GYMNASTICS SEVABHAVAI SANSTHA, MUMBAI V. CIT (EXEMPTION), PUNE

ITA 2010/MUM/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9582 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Assessment Year: 2020-2021
• Appeal Filed On: 16-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KOLI
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Charitable institution; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 2010/Mum/2020 (Assessment Year 2020-21) Gym n a st ic s S e va b h a vi S a n sth a Fla t No . 1 0 1 , B u ild i n g No .4 , Ra u n a k P a r k, P o kh a ra n Ro a d , No .2 , K o ka n ip a d a , T h a n e (W ) Mu m b a i-4 0 0 6 0 6 Vs. CIT Exemption, Pune Room No. 322, 3 rd Floor, Income Tax Office, PMT Building, Shankar Seth Road, Pune- 411 037 (Appellant) (Respondent) PAN No.AACTG 7323 G Assessee by : Shri Subodh Ratnaparkhi, AR Revenue by : Shri Ashok Koli, CIT DR Date of hearing: 01.06.2022 Date of pronouncement : 07.07.2022 O R D E R PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by G ym nastic s S evabhavi S anstha [assessee / appellant] trust against the order passed by the learned Commissioner of Income Tax (Exemption) [CIT(E)] being dated 1 st October, 2020, under Section 12AA(1)(b)(ii) of the Income-tax Act, 1961 (the Act), rejecting the application for grant of registration 02. Assessee has raised following grounds of appeal:- “1. The Hon. CIT (Exemption) erred in rejecting the application for registration u/s 12A of grant of the I. T. Act, 1961. Page | 2 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 2. The Hon. CIT (Exemption) erred in rejecting the application for registration u/s 12A of the I.T. Act, 1961, alleging that the activities of the appellant fell under category of advancement of any other object of general public utility u/s 2(15) of the Act and therefore as per proviso to section 2(15) and for other unjustified reasons, the appellant was not entitled for and registration, which view being factually and legally incorrect, the registration u/s 12A may kindly be granted to the appellant. 3. The appellant craves leave to add, alter, amend and/or vary the above grounds of appeal at any time before the decision of the appeal.” 03. The brief fact of the case shows that appellant set up a Trust on 25 th December, 2016, registered under the Bombay Public Trust Act, 1950 with the object of promotion of the sport of gymnastic in India. 04. The assessee made an application for registration under Section 12AA of the Act to the CIT(E) on 25 th February, 2020. The learned CIT rejected the same as per order dated 1 st October, 2020, holding that the object and activity claimed by the assessee are not charitable in nature in view of the proviso to Section 2(15) of the Act. 05. The object of the assessee shows that it is set up for carrying out the activities such as preparing players for International programme, providing foreign coaches for training and to support physical wellbeing of the players. 06. The CIT noted that assessee is charging fees for such activities. During F.Y. 2018-19, such income of the Page | 3 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 assessee is of ₹18.99 lacs out of the total income of ₹25.89 lacs which is more than 20% of the total income. Further, the assessee also did not produce the address of the donor with respect to the donation of ₹6.48 lacs. The CIT was also of the view that the proviso to Section 2 sub Section 15 of the Income Tax Act is also attracted and therefore, the object and the activity cannot be termed as charitable in nature. Hence, assessee was denied registration. Therefore, assessee is in appeal. 07. The learned Authorized Representative submitted that only activity under taken by the assessee is promoting the sports of gymnastics by coaching students, organizing training programme, organizing coaching campus etc. It is the claim that the assessee is not involved in activity in the nature of trade or commerce or business where proviso to Section 2(15) of the Act is attracted. Assessee also relied on Circular 395 dated 24 th September, 1984 where it has been clarified that promotion of sports and games is a charitable purpose. It is also referred to CBDT circular no. 11/2008 dated 19 th December, 2008 wherein it has been clarified that if the assessee has the object of advancement of any other object of general public utility engaged in the activity of trade or commerce then only the proviso to Section 2 (15) of the Act would be applicable. It is also relied on the decision of the co-ordinate Bench in Navi Mumbai Sports Association vs. ADIT (Exemption) [2022] 137 taxmann.com 347 (Mumbai - Trib.), wherein it has been held that where the assessee’s trust is engaged in promoting sports, it was held that not attracting proviso to Section 2[15] of the Act. Therefore, learned CIT (E) is Page | 4 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 not correct in rejecting the application of the trust for registration under Section 12AA of the Act. 08. The learned Departmental Representative supported the order of the learned CIT. It was also stated that assessee also not given the details of address of the donors and therefore, the assessee’s trust is not entitled for registration in lieu of the Proviso to Section 2(15) of the Act. It was stated that the sport is not a charitable activity. 09. We have carefully considered the rival contention as well as the orders of the learned CIT rejecting the application under Section 2(15) o the Act. Undoubtedly, the activities of the assessee are for the promotion of sporting activities. We find that whether the trust carrying on the sport activities is entitled to registration under Section 12AA of the Act or not. The objects of the trust placed before us at page no. 15 of the Paper Book shows that it is for the promotion of sport as well education, social, arts and cultural advancements. The objects are as under:- ‘3. Objects and Goal Of TRUST: “Gymnastics Sevabhavi Sansthan" formed for undertaking charitable object of following various Social, Educational, Cultural, Sports, Medical and Cultural development of Children, Youth & women. (a) Sports 1. To promote and popularise the sport of Gymnastics 2. To create awareness about gymnastics from villages to cities. Page | 5 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 3. To develop state, national and international level Gymnastic players. 4. To create awareness among people about the emotional, intellectual and psychological progress due to gymnastics. 5. To Organize this Sport Competitions from District to International level. 6. To prepare maximum number of players and coaches for Gymnastics 7. To educate public about the sport of gymnastics and to attract them. 8. To make efforts for providing sports kits required for gymnastics and its regularly availability and to take practice. 9. To arrange camps, workshops, group discussions and other competitions, also encouraging the winners by various awards, prizes, building the gymnastic school for them and developing interests in the youngsters. 10.To appoint individuals/organizations who have contributed to Gymnastics as honorary members (b)EDUCATIONAL: 1. Establish and run the kindergarten schools, schools for primary and secondary education and also colleges for medical, D.ed, B.ed, Technology colleges, art colleges, computer courses and such other various courses for the poor and needy children. Page | 6 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 2. To establish and run public libraries, study circles, libraries, music schools, welfare centers, workshops centers for educational enrichment. 3. To undertake training programmes in computer software and hardware, to establish and run computer training centres and arrange lectures, discussion sessions for education relating to computer and all round development in said profession. 4. To improve the social, cultural and educational development in public. To help really needy and poor people and to undertake various social, educational activities or for them. 5. To guide women about various government schemes regarding women development. 6. To promote the importance of education in tribal areas which are deprived of education and to arrange various educational programmes in the tribal areas. 7. To arrange school fees, scholarships, notebooks, study books, writing material, stationery for the poor and needy students To felicitate bright students and arrange financial help for them. 8. To train for traditional Adivasi dance forms. Eg: dholnach, tarpanach, etc. (c)SOCIAL: 1. To help the people suffering from AIDS and other natural calamities like floods and earthquake and undertake other social programmes. Page | 7 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 2. To eradicate superstition/blind faiths and prohibition of alcoholism among adivasis community 3. To create employment for adivasis by encouraging them to collect ayurvedic medicinal plants from forests and to conduct camps to encourage and guide ayurvedic medicinal plantation 4. To arrange the health camps, blood donation camps, eye test camps, the tree plantation camps likewise providing the medicines and treatments to the needy patients, to establish charity hospitals, arrange medical camps, ambulance etc for needy patients 5. To help the physically, mentally challenged, handicapped people and help them live a better life. 6. To establish and run Orphanage, Mahila Ashram, old age home, child care centres, hostels, schools for Handicaps, Vedshala, Goshala, Yogshala, Tatwadnyan Pith, child culture centre, meditation centre, Yogsadhana Kendra, Hospice etc. 7. To carry out activities to develop a sense of brotherhood, unity and patriotism in people by bringing them together. (d) ARTS: 1. To create a sense of emotional solidarity towards art, culture, education, social work, etc. 2. To develop liking towards dance, music, etc. by promoting the same. Page | 8 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 3. To encourage the artists by felicitation and promotion of art 4. To arrange various cultural programmes for promotion of Indian culture 5. To arrange programmes for helping economically backward classes, artists, etc. 6. To create platform for achieving thought process on non-violence, improvement and unity in Individuals through the foundation. 7. To provide a platform for new comers in art and cultural fields and to arrange competitive festivals and to create cultural exchange in India and abroad by making new artwork (e)CULTURAL: 1. To establish and run Annachatra, Panpoi etc 2. To celebrate various festivals such as Dahlhandi, Mahashivaratri, Ganeshotsav, Navaratrotsav, Kojagiri Poornima and Shivajayanti, Gandhi Jayanti, Lokmanya Tilak Jayanti and national days i.e. 26 th January, 15 th August, 1 May. To arrange charity programmes on the said days. To arrange charity programmes. To establish charity service centre in future and arrange drama, dance, soloist from students for cultural development among them’ 010. We find that this issue is squarely covered in favour of the assessee by the decision of the co-ordinate Bench in ITA No.6160, 6161 and 7710/Mum/2019 for A.Y. 09-10, 11-12 and 12-13 vide order dated 2 nd March, 2022. By this Page | 9 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 order, held that income derived from the sport activities are held to be charitable in nature. The co-ordinate Bench in that decision has followed the decision of Hon'ble Bombay High Court in the case of Director of Income-tax (Exemption) vs. Chembur Gymkhana [2012] 346 ITR 86 (Bombay). Therefore, respectfully following the decision of co-ordinate bench, we hold that the learned CIT (E) is not correct in holding that assessee is not eligible for registration under Section 12AA of the Act so far as the activities of the sports are concerned. 011. Further in Assistant Commissioner of Income-tax (Exemptions) v. Surat District Cricket Association* [2022] 139 taxmann.com 182 (Surat-Trib.) it is held that Where predominant object of assessee-society was to promote cricket and other sports at State as well as at National level and receipts shown under income from other sources were from activities undertaken in furtherance of various sports, profit earning was not predominant purpose of assessee and thus, proviso to section 2(15) could not be invoked to decline benefit of section 11 of The Act . Thus at least asessee which is promoting Gymnastic Sports is entitled to Registration u/s 12 AA of The ACT. 012. In view of this, we set aside the order of the learned CIT holding that the sports and activities are following under the category of advancement of other object of general public utility. 013. However, we also find that assessee is not given the address of the donors to the learned CIT (E). The CIT is also required to verify the activities of the trust at the time Page | 10 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 of granting of registration under Section 12AA of the Act. In view of this, we direct the assessee to submit the requisite details called for by the learned CIT (E) with respect to the activities of the trust. 014. In view of this, the learned CIT (E) is directed to grant registration to the assessee under Section 2(15) of the Act holding that the objects of the assessee are charitable in nature. Further, he is also directed to examine the activities of the trust and decides the application of the assessee afresh. 015. In the result, appeal filed by the assessee is partly allowed with above directions. Order pronounced in the open court on 07.07.2022. Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 07. 07.2022 Sudip Sarkar, Sr.PS Page | 11 ITA No. 2010/Mum/2020 Gymnastics Sevabhavai Sanstha; A.Y. 20-21 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai