ACIT, New Delhi V. Delhi & Delhi Circket Association, New Delhi

ITA 189/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8396 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 11-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Business income; Depreciation; Charitable institution; Benefit of exemption; Capital expenditure; Set aside
• Section: 40A(3); 143(3); 115JB; 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.189/DEL./2017 (ASSESSMENT YEAR : 2012-13) DCIT (E), CIRCLE 1 (1), VS. DELHI & DISTRICT CRICKE T ASSOCIATION, NEW DELHI FEROZSHAH KOTLA GROUND, BAHADURSHAH ZAFAR MARG, NEW DELHI 110 002. (PAN : AAATD0828P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE REVENUE BY : MS. NIDHI SRIVASTAVA, CIT DR DATE OF HEARING : 09.07.2019 DATE OF ORDER : 16.07.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DCIT (E), CIRCLE 1 (1), NEW DELHI (HERE INAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 25.10.2016 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) - 40, NEW DELHI QUA THE A SSESSMENT YEAR 2012-13 ON THE GROUNDS INTER ALIA THAT :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DIRECTING THE AO TO AL LOW EXEMPTION U/S. 11 (1) OF THE ACT PARTICULARLY WHEN THE ASSESS EE HAS SHOWN RECEIPTS FROM SPONSORSHIP INCOME SALE OF LIQUOR, IN COME FROM CORPORATE BOXES, SALE OF TICKETS AND ADVERTISING/CO NTRACTUAL RECEIPTS WHICH ARE PURELY COMMERCIAL IN NATURE. ITA NO.189/DEL./2017 2 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE, AN ASSOCIATION ESTABLISHED TO ENCOURAGE AND PROMOTE THE GAME OF CRICKET IN THE PR OVINCE OF DELHI AND DISTRICT OF KARNAL WHICH WAS REGISTERED UNDER SECTI ON 12A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT), BUT THE REGISTRATION WAS WITHDRAWN W.E.F. 01.04.2009 FOR AY 2009-10 ONWARDS. HOWEVER, THE REGISTRATION U/S 12AA OF THE ACT WAS SUBSEQUENTLY R ESTORED BY THE TRIBUNAL VIDE ORDER DATED 13.01.2015. ASSESSEE IS ALSO REGISTERED U/S 25 OF THE COMPANIES ACT, 1956. ASSESSING OFFICER, IN SCRUTINY PROCEEDINGS, DENIED EXEMPTION U/S 11 OF THE ACT ON THE GROUND THAT THE ASSESSEE IS INVOLVED IN THE BUSINESS ACTIVITIES AS PER PROVISO 1 & 2 OF SECTION 2(15) OF THE ACT BECAUSE THE ASSESSEE HAS R ECEIVED SPONSORSHIP FEES, CASUAL MEMBERSHIP FEE, PERMANENT MEMBERSHIP F EE, RENT FROM THE GROUND, COLLECTION FROM THE HEALTH CLUB, TICKET SAL E FROM PUBLIC AND THE CORPORATE HOUSE, RESTAURANT AND TELECASTING RIGHT F EES ETC. AND THEREBY ASSESSED THE INCOME BY PASSING THE FOLLOWING ORDER :- 7. IN VIEW OF THE ABOVE THE ACTIVITIES OF THE ASSE SSEE DURING A.Y.2009-10 , A.Y. 2010-11 AND A.Y. 2011-12 HAVE BE EN HELD TO BE COMMERCIAL IN NATURE AND PROVISIONS OF PROVISO T O SECTION 2( 15) R/W SECTION 13(8) WERE INVOKED IN ITS CASE AND THE INCOME OF THE ASSESSEE WAS ASSESSED WITHOUT GIVING IT BENEFIT OF EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT. 1961, THEREFORE, IN VIEW OF THE ABOVE DISCUSSION EXEMPTION U/S 11 & 12 IS DENIE D TO THE ASSESSEE IN THE A.Y 2012-13 ALSO IN VIEW OF PROVISI ONS OF PROVISO 1 & 2 TO SECTION 2(15) R/W SECTION 13(8) OF THE INC OME TAX ACT, 1961. FURTHER SINCE REGISTRATION U/S 12AA HAS ALSO BEEN WITHDRAWN IN ASSESSEE'S CASE, NO BENEFIT OF SECTION II & 12 OF INCOME-TAX ACT, 1961 CAN BE GIVEN TO THE ASSESSEE I N THE CURRENT ASSESSMENT YEAR I.E. A. Y. 2012-13. ITA NO.189/DEL./2017 3 8. ONLY DEPRECIATION ON ASSETS PURCHASED DURING FY 2009-10 AND ONWARDS WILL BE ALLOWED, AS CAPITAL EXPENDITURE FOR EARLIER YEARS HAS ALREADY BEEN ALLOWED AS APPLICATION OF IN COME IN THE ASSESSMENT YEARS PRIOR TO A.Y.2009-10. THE DEPRECIA TION FROM A.Y. 2009-10 TO AY 2011-12 HAS ALREADY BEEN ALLOWED TO THE ASSESSEE. FURTHER, THE DEPRECIATION ALLOWABLE DURIN G THE YEAR I.E. FOR F.Y. 2011-12 (A.Y. 2012-13) IS AS UNDER: ASSETS RATE OF DEPRECIATION DEP. ON ASSETS ADDED DURING AY 2012-13 BUILDING/STADIUM 10% 121349243 FURNITURE & FIXTURE 10% 704110 ELECTRONIC / ELECTRICAL OFFICE ITEMS, P&M 15% 6909543 VEHICLES 15% 96487 COMPUTER H/W & S/W 60% 793730 TOTAL DEP. 12,98,53,113 9. DURING THE YEAR THE ASSESSEE HAS INCURRED EXPEND ITURE OF RS.1,37,66,227/- IN CASH. OUT OF THIS EXPENDITURE S OME PAYMENTS HAVE BEEN MADE TO EMPLOYEES AS EX-GRATIA OR OTHER B ENEFITS, D.A. TO DIRECTORS ON TOUR, DIESEL EXPENSES ETC. WHICH AR E CONSIDERED OUTSIDE PURVIEW OF SECTION 40A(3) OF INCOME-TAX ACT , 1961 R/W RULE 6DD OF INCOME-TAX RULES, 1962. AFTER TAKING IN TO CONSIDERATION ALL THE FACTS IT IS HELD THAT STILL A SUM OF RS.L,37,66,227/- HAS BEEN INCURRED IN CASH SO THAT THE EACH PAYMENT EXCEEDS RS.20,000/- AND IS THUS IN CONTRAVE NTION OF PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961. 10. DURING THE YEAR THE ASSESSEE HAS RECEIVED A SUM OF RS.61,67,0001- AS MEMBERSHIP FEE, WHICH HAS BEEN SH OWN AS RECEIPT IN ITS CORPUS FUND AND NOT ROUTED THROUGH I TS INCOME & EXPENDITURE ALC. THIS INCOME IS OF REVENUE NATURE A ND ADDED TO TOTAL INCOME OF THE ASSESSEE. 11. DURING THE YEAR THE ASSESSEE MADE A PROVISION FOR GRATUITY OF RS.17,48,920/- (NET) AND PRIOR PERIOD EXPENSES R S.39,13,766/- WHICH ARE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 12. WITH THESE REMARKS, THE INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: INCOME AS PER INCOME & EXPENDITURE A/C RS.4,70,70, 202/- ADD: DEPRECIATION(AS PER COMPANY ACT) RS.7,34,76,3 49/- SEPARATELY TREATED ADD: ADMISSION/MEMBERSHIP FEES RS. 61,67,000/- ADD: PROVISION FOR GRATUITY RS. 17,48,920/- ADD: PRIOR PERIOD EXPENSES RS. 39,13,766/- ADD: DISALLOWANCE U/S 40(A)(3) RS.1,37,66,227/- RS.14,61,42,464/- ITA NO.189/DEL./2017 4 LESS: DEPRECIATION AS PER I.T. ACT RS.12,98,53,11 3/- NET INCOME RS. 1,62,89,351/- B/F LOSSES A.Y.2010-11 RS.3,19,56,121/- A.Y.2011-12 RS. 76,83,655/- RS.3,96,39,776/- C/F LOSSES RS.2,33,50,425/- TAX AS PER NORMAL RATE NIL TAX CALCULATION AS PER SECTION 115JB OF I.T. ACT, BEING COMPANY IS REGISTERED UNDER COMPANY ACT BOOK PROFIT RS.4,70,70,202/- @ 18.5% RS.87,07,987 /- ASSESSED AS ABOVE. SINCE THE ASSESSEE HAS FILED ITS RETURN U/S 139(4) ON 19-02-2013, IT IS NOT ALLOWED TO CARRY FO RWARD THE ABOVE LOSS DETERMINED IN THE CURRENT ASSESSMENT YEAR. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF F ILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. AT THE VERY OUTSET, IT IS BROUGHT TO THE NOTICE OF THE BENCH BY LD. AR FOR THE ASSESSEE THAT CONSEQUENT UPON THE RESTOR ATION OF THE REGISTRATION U/S 12AA OF THE ACT VIDE ORDER DATED 13.01.2015 PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2009-10 & 2010-11, THE TRIBUNAL HAVE DECIDED THE ISSUES IN CONTROVERSY IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 19.09.2018 PASSED IN ITA NO.361/DEL/201 6 FOR AY ITA NO.189/DEL./2017 5 2010-11 AND ORDER DATED 23.06.2017 IN ITA NO.5809/DEL/2014 FOR AY 2009-10 , AND NOW THE PRESENT APPEAL IS COVERED IN FAVOUR O F THE ASSESSEE. THIS FACTUAL POSITION HAS NOT BEEN CONTR OVERTED BY THE LD. DR FOR THE REVENUE. 6. PERUSAL OF THE ORDER PASSED BY THE COORDINATE BE NCH OF THE TRIBUNAL IN ITA NO.361/DEL/2016 DATED 19.09.2018 FOR AY 2010-11 (SUPRA) GOES TO PROVE THAT THE ISSUE IN CONTROVERSY HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY RELYING UPON THE ORDER PA SSED BY THE TRIBUNAL IN ITA NO.5809/DEL/2014 FOR AY 2009-10 ORDER DATED 23. 06.2017, THE OPERATIVE PART OF WHICH IS EXTRACTED FOR READY PERUSAL AS UNDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WEL L AS ORDER OF THE TRIBUNAL AS RELIED UPON BY THE LEARNED COUNSEL. FRO M THE PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT THE LD. AS SESSING OFFICER HAS DENIED THE EXEMPTION U/S 11 ( 1) ON THE GROUND THAT NOW IN WAKE OF NEWLY INSERTED PROVISO TO SECTION 2(15) WITH EFFECT FROM 1.4.2009, THE ASSESSEE'S ACTIVITIES COULD NO LONGER BE HELD TO BE CHARITABLE IN NATURE. HE HAS ANALYZED THE VARIOUS SOURCES OF INCO ME AND ALSO VARIOUS AGREEMENTS THROUGH WHICH THE ASSESSEE WAS E ARNING ITS INCOME LIKE SPONSORSHIP INCOME, SALE OF LIQUOR, INC OME FROM CORPORATE BOXES, SALE OF TICKETS, ADVERTISING/ CONT RACTUAL RECEIPTS, INCOME FROM IPL MATCHES AND TELEVISION SUBSIDY RECE IPT FROM BCCI. WHILE ANALYZING THESE NATURE OF INCOMES / RECEIPTS EARNED BY THE ASSESSEE, HE ALSO EXAMINED THE VARIOUS AGREEMENTS E NTERED BY THE ASSESSEE. AFTER ANALYZING THESE AGREEMENTS AND NATU RE OF INCOME HE CAME TO THE CONCLUSION THAT THE ASSESSEE'S ACTIVITI ES FALLS WITHIN THE AMBIT OF TRADE, COMMERCE OF BUSINESS. AFTER COMING TO SUCH CONCLUSION, IT APPEARS THAT HE HAS MADE A PROPOSAL TO DIT (EXEMPTION) FOR WITHDRAWAL OF REGISTRATION U/S 12AA ON THE SAME VERY POINTS. IN PURSUANCE THEREOF, LD. DIT (E) VIDE ITS ORDER DATED 23.5.2012 HAS WITHDRAWN THE REGISTRATION U/S 12AA ( 3), PRECISELY ON THE SAME ISSUES WHICH HAS BEEN RAISED BY THE ASSESS ING OFFICER IN THE IMPUGNED ORDER: THIS IS PRIMA FACIE EVIDENT FRO M THE FACTS AND ISSUE DISCUSSED IN DETAIL BY THE TRIBUNAL IN ITS OR DER DATED 13.1.2015. ON A PLAIN READING OF THE DECISION OF THE TRIBUNAL, WE FIND THAT ON EXACTLY SAME POINTS AS, RAISED BY THE DIT (E) AND A LSO ARGUED FROM THE SIDE OF THE DEPARTMENT, THIS TRIBUNAL HAS TAKEN NOTE OF ALL THESE OBJECTIONS RAISED BY THE REVENUE AS WELL AS THE SUB MISSIONS MADE BY THE ASSESSEE AND AFTER RELYING UPON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCI ATION VS. DIT ITA NO.189/DEL./2017 6 (E) REPORTED IN 360 ITR 633 AND THE DECISION OF HON 'BLE DELHI HIGH COURT IN THE CASE OF GS 1 VS. DIT (SUPRA), THE TRIB UNAL HELD THAT ASSESSEE'S ACTIVITIES REVOLVES AROUND CRICKET ONLY WHICH FALLS WITHIN THE AMBIT OF 'CHARITABLE PURPOSE'; AND NONE OF ITS ACTIVITIES FALL IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE RELE VANT OBSERVATION AND FINDING OF THE TRIBUNAL IN THIS REGARD READS AS :- '10.6. THUS APPLYING THE PRINCIPLES LAID DOWN IN TH E JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CA SE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA), THE IMPUGNE D ORDER CANCELLING THE REGISTRATION U/S 12A QUASHED. 10.7. EVEN OTHERWISE THE MAIN AND PREDOMINANT OBJEC T AND ACTIVITY OF THE ASSESSEE IS TO PROMOTE, REGULAT E AND CONTROL THE GAME' OF CRICKET IN AND AROUND DELHI. T HE UNDISPUTED FACT IS THAT OVER THE YEARS THIS ACTIVIT Y HAS BEEN RECOGNIZED BY THE INCOME TAX DEPT, AS A CHARITABLE ACTIVITY AND REGISTRATION U/ S 12A WAS GRANTED TO THE ASSESS EE. A NUMBER OF ASSESSMENT ORDERS U/S 143(3) WERE PASSED, WHEREIN THE ASSESSEE WAS HELD AS ELIGIBLE FOR EXEMP TION U/S 11/12 OF THE ACT. HENCE THIS FACT OF THE ASSESSEE B EING A CHARITABLE INSTITUTION IS NOT A DISPUTE. 10.8. THE CORE ACTIVITY OF THE ASSESSEE IS UNDISPU TEDLY CHARITABLE IN NATURE. HENCE IT IS NOT THE CASE OF T HE REVENUE THAT THE ASSESSEE IS CARRYING ON TRADE, COMMERCE O R BUSINESS' UNDER THE GARB OF THE ACTIVITY BEING 'GEN ERAL PUBLIC UTILITY. AS REGARDS THE VARIOUS RECEIPTS OF THE ASSESSEE, WE FIND THAT IN THE CASE OF TAMII NADU CRICKET ASSO CIATION, 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 MADR AS HIGH' COURT, AS ACTIVITIES IN THE NATURE OF 'TRADE, COMMERCE OR BUSINESS'. THERE IS NO CONTRARY DECISION CITED B Y 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 H ON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA), WE HAVE TO HOLD THAT THE AMOUN TS RECEIVED BY THE ASSESSEE FROM A) GROUND BOOKING CHA RGES) B) HEALTH CLUB CHARGES, C) INCOME FROM CORPORATE BOXES , D) LAWN BOOKING INCOME, E) SPONSORSHIP MONEY AND SALE OF ITA NO.189/DEL./2017 7 TICKETS, ADVERTISEMENT) SOUVENIRS AND OTHER SUCH RE CEIPTS DO NOT RESULT IN THE ASSESSEE BEING HELD AS UNDERTAKIN G ACTIVITIES IN THE NATURE OF 'TRADE, COMMERCE OR BUSINESS. J) T HESE RECEIPTS ARE INTRINSICALLY RELATED, INTERCONNECTED AND INTERWOVEN WITH THE CHARITABLE ACTIVITY AND CANNOT BE VIEL.UED SEPARATELY. THE ACTIVITIES RESULTING IN TH E SAID RECEIPTS ARE ALSO CHARITABLE ACTIVITIES AND NOT 'TR ADE, COMMERCE OR BUSINESS' ACTIVITIES. 11. WE NOW TAKE UP EACH OF THE ISSUES RAISED BY THE LD. DIT (E) 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 S UM OF RS.14,20,000/- FROM BCCI AS SUBSIDY, THERE WAS A SH ORT FALL OF RS.29,84,835/-, WHICH WAS MET BY THE ASSESSEE. I T WAS SPECIFICALLY ARGUED BY THE LD. D.R. THAT THE AGREEM ENT WITH M/S TWENTY FIRST CENTURY MEDIA PVT. LTD.' IS COMME RCIAL IN NATURE. THE REPLY OF THE ASSESSEE IS THAT IT SHO ULD BE APPRECIATED THAT, FOR ANY ORGANIZATION TO RUN AND S URVIVE IT IS ESSENTIAL THAT IT SHOULD AUGMENT SOME FUNDS TO M EET THE COST/ EXPENDITURE, AS REQUIRED TO BE INCURRED, TO C ARRY OUT THE ACTIVITIES MEANT TO ACHIEVE ITS OBJECT. WE AGREE WI TH THE SUBMISSIONS OF THE ASSESSEE. 11.2. THE ASSESSEE HAS TO PERFORM MANY ACTIVITIES A ND FOR THIS PURPOSE IT HAS TO ENTER INTO TRANSACTIONS WITH VARIOUS TYPES OF PERSONS. THESE PERSONS CAN BE COMMERCIAL O R NON- COMMERCIAL ORGANIZATIONS, PROFESSIONALS, VENDORS OF GOODS, VENDOR OF SERVICES AND SO FORTH AND SO ON. MERELY E NTERING INTO SUCH AGREEMENT DOES NOT TANTAMOUNT TO THE ASSE SSEE BEING A BUSINESS ENTITY. THE QUESTION IS WHETHER TH E ACTIVITY DONE BY ASSESSEE, WOULD TANTAMOUNT TO BUSINESS ACTI VITY OR NOT. THIS HAS TO BE VIEWED FROM VIEW POINT OF THE A SSESSEE. THE OTHER PERSON WITH WHOM THE ASSESSEE HAS AN AGRE EMENT) MAY HAVE ITS OWN OBJECT AND REASON FOR DOING TRANSA CTION AND ACCORDINGLY, THE NATURE OF TRANSACTION AND THE RESULTANT ACTIVITY WOULD BE DETERMINED IN THE OTHER PERSONS H ANDS. HOWEVER, THAT BY ITSELF, SHOULD NOT HAVE ANY BEARIN G AT ALL ON THE NATURE OF THE TRANSACTION) AS WELL AS RESULT ANT ACTIVITY IN THE HANDS OF ASSESSEE. TO CARRY OUT A TRANSACTIO N IN AN ORGANIZED MANNER AND TO ENSURE THAT THE TRANSACTION WOULD HELP THE ASSESSEE IN ACHIEVING ITS CHARITABLE OBJEC T, IT IS IMPERATIVE THAT THE TERMS AND CONDITIONS OF THE TRA NSACTIONS 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 MA NNER, THAT ALONE WILL NOT MAKE THESE ACTIVITIES AS BUSINE SS/ COMMERCIAL ACTIVITY. PROFIT MOTIVE IS ONE ESSENTIAL ITA NO.189/DEL./2017 8 INGREDIENT, WHICH IS APPARENTLY MISSING IN THIS CAS E. IN CARRYING OUT AN ACTIVITY, ONE ACTIVITY, THE PRESENC E OF PROFIT MOTIVE IS A SIN QUA NON I.E. CONDITION PRECEDENT AT THE TIME OF ENTERING INTO TRANSACTION. IN THIS CASE THE FACT S DEMONSTRATE THAT DESPITE THE RECEIPT OF AMOUNT FROM SPONSORSHIP AND SUBSIDY FROM BCCI, THERE WAS DEFICI T WHICH WAS MET BY THE ASSESSEE. THUS THIS ADJUSTMENT RESUL TED IN SUBSIDIZING THE COST OF THE ASSESSEE AND HENCE THER E IS NO PROFIT MOTTO. THIS CANNOT BE TERMED AS BUSINESS ACT IVITY. SIMILAR IS THE VIEW OF THE HON'BLE MADRAS HIGH COUR T IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA). 11.3. ON THE ISSUE OF SALE OF LIQUOR, IT WAS SUBMIT TED THAT INITIALLY DDCA WAS FORMED AS A CLUB TO TAKE OVER TH E ASSETS AND LIABILITIES OF THE ASSOCIATION CALLED, 'DELHI C RICKET ASSOCIATION'. HE REFERRED TO THE OBJECTS AND SUBMIT TED 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 P AVILION, REFRESHMENT ROOMS AND OTHER FACILITIES IN CONNECTIO N THEREWITH. THEREFORE, AN EATERY WAS ESTABLISHED WHI CH WAS EVENTUALLY SHAPED AS A CANTEEN FOR THE BENEFIT OF T HE MEMBERS AS WELL AS FEW OTHER PERSONS ASSOCIATED WIT H DDA E.G. PLAYERS) COACHES, STAFF, OTHER GUESTS ETC.' 11.4. IN OUR VIEW FOR THE PURPOSE OF MAKING THIS CA NTEEN 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 S OLD INDEPENDENTLY AS TRADING ITEM. THE EATERY IS AVAILA BLE FOR THE USE ONLY OF MEMBERS, PLAYERS, STAFF AND OTHER GUEST S 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 HU GE CRICKET STADIUM AND PROMOTING THE GAME OF CRICKET. THE REVENUE, IN THIS CASE IS TRYING TO PROJECT THAT THE ASSESSEE AS A LIQUOR DEALER. THIS IS NOT CORRECT. INTERNATIONAL LY, WHEN FACILITIES ARE PROVIDED TO PLAYERS, LIQUOR IS PART, OF THE MENU. THIS IS JUST INCIDENTAL TO PROVIDING FOOD AND BEVER AGES IN THE CANTEEN TO THE MEMBERS, WE CANNOT FIND FAULT WI TH LIQUOR BEING PART OF THE MENU CARD AND BEING SERVED AS PER INTERNATIONAL CUSTOMS AND REQUIREMENTS: 11.5. HENCE TO MEET GLOBAL STANDARDS THESE FACILITI ES ARE REQUIRED AND THESE ARE NOT INDEPENDENT OF THE ACTIV ITY OF PROVIDING FOOD AND REFRESHMENTS TO MEMBERS AND ASSO CIATED PERSONS, RUNNING OF A CANTEEN IS AN INCIDENTAL AND NECESSARY ACTIVITY AS IS IN EVERY ORGANIZATION. THI S CANNOT BE TERMED AS BUSINESS ACTIVITY, IT IS PART AND PARCEL OF CHARITABLE ITA NO.189/DEL./2017 9 ACTIVITY AND THE RECEIPT IN QUESTION CANNOT BE TERM ED AS EXEMPT FROM ACTIVITY WHICH IS IN THE NATURE OF 'TRA DE, COMMERCE OR BUSINESS', 11.6. ON ADVERTISING AND CONTRACTUAL RECEIPTS THE S AME EXPLANATION AS WAS GIVEN BY THE ASSESSEE, AS IN THE CASE OF SPONSORSHIP MONEY. CONSISTENT WITH THE VIEW EXPRESS ED BY US, WHEN WE WERE DEALING WITH SPONSORSHIP MONEY, WE HOLD THAT THESE CONTRACTUAL RECEIPTS GO TO REDUCE PART O F THE COST INCURRED BY THE ASSESSEE FOR ITS CHARITABLE ACTIVIT Y AND HENCE CANNOT BE TERMED AS BUSINESS OR THAT THE ASSESSEE H AS UNDERTAKEN ACTIVITY IN THE NATURE OF TRADE, COMMER CE OR BUSINESS', 11.7. ON RECEIPTS FROM IPCL AN ELABORATE EXPLANATIO N WAS GIVEN, THE PITH AND SUBSTANCE IS THAT EXPENDITURE H AS TO BE INCURRED BY THE DDCA ON VARIOUS ITEMS, AS COORDINAT ION HAS TO BE DONE AND THE AGGREGATE OF EXPENDITURE INCURRE D FOR THE SAME IS RS.238 LAKHS. IT WAS SUBMITTED THAT THE DDC A, INITIALLY MEETS THIS EXPENDITURE OUT OF ITS OWN SOU RCES AND THERE AFTER THE BCCI AND LEGAL FRANCHISEE, CONTRIBU TE AND COMPENSATE PART OF THIS EXPENSES. THE SAME ARGUMENT S AS WERE ADVANCED BY THE ASSESSEE IN THE CASES WHERE SPONSORSHIP MONEY RECEIVED, WERE MADE HERE ALSO. TH E SUMMARY OF THE SUBMISSIONS ARE AS FOLLOWS. 'OUR RESPECTFUL SUBMISSION IS THAT, AS WE HAVE GIVE N DETAILED SUBMISSION IN EARLIER PART OF OUR SUBMISSI ONS WHEREIN WE HAVE MADE ANALYSES OF RECEIPTS AS WELL A S OF THE EXPENSES INCURRED BY THE ASSESSEE. THE ANALYSIS OF EXPENSES HAVE REVEALED THAT THE EXP ENSES 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 O F 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 WOU LD FIND THAT THE RECEIPTS ARE DIRECTLY OR INEXTRICABLY LINK ED WITH THE ORGANIZING OF MATCHES AND TOURNAMENTS OR FOR PROMOT ION OF GAME OF CRICKET IN ANY OTHER MANNER OR FOR MAINTENA NCE OR BUILDING UP THE INFRASTRUCTURE MEANT FOR THE PROMOT ION OF THE GAME OF CRICKET. THUS, IT CAN BE SAFELY SAID TH AT THE DDA EXISTS FOR CRICKET AND CRICKET ONLY. THE CBDT HAS ALREADY CLARIFIED THAT SPORTS IS A MAT TER OF GENERAL PUBLIC UTILITY. THEREFORE DDCA SATISFIES TH E CONDITION OF HAVING A CHARITABLE OBJECT AS MENTIONE D IN S.2 (15) OF THE INCOME TAX ACT, 1961. IT DOES NOT VIOLA TE ANY CONDITION AS MENTIONED IN PRO VISO TO S.2 (L5). ITA NO.189/DEL./2017 10 THE APPREHENSION THAT CERTAIN INCOME RECEIVED BY TH E ASSESSEE, DURING THE YEAR, PARTAKE THE CHARACTER OF BUSINESS INCOME, IS ILL FOUNDED. IN THIS REGARD WE HAVE SUBM ITTED IN DETAIL THAT THIS APPREHENSION IS MISPLACED ON ACCOU NT 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 PROMOTIO N 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. TH US, 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 EAR NED ON COMMERCIAL LINES AND THESE ARE EARNED WITHOUT AN Y COMMERCIAL ATTRIBUTES. THE REVENUE IS GENERATED FOR RECOVERING THE COST, AT LEAST PARTLY IF NOT FULLY. 7. THE ASSESSEE HAS NOT ENTERED ANY TRANSACTION WI TH ANY PERSON ON PROFIT MOTIVE. THE OTHER PERSON MAY B E AN ENTREPRENEUR OR MAY BE DOING BUSINESS BUT THE ASSES SEE HAS ENTERED THE TRANSACTION ONLY FOR THE SOLE AND DEDIC ATED PURPOSE I.E. FOR THE PROMOTION OF CRICKET. 8. THESE FACTS ARE WORTH NOTING THAT (A) THE ASSES SEE HAS NOT DIVERTED ITS FUNDS FOR ANY PURPOSE OTHER TH AN PROMOTION OF CRICKET; (B) THE ASSESSEE HAS NOT DONE ANY ACTIVITY OR TRANSACTION WITH PROFIT MOTIVE, (C) THE ASSESS HAS NOT DONE ANY ACTIVITY BEYOND AND OUTSIDE ITS OBJECT S AND (D) THERE IS NO CHANGE IN FACTS SO AS TO DEVIATE FROM T HE STAND TAKEN BY LD. A. O. IN ALL THE PAST YEARS ACCEPTING THE CLAIM OF THE ASSESSEE ALL ALONG ON FACTS AS WELL AS ON LA W. 11.8. IN VIEW OF OUR DECISION OF SPONSORSHIP AND SU CH OTHER RECEIPTS, WE AGREE WITH THE ARGUMENTS MADE BY THE ASSESSEE. REGARDING SALE OF TICKETS THE ASSESSEE EX PLAINED ITA NO.189/DEL./2017 11 THAT NO TICKETS ARE SOLD FOR RANJI TROPHY AND ONLY IN CASE OF INTERNATIONAL MATCHES, RS.200/- PER TICKET ARE LEVI ED, WITH, A SALE INTENTION TO CONTROL THE CROWDS AND THAT THE C OST INCURRED PER TICKET IS MUCH MORE THAN THE AMOUNT WH ICH IS CHARGED FOR TICKET. UNDER THESE CIRCUMSTANCES, THE SALE OF TICKETS CANNOT BE CONSIDERED AS AN ACTIVITY OF 'TRA DE, COMMERCE OR BUSINESS'. WE AGREE WITH THE SUBMISSION S OF THE ASSESSEE. 11.9. REGARDING PLAYING CARDS, IT IS AN INCIDENTAL RECREATION ACTIVITY UNDERTAKEN IN MOST CLUBS AND WH AT IS CHARGED BY THE ASSESSEE, GOES TO RECOVER THE' COSTS FOR PROVIDING SUCH RECREATIONAL FACILITY TO, ITS MEMBER . THE RECEIPTS ARE MINISCULE AND HENCE NEGLIGIBLE. 11.10. SIMILARLY AS FAR AS RECEIPTS FROM HEALTH CLU B IS CONCERNED, WE FIND THAT, ONLY A PART OF THE EXPENDI TURE INCURRED ON HEALTH CLUB IS RECOVERED BY WAY OF CHAR GES FROM MEMBERS, WHO ARE USING THE HEALTH CLUB FACILITY. TH ESE ARE ALL, AT BEST BE CALLED USER CHARGES. IN OUR VIEW TH ESE RECEIPTS CANNOT BE TERMED AS AN ACTIVITY IN THE NATURE OF T RADE, 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 INTRINS ICALLY LINKED WITH THE ACTIVITY OF ORGANIZING MATCHES AND TOURNAM ENTS FOR THE PROMOTION OF CRICKET. USER CHARGES ARE REQUIRED FOR MAINTAINING THE FACILITIES THAT ARE PROVIDED AS PAR T OF THE INFRASTRUCTURE, FOR CONDUCTING THE ACTIVITIES OF TH E ASSESSEE. 11.12. ON CONSIDERATION OF ALL THE FACTS AND CIRCUM STANCES OF THE CASE AND WHEN VIEWED IN TOTALITY, WE HAVE TO CO ME TO A CONCLUSION THAT THE ASSESSEE IS NOT CARRYING OF THE ACTIVITIES WITH ANY PROFIT MOTIVE OR WITH ANY SELF INTEREST. T HE CONTRIBUTION RECEIVED BY WAY OF SPONSORSHIP, ADVERT ISEMENT, 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 JUDGMENTS CITED ABOVE, WE HAVE TO NECESSARI LY QUASH THE IMPUGNED ORDER PASSED BY THE DIT (E) U/ 12AA ( 3) R.W.S. 12 OF THE ACT, AS IT IS BAD IN LAW. 7. ON A PLAIN READING OF THE AFORESAID DECISION AN D CONCLUSION OF THE TRIBUNAL, WE FIND THAT THE TRIBUNAL HAS ADDR ESSED EXACTLY SIMILAR KINDS OF OBJECTIONS RAISED BY THE REVENUE B EFORE US AND AFTER DEALING WITH EACH AND EVERY ISSUE TRIBUNAL HAS COME TO CONCLUSION THAT THE ASSESSEE IS NOT CARRYING OUT ANY BUSINESS ACTIVITIES AND NONE OF ITS RECEIPTS CAN BE TERMED AS AN ACTIVITY IN THE NATURE OF 'TRADE, COMMERCE AND BUSINESS'. ONCE SUCH A FINDING OF FACT HAS BEEN GIVEN ON SIMILAR SET OF FACTS, THEN WE DO NOT FIND ANY RE ASON TO DEVIATE ITA NO.189/DEL./2017 12 FROM SUCH A FINDING IN ASSESSEES OWN CASE, THEREFO RE, FOLLOWING THE AFORESAID DECISION WE REJECT THE GROUNDS RAISED BY THE REVENUE AND UPHOLD THE ORDER OF THE LEARNED CIT (APPEALS) FOR R ESTORING THE EXEMPTION U/S 11(1) TO THE ASSESSEE FOR THE A.Y. 20 09-10. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 7. FOLLOWING THE AFORESAID DECISIONS RENDERED BY TH E COORDINATE BENCH OF THE TRIBUNAL IN AYS 2009-10 & 2010-11 IN A SSESSEES OWN CASE WHEREIN THE AO HAD DENIED THE BENEFIT OF SECTI ONS 11 & 12 OF THE ACT TO THE ASSESSEE BY FOLLOWING AY 2009-10 WHICH H AS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL, WE FIND NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASSED BY THE L D. CIT (A) EXTENDING BENEFIT OF SECTIONS 11 & 12 OF THE ACT, HENCE FINDI NGS RETURNED BY THE LD. CIT (A) IN THE IMPUGNED ORDER ARE UPHELD. CONSEQUE NTLY, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF JULY, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 16 TH DAY OF JULY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-40, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.