DCIT(E), Circle - 2, Kolkata , Kolkata V. M/s. Tripura Cricket Association, Agartala

ITA 1758/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2264 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 31-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Depreciation; Charitable institution; Opportunity of being heard; Capital receipt; Cancellation of registration; Reassessment proceedings; TDS; Set aside
• Section: 69C; 143(3); 40(a)(ia); 12A; 12AA; 250; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER] I.T.A. NO. 1758/KOL/2017 ASSESSMENT YEAR: 2014-15 DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS) CIRCLE-2, KOLKATA.....................APPELLANT VS. M/S. TRIPURA CRICKET ASSOCIATION..............................RESPONDENT HGB ROAD P.O.:- CHOWMUHANI AGARTALA PIN:- 799 001 [PAN : AACTS 7283 F] APPEARANCES BY: NONE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI A.K. SINGH, CIT D/R APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : MAY 20 TH , 2019 DATE OF PRONOUNCING THE ORDER : JUNE 21 ST , 2019 O R D E R PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 25, (HEREINAFTER THE LD. CIT (A)) PASSED U/S. 250 OF THE INCOME TAX ACT, 1961, (THE ACT), DT. 23/05/2017, FOR THE ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 27/10/2014 DECLARING NIL INCOME. THE ASSESSING OFFICER PASSED AN ORDER U/S 143(3) OF THE ACT ON 29/12/2016 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.48,48,06,710/- INTERALIA MAKING VARIOUS ADDITIONS. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE LD. FIRST APPELLATE AUTHORITY GRANTED RELIEF. 3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 54,84,00,000/- ON INFRASTRUCTURE SUBSIDY RECEIVED FROM BCCI DENYING EXEMPTION U/S.11(1)(D) OF THE INCOME TAX ACT, 1961 ON CORPUS DONATION WITHOUT ANY 'SPECIFIC DIRECTION' FOR THE PURPOSE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF 'BOGUS DONATION' CLAIMED ON ACCOUNT OF EXPENSES 2 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA RELATING TO TOURNAMENT & TROPHY AND RANJI TROPHY WITHOUT CONSIDERING THAT THE EXPENSES COULD NOT BE SUBSTANTIATED DURING THE ASSESSMENT PROCEEDINGS. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DECISION OF THE LD. CIT(A) IS PERVERSE IN ALLOWING EXPENDITURE WITHOUT ESTABLISHING GENUINENESS OF THE SAME PARTICULAR IN THE CONTEXT THAT IN THE NEXT ASSESSMENT YEAR, I.E., 2015- 16, THE ASSESSEE ITSELF SUGGESTED FOR SPECIAL AUDIT OF ITS BOOKS OF ACCOUNTS REGARDING THE CLAIM OF EXPENDITURE. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING ADMINISTRATIVE AND ESTABLISHMENT EXPENSES AS APPLICATION OF INCOME. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING SETTING APART OF FUND U/S. 11(2) OF THE INCOME TAX ACT,1961 WITHOUT CONSIDERING THAT THERE WAS NOT ONLY THE DEFICIT OF FILING FORM 10 IN DUE TIME BUT ALSO THE SAME WAS NOT CLAIMED IN THE RETURN OF INCOME. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING ENHANCED CLAIM MADE BY FURNISHING OF FORM 10 BEFORE THE COMPLETION OF ASSESSMENT AGAINST THE JUDGMENT OF THE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD VS. CIT REPORTED IN 284 ITR 323 (2006) THAT NO FRESH CLAIM CAN BE ACCEPTED DURING ASSESSMENT PROCEEDINGS. 7. THAT THE APPELLANT CRAVES FOR LEAVE TO AMEND, ALTER, MODIFY, SUBSTITUTE, ADD OR ABRIDGE AND/OR RESCIND ANY OR ALL OF THE GROUNDS OF APPEAL DURING ANY STAGE OF APPEAL. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUE OF NOTICE THROUGH RPAD. THERE IS AN APPLICATION FOR GRANT OF ADJOURNMENT FROM SHRI NIHAR DASGUPTA, LD. ADVOCATE ON BEHALF OF THE ASSESSEE. AS, IN OUR OPINION, THIS IS NOT A FIT CASE FOR GRANT OF ADJOURNMENT, WE DISPOSE OFF THE CASE EX-PARTE QUA THE ASSESSEE, AFTER HEARING THE LD. D/R. 5. WE HAVE HEARD SHRI A.K. SINGH, CIT D/R ON BEHALF OF THE REVENUE. 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:- 5.1. THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S 12AA OF THE ACT BY THE COMMISSIONER OF INCOME TAX. THE ISSUE THAT ARISE FOUR OUR CONSIDERATION ARE AS FOLLOWS:- 3 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA A) CONTRIBUTION RECEIVED FROM PARENT BODY [BCCI] TOWARDS INFRASTRUCTURE FUND FOR CONSTRUCTION OF CRICKET STADIUM WHICH WAS TREATED BY THE ASSESSEE AS A CORPUS DONATION AND TAKEN DIRECTLY TO THE BALANCE SHEET OF THE ASSESSEE COMPANY. B) ADMINISTRATIVE AND ESTABLISHMENT EXPENSES WHICH ARE NOT DIRECTLY AND PROXIMATELY RELATED WITH CRICKET ADMINISTRATION ACCOUNTS TO RS.18,21,004/- ARE NOT TAKEN AS APPLICATION AS INCOME FOR CALCULATION OF ACCUMULATION OF SURPLUS. C) DEPRECIATION DISALLOWED ON THE GROUND THAT THERE IS A DOUBLE CLAIM I.E., ONE AS APPLICATION OF INCOME AND ONE AS DEPRECIATION ON ASSETS. 5.2. THE LD. CIT(A) IN THE IMPUGNED ORDER HELD AS FOLLOWS:- A) WITH REGARD TO THE CONTRIBUTION RECEIVED FROM PARENT BODY BCCI TOWARDS INFRASTRUCTURE FUND GIVEN FOR CONSTRUCTION OF CRICKET STADIUM HE HELD THAT, HE IS FOLLOWING HIS OWN DECISION FOR THE ASSESSMENT YEAR 2012-13 TAKEN IN THE ASSESSEES OWN CASE IN APPEAL NO. CIT(A), KOLKATA-25/10144/2015-16, ORDER DT. 06/01/2017, WHEREIN HE HAS HELD THAT THE ASSESSEE HAS FILED INTIMATION U/S 11(2) AND HAD DEPOSITED THE AMOUNT AS SPECIFIED U/S 11(5) OF THE ACT AND ALTERNATIVELY THAT SECTION 11(1)(D) OF THE ACT APPLIES AS THE AMOUNT IN QUESTION WAS RECEIVED WITH A SPECIFIC DIRECTION. HE FURTHER HELD THAT THE AMOUNT WAS GIVEN BY BCCI SPECIFICALLY FOR CONSTRUCTION OF A CRICKET STADIUM AND THE ASSUMPTIONS OF THE ASSESSING OFFICER THAT THE RECEIPTS ARE NOT DONATION SINCE BCCI WILL BE HOSTING CRICKET MATCHES IN FUTURE IS A WRONG ASSUMPTION AT PARA 7.3. OF HIS ORDER, HE HELD AS FOLLOWS:- 7.3 TO WIND-UP ON THIS ISSUE: FIRSTLY, FOLLOWING MY APPEAL ORDER IN THE CASE OF THIS SAME APPELLANT FOR THE AY 2012-13 [SUPRA], THE FACTS BEING THE SAME/IDENTICAL, THE ISSUE IS ALLOWED. IT IS THE CASE OF SECTION 11(L)(A) R.W.S. 12(1), AND AS THE AMOUNT COULD NOT BE APPLIED, FOR ACCUMULATION U/S 11(2) - THE FUNDS HAVING BEEN ALREADY DEPOSITED/INVESTED IN THE MODES SPECIFIED IN SECTION 11 (5). THE BELATED FORM NO. 10 WAS DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE APPELLANT, AND IN ANY CASE IT WAS SUBMITTED BEFORE THE COMPLETION OF ASSESSMENT; AND, IT IS ONLY A PROCEDURAL INTIMATION. IN THIS REGARDS, IT ALSO NEEDS TO BORNE IN 4 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA MIND, THAT IF AT ALL FOR THE DELAY, THEN AT BEST THERE SHOULD BE PROVISIONS FOR PENALTY IMPOSABLE [AS IN THE CASE OF SECTION LATE FILING OF AUDIT REPORT U/S 44AB/271B]; BUT THERE IS NOT PENALTY FOR LATE FILING OF FORM NO. 10 - IN FACT THERE IS NO ANY PENALTY PROVISIONS FOR CHAPTER III OF THE ACT - OBVIOUSLY SINCE IT IS EXEMPTED INCOMES CHAPTER]. SO, TO DENY ACCUMULATION U/S 11 (2) MERELY BECAUSE OF LATE FILING OF THE FORM NO. 10 - WOULD BE IRRATIONAL. THE ALTERNATE CONTENTION OF EXEMPTION U/S 11(L)(D) EQUALLY HOLDS GOOD - FOR THE CONTRIBUTIONS ARE SPECIFICALLY FOR THE CONSTRUCTION OF THE STADIUM. THE STADIUM IS CORPUS OF THE TRUST. IT IS A CAPITAL ASSET TO PROMOTE AND IMPLEMENT THE OBJECTS OF THE TRUST. AND, TO ADD A POINT FURTHER TO MY APPEAL ORDER OF AY 2012- 13, EVEN IF, FOR ACADEMIC DISCUSSION SAKE, THE CONTRIBUTION IS NOT HELD TO BE AS INCOME U/S11(1)(A) OR SECTION 11(1)(D), OR THAT THE FORM NO. 10 IS NOT ENTERTAINABLE - IT DOES NOT MEAN THAT THE CONTRIBUTION BECOMES CHARGEABLE TO INCOME-TAX - FOR THERE IS NO CHARGEABILITY PROVISIONS AS SUCH IN THE CHARGING SECTION 13. 5.2.1. ON TOURNAMENT EXPENSES, HE HELD THAT THE PROVISIONS OF TDS ARE NOT APPLICABLE AND THAT SECTION 69C OF THE ACT, BEING BROUGHT IN BY THE ASSESSING OFFICER WAS OUT OF CONTEXT AND ABSURD. 5.2.2. ON THE ISSUE OF DISALLOWANCE OF ADMINISTRATIVE AND ESTABLISHMENT EXPENSES, HE HELD THAT THESE HAVE TO BE REDUCED FROM THE GROSS RECEIPTS BEFORE COMPUTING ACCUMULATION U/S 11(1)(A) OF THE ACT. HE ALSO HELD THAT THE EXPENDITURE IN QUESTION ARE NECESSARY AND ESSENTIAL EXPENDITURE AND HENCE HAVE TO BE ALLOWED. ON THE ISSUE OF DEPRECIATION HE APPLIED THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) V. INDRAPRASTHA CANCER SOCIETY [2015] 53 TAXMANN.COM 463 (DELHI) AND HELD THAT SUB-SECTION (6) WOULD BE PROSPECTIVE. HE APPLIED THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SILIGURI REGULATED MARKET COMMITTEE [2014] 51 TAXMANN.COM 455 (CALCUTTA) AND SUBMITTED THAT THE DEPRECIATION CLAIMED IS ALLOWABLE. THESE ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE RANCHI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. JHARKHAND STATE CRICKET ASSOCIATION VS. DCIT(E), RANCHI IN ITA NOS. 157 TO 159/ RAN/2017 ORDER DT. 15 TH MARCH, 2019, WHEREIN IT HAS BEEN HELD AS FOLLOWS:- 5 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 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 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 6 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 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. 7 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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. (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 8 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 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 9 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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. 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) 10 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 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. 11 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 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 12 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 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).' 13 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 FOLL OWING 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. (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. 14 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA (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. (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, 15 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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. 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 16 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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. 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 17 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 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 : 18 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA '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. 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. 19 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA 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 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 20 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA AND HAS COME TO A CONCLUSION THAT THE PROVISO TO SECTION 2(15) OF THE ACT, CANNOT BE INVOKED ON THE GROUND THAT THESE RECEIPTS ARE IN THE NATURE OF TRADE, COMMERCE AND BUSINESS. 14. THE ARGUMENT OF THE LD. D/R WHICH IS BROUGHT OUT ABOVE HAS BEEN CONSIDERED IN THIS ABOVE REFERRED DECISIONS 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. 5.3. RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID THEREIN AND AS THE ORDER OF THE LD. CIT(A), ON THIS ISSUE IS IN LINE WITH THE VIEW TAKEN BY THE RANCHI BENCH OF THE TRIBUNAL WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THIS GROUND NO. 1 OF THE REVENUE. 6. GROUND NO. 2, IN OUR VIEW DOES NOT ARISE FROM THE ASSESSMENT ORDER. THERE IS NO FINDING IN THE ASSESSMENT ORDER THAT CERTAIN DONATIONS ARE BOGUS DONATIONS. HENCE, THIS GROUND RAISED BY THE REVENUE IS MISCONCEIVED AND DISMISSED AS SUCH. 7. GROUND NOS. 3 & 4 ARE ON THE ISSUE OF EXPENDITURE CLAIMED BY THE ASSESSEE. THE LD. CIT(A) AT PARA 8.2. HAS DISCUSSED THE ISSUE AT LENGTH. HE HAS HELD THAT THE DISALLOWANCE U/ 69C OF THE ACT, CANNOT BE SUSTAINED AS THE AMOUNTS IN QUESTION WERE RECORDED IN THE BOOKS OF ACCOUNTS AND ARE PART OF THE INCOME AND EXPENDITURE ACCOUNT AND THE SOURCE OF THE EXPENDITURE HAS BEEN DISCLOSED IN THE BOOKS OF ACCOUNT. HE FURTHER HELD THAT THE ASSESSING OFFICER MADE QUANTUM DISALLOWANCE EXCEEDING MORE THAN WHAT WAS DEBITED TO THE INCOME AND EXPENDITURE ACCOUNT. HE FOUND THAT THE ASSESSING OFFICER HAS MIXED UP THE DISALLOWANCE DUE TO NON DEDUCTION OF TDS. FURTHER HE HELD THAT, WHEN APPLICATION OF INCOME IS CONSIDERED U/S 11 OF THE ACT, DISALLOWANCE U/S 40(A)(IA) OF THE ACT, CANNOT BE MADE FOR THE IMPUGNED ASSESSMENT YEAR. WE FIND NO INFIRMITY IN THIS ORDER OF THE LD. CIT(A) AS EXPLANATION (III) TO SECTION 11(1) OF THE ACT, WAS 21 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA INTRODUCED BY THE FINANCE ACT, 2018 ONLY W.E.F. 01/04/2019. THUS, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISSED GROUND NOS. 3 & 4 RAISED BY THE REVENUE. 8. GROUND NO. 5 & 6, ARE ON THE ISSUE OF DELAY IN FILING FORM NO. 10 FOR SETTING APART FUNDS U/S 11(2) OF THE ACT. THE LD. D/R RELIES ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. VS CIT [2006] 284 ITR 323 SC . WE FIND THAT THIS IS NOT A CASE WERE A FRESH CLAIM HAS BEEN MADE BY THE ASSESSEE. THIS IS A CASE WHERE THERE IS A DELAY IN FILING INTIMATION IN FORM NO. 10, FOR THE PURPOSE OF ACCUMULATION OF FUNDS. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. NAGPUR HOTEL OWNERS ASSOCIATION REPORTED IN [2001] 247 ITR 201 (SC) HAD HELD THAT FORM NO. 10 CAN BE FILED BY THE ASSESSING OFFICER BEFORE THE COMPLETION OF ASSESSMENT. THE LD. CIT(A) APPLIED THIS DECISION OF THE HONBLE SUPREME COURT. WE FIND NO INFIRMITY IN THE SAME AND HENCE GROUND NOS. 5 & 6 OF THE REVENUE ARE DISMISSED. 9. GROUND NO. 7 IS GENERAL IN NATURE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 21 ST DAY OF JUNE, 2019. SD/- SD/- [S.S. VISWANETHRA RAVI] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21.06.2019 {SC SPS} 22 I.T.A. NO. 1067/KOL/2017 ASSESSMENT YEAR: 2013-14 PRAVINA KHARA COPY OF THE ORDER FORWARDED TO: 1. M/S. TRIPURA CRICKET ASSOCIATION HGB ROAD P.O.:- CHOWMUHANI AGARTALA PIN:- 799 001 2. DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS) CIRCLE-2, KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES