSING OFFICER WHICH CAUSE PREJUDICE TO THE INTEREST OF THE REVENUE. BE IT AS IT MAY, WE HAVE ADJUDICATED THE MAIN ISSUE AS TO WHETHER THE PROVISION TO SECTION 2(15) OF THE ACT IS APPLICABLE TO THE FACTS OF THIS CASE IN FAVOUR OF THE ASSESSEE. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE HAVE TO NECESSARILY CANCEL THE ORDER OF THE LD. CIT PASSED U/S 263 OF THE ACT. 18. IN THE RESULT, ALL THESE APPEALS OF THE ASSESSEE ARE ALLOWED. KOLKATA, THE 15 TH DAY OF MARCH, 2019. SD/- SD/- 49 ITA NO. 157/RAN/2017 ITA NO. 158/RAN/2017 ITA NO. 159/RAN/2017 ITA NO. 108/RAN/2018 M/S. JHARKHAND STATE CRICKET ASSOCIATION [S.S. VISWANETHRA RAVI] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15.03.2019 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. M/S. JHARKHAND STATE CRICKET ASSOCIATION KEENAN STADIUM, SAKCHI JAMSHEDPUR-831011 2. DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS), RANCHI 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES