M/s. Orissa Cricket Association, Cuttack V. ACIT, Circle-2(1), Cuttack

ITA 210/CTK/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5312 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Assessee Lawyers: S K TULSIYAN; D DAS
• Keywords: Search and seizure; Charitable institution; Opportunity of being heard; Source of fund; Reasonable cause; Capital receipt; Benefit of exemption; Condonation of delay
• Section: 133A; 12A; 12AA; 132; 28; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ITA NO. 335 / CTK /20 1 7 (AY: 1997 - 1998) ORISSA CRICKET ASSOCIATION BARABATI STADIUM,CUTTACK - 753001, ODISHA , PAN NO. : AAAAO 0319 F VS. CIT(EXEMPTIONS), HYDERABAD AND ITA NO.210/CTK/2016 (AY : 2011 - 2012) ORISSA CRICKET ASSOCIATION BARABATI STADIUM, CUTTACK - 753001, ODISHA PAN NO. : AAAAO 0319 F VS. ACIT, CIRCLE - 2(1), CUTTACK ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI S.K.TULSIYAN & D.DAS , AR /REVENUE BY : SHRI SAAD KIDWAI , CIT DR / DATE OF HEARING : 12 / 12 /201 7 / DATE OF PRONOUNCEMENT 26 / 12 /201 7 / O R D E R PER SHRI N.S.SAINI , A M : ITA NO.335/CTK/2017 (AY : 1997 - 1998) IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(E), HYDERABAD, DATED 26.05.2017 AND ITA NO.210/CTK/2016 (AY : 2011 - 2012) IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), CUTTACK, DATED 19.02.2016. ITA NO.335/CTK/2017 (AY : 1997 - 1998) : 2. THE CENTRIPETAL ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE IS THAT THE CIT(E) ERRED IN REFUSING TO GRANT REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE - ASSOCIATION. 3. SUCCI NCT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN ASSOCIATION REGISTERED UNDER THE SOCIETY REGISTRATION ACT, 1860 ON 0 8. 0 3.1961 WITH REGISTRATION NO. 346/44 OF 1960 - 61. THE ASSESSEE ASSOCIATION FILED AN APPLICATION IN FORM NO. 10A ON 31.03.2003 SEEKING REGIS TRATION U/S.12A OF ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 2 THE ACT BEFORE THE CIT, CUTTACK CHARGE CUTTACK. HOWEVER, THE CIT, CUTTACK CHARGE, CUTTACK HAS NEITHER GRANTED THE REGISTRATION NOR REJECTED THE APPLICATION FILED BY THE ASSESSEE IN FORM NO.10A ON 31.03.2003. SURVEY OPERATIONS WERE CONDU CTED IN THE PREMISES OF M/S ORISSA CRICKET ASSOCIATION ALONG WITH SEARCH AND SEIZURE OPERATIONS IN THE RESIDENTIAL PREMISES OF THE HONORARY SECRETARY OF ORISSA CRICKET ASSOCIATION ON 28.03.2006 AND DEMANDS WERE RAISED FOR THE AYS. 2000 - 01 TO 2006 - 07 DURIN G THE COURSE OF ASSESSMENTS AND THE SAME WERE CONFIRMED BY THE CIT(A). THE ASSESSEE PREFERRED SECOND APPEAL AGAINST THE ORDERS OF AO BEFORE TRIBUNAL AND PLEADED THAT THE APPLICATION FILED ON 31.03.2003 SEEKING REGISTRATION U/S.12A OF THE I.T.ACT, 1961 IS S TILL PENDING WITH THE COMPETENT INCOME TAX AUTHORITY FOR CONSIDERATION. THE TRIBUNAL ACCEPTED SUCH PLEA PUT FORTH BY THE ASSESSEE ASSOCIATION AND SET ASIDE THE ASSESSMENT ORDERS FRAMED FOR THE AYS. 2000 - 01 TO 2006 - 07 FOR EXAMINATION AFTER THE PENDING PETIT ION FILED BY THE ASSOCIATION U/S.12A OF THE ACT IS DISPOSED OF BY THE COMPETENT INCOME TAX AUTHORITY . THE ASSESSEE A SSOCIATION FILED A PETITION ON 25.03.2008 REQUESTING FOR GRANT OF REGISTRATION U/S.12AA OF THE I T. ACT, 196 1 AS PER THE DIRECTIONS OF HON.BL E ITAT, CUTTACK BY TAKIN G INTO CONSIDERATION OF THE APP L ICATION FILED IN FORM NO.10A ON 31.03.200 3. FOLLOWING THE DIRECTIONS OF THE TRIBUNAL THE COMMISSIONER OF INCOME TAX, CUTTACK CHARGE, CUTTACK CALLED FOR INFORMATION FROM THE ASSESSEE SOCIETY VIDE LETTE R DATED 10 . 08.2009 AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ASSOCIATION, THE COMMISSIONER OF INCOME TAX, CUT T ACK C HARGE, CUTTACK VIDE ORDER DATED ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 3 22.03.2010, REJECTED THE APPLICATION OF THE ASSESSEE ASSOCIATION FOR THE REASONS STATED THEREIN. AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX, CUTTACK CHARGE, CUTTACK, AS S ESSEE , PREFERRED AN APPEAL BEFORE THE TRIBUNAL . AFTER CONSIDERING THE S UBMISSIONS OF THE ASSESSEE, THE TRIBUNAL VIDE ITS ORDER IN ITA NO.232/CTK/2010 DATED 27.06.2014, SET ASIDE THE ORDER OF CIT AND RESTORED THE ISSUE TO THE FILE OF CIT WITH THE DIRECTION THAT THE CIT SHALL LOOK I NTO THE MATTER OF REGI S TRATION OF THE INSTITUTION AFRESH AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE ASSOCIATION . CONSEQUENT UP ON THE CBDT'S NOTIFICATION NO. 65/ 2014 DT. 13.11.2014 (F. NO. 187/38/2014 ITA - I) U/S 120 (1) & (2) OF THE INCOME TAX ACT, 1961 (SO NO. 2754(E) PUBLISHED IN GAZETTE OF INDIA, EXTRAORDINARY PART - II , SEC 3( II) ON 22 - 10 - 2014 & SUBSEQUENT NOTIFICATION IN THIS REGARD, JURISDICTION OVER THE CASE WAS ASSIGNED TO CIT(E), HYDERABAD. ACCORDINGLY, AS PER THE DIRECTI ONS TRIBUNAL, THE ASSESSEE ASSOCIATION WAS GIVEN OPPORTUNITY AND WAS REQUIRED TO APPEAR FOR HEARING BEFORE THE CIT(E), HYDERABAD ON 14.12.2015 VIDE OFFICE LETTER DATED 26.11.2015 . ACCORDINGLY, SHRI DIGANTA DAS, ADVOCATE OF THE ASSESSEE ASSOCIATION APPEARED FOR HEARING ON 14.12.2015 AND REQUESTED FOR ADJOURNMENT OF HEARING AND THE C ASE WAS REPOSTED TO 07.01,2016 . SHRI S . K. TULSIYAN , ADVOCATE ASSESSEE A SSOCIAT ION APPEARED FOR H EARING ON 07.01. 2016 AND FILED WRITTEN SUBMISSIONS A ND REPRESENTED THE CASE. HE WAS REQUIRED TO F ILE THE LETTER FROM BOARD OF CONTROL FOR CRICKET IN INDIA ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 4 (BCCI), CONFI RMING THAT THE TELECAST RIGHTS ARE GIVEN AS DONATION TO ORISSA CRICKET ASSOCIATION. THE ASSESSEE ASSOCIATION FILED LETTER DATED 14.03,2016, STATING T HAT THE ASSOCIATION FI L ED PETITION U/S. 2 5 4(2) OF THE IT ACT, 1961 BEFORE THE TRIBUNAL TO RECALL ITS EARLIER ORDER IN ITA NO.232/C T K/2010 DATED 27 . 06.2014 IN THE L IGHT OF THE H ONBLE SUPREME COURT J UDGMENT IN THE CASE OF CIT , KANPUR & ORS VS. SOCIETY FOR THE PROMOTION OF EDUCATION ALLAHAB AD, CIVIL APP EAL NO.1478 OF 2016, SLP (C) NO. 9705 OF 2009 A ND REQUESTED TO HOLD THE PROCEEDINGS FOR REGISTRATION U/S.12AA OF THE I T, ACT, 1961 UNTIL THE SAID PETITION IS DISPOSED OF BY THE TRIBUNAL. ACCORDINGLY, THE CASE WAS REPOSTED ON 14 .0 6 . 2016 AT CAMP OFFICE BHUBANESW AR. SHRI DIGANTA DAS, ADVOCATE OF THE ASSESSEE ASSOCIATION APPEARED FOR HEARING ON 14.12,2015 AND RE QUESTED FOR ADJOURNMENT O F HEARING AS THE PETITION F ILED BY THE ASSOCIATION BEFORE THE TRIBUNAL WAS NOT DISPOSED OF, CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE ASSOCIATION , THE CASE WAS REPOSTED TO 10. 08.2016, HOWEVER, THE ASSESSEE REQUESTED FOR ADJOURNMENT OF HEARING VIDE LETTER RECEIVED ON 17.08.2016. THE TRIBUNAL VIDE ORDER IN MA.NO. 0 3/C T K/20 16 ( ARISING OUT OF ITA NO.23 2 /CTK/2010) DATED 19. 08.2016, REJECTED THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE ASSOCIATION. IN THIS CONNECTION, THE ASSESSEE ASSOCIATION WAS REQUIRED TO APPEAR FOR HEARING BEFORE THE COMMISSIONER OF INCOME TAX(E), HYDERABAD ON 26.09.2016. HOWEVER, THE ASSESSEE FILED LETTER REQUESTING FOR ADJOURNMENT OF HEARING AND THE CASE WAS REPOSTED FOR HEARING ON 24.10.2016 AT CAMP OFFICE, BHUBANESWAR. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 5 HOWEVER, SHRI DIGANTA DAS, ADVOCATE OF THE ASSESSEE ASSOCIATION APPEARED ON 24.10.2016 AND REQUESTED FOR ADJOURNMENT OF HEARING, IN VIEW OF WRIT PETITION FILED BY THE ASSESSEE BEFORE THE HONBLE HIGH COURT OF ORISSA. IN THIS CONNECTION THE ASSESSEE WAS GIVEN FINAL OPP ORTUNITY AND REQUIRED TO APPEAR FOR HEARING BEFORE THE COMMISSIONER OF INCOME TAX (E), HYDERABAD ON 21.11.2016. ACCORDINGLY, SHRI DIGANTA DAS, ADVOCATE OF THE ASSESSEE ASSOCIATION APPEARED FOR HEARING ON 21.11.2016 AND FILED WRITTEN SUBMISSIONS AND REPRESE NTED THE CASE. THE CIT(E) THEREAFTER OBSERVED THAT A S PER THE SECTION 2(15) THE ACT, 1961 AS IT S TANDS ON THE 1 ST APRIL 1997, READS AS CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATI O N, MEDICAL RELIEF, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF G ENERAL PUBLIC UTILITY. AS PER THE MOA AND RULES AND REGULATIONS, THE OBJECTIVE OF THE ASSESSEE ASSOCIATION IS TO ENCOURAGE AND PROMOTE THE GAME OF CRICKET I N ODISHA AND TO HOLD AND MAINTAIN THE TAWS OF CRICKET AND RULES A N D REGULATIONS OF THE BOARD OF CONT ROL FOR CRICKET IN INDIA. AS SEEN FROM THE OBJECTIVES, THEY ARE OF GENERAL PUBLIC UTILITY AND THE ASSOCIATION WAS SET UP FOR ENCOURAGE VARIOUS SPORTS I.E. CRICKET IN THE STATE OF ODISHA AND WOULD FALL IN THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLI C UTILITY. HOWEVER, AS SEEN FROM THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND THE INFORMATION AVAILABLE ON RECORD, THE CIT(E) FOUND THAT SURVEY OPERATIONS U/S.133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN THE PREMISES OF M/ S ORISSA CRICKET ASSOCIA TION ON 28.03 . 2006 ALONG WITH SEARCH AND SEIZURE OPERATION U/S.132 OF THE ACT, 1961 IN THE ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 6 RESIDENTIAL PREMISES OF THE HONORARY SECRETARY OF M/S ORISSA CRICKET ASSOCIATION AND INCRIMINATING DOCUMENTS, BOOKS OF ACCOUNTS WERE FOUND AND IMPOUNDED AND TAX DEMA NDS WERE RAISED FOR THE BLOCK PERIOD FROM AYS.2000 - 01 TO 2006 - 07 AND THE SAME WAS CONFIRMED BY THE CIT(A) . THE INCRIMINATING DOCUMENTS AND BOOKS OF ACCOUNTS FOUND DURING THE SEARCH AND SEIZURE OPERATIONS HAVE BROUGHT OUT THE FACT THAT THE FUNCTIONING OF M/ S ORISSA CRICKET ASSOCIATION DURING THESE PERIODS WERE SO MANAGED AS TO CONFER CERTAIN FINANCIAL BENEFITS/GAINS TO THE EXECUTIVES WHO WERE MANAGING THE AFFAIRS OF THE ASSOCIATION, IN VIOLATION OF THE OBJECTS OF THE ASSOCIATION AND THE PROVISIONS OF SECTION 13 OF THE ACT. THOUGH THESE PROVISIONS HAVE TO BE EXAMINED BY THE AO DURING THE ASSESSMENT, THE INFORMATION AVAILABLE ON RECORD, WHICH CLEARLY EVIDENCED THE VIOLATIONS OF PROVISIONS OF SECTION 13 OF THE ACT, CANNOT BE IGNORED WHILE CONSIDERING THE ASSOCIA TION FOR GRANTING REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961. FURTHER, THE CIT(E) OBSERVED THAT ON ANALYSIS OF THE INCOME AND EXPENDITURE STATEMENTS FILED BY THE ASSESSEE ASSOCIATION , IT IS FOUN D THAT THE RECEIPTS ARE IN THE FORM OF FEES FROM AFFILI ATED CLUBS AND INSTITUTIONS, RENTAL INCOME FROM HIRING OUT OF PLANT AND MACHINERY LIKE GENERATORS AND TO A SUBSTANTIAL EXTENT THE RECEIPTS COMPRISED OF SALE OF TICKETS IN RESPECT OF VARIOUS CRICKET MATCHES AND VARIOUS INFRASTRUCTURE SUBSIDY AND OTHER RECEI PTS CLASSIFIED AS CORPUS FUND FROM BCCI AND THE EXPENSES WERE COMPRISED OF GRANTS GIVEN TO DISTRICT LEVEL ASSOCIATIONS, INSTITUTIONS AND CLUBS FOR CONDUCTING CENTRAL LEVEL CRICKET MATCHES AND EXPENDITURE RELATING ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 7 TO NATIONAL LEVEL MATCHES SUCH AS RANJI TRO PHY, DULEEP TROPHY, DEODHAR TROPHY, INTER STATE TOURNAMENTS FOR PLAYERS UNDER THE AGE GROUP OF 16,19,21 ETC. THE CIT(E) FURTHER OBSERVED THAT RECEIPTS/SUBSIDY RECEIVED FROM THE BCCI IS SHOWN AS CORPUS FUND INSTEAD OF TREATING IT AS REVENUE INCOME BY THE AS SESSEE ASSOCIATION FOR THE FINANCIAL YEAR 2002 - 03 TO 2006 - 07. HOWEVER, THE ASSESSEE ASSOCIATION ITSELF HAS ADMITTED THE FUNDS RECEIVED FROM BCCI AS REVENUE RECEIPTS INSTEAD OF CORPUS FUND IN THE RETURN FILED FOR ASSESSMENT YEAR 2008 - 09, WHICH IS CORRECT AS PER ACCOUNTING STANDARDS AND REVENUE RECOGNIZED NORMS. IN THIS CONNECTION, DURING THE HEARING OF THE CASE THE ASSESSEE WAS REQUIRED TO PRODUCE EVIDENCE FROM BCCI TO SUPPORT THE CLAIM OF THE ASSESSEE THAT THE FUNDS RECEIVED FROM BCCI ARE CORPUS IN NATURE. HOWEVER, THE ASSESSEE IS NOT ABLE TO PRODUCE ANY EVIDENCE TO CONSIDER THE FUNDS RECEIVED FROM BCCI AS CORPUS DONATIONS, IN ABSENCE OF WHICH THESE ARE TO BE CONSIDERED AS REVENUE RECEIPTS ONLY. FURTHER, AS SEEN FROM THE INCOME AND EXPENDITURE STATEMENTS FIL ED BY THE ASSESSEE, IT IS FOUND THAT THE ASSESSEE DISTRIBUTED THE FUNDS RECEIVE D FROM THE BCCI TO OTHER ORGANISATIONS IN THE STATE OF ORISSA AND MERELY ACTED AS A NODAL AGENCY AND HAS NOT UNDERTAKEN ANY CHARITABLE ACTIVITY AS PER THE OBJECTS OF THE ASSOCI ATION, EXCEPT, GENERATING INCOME BY SELLING TICKETS AND BY LETTING OUT THE INFRASTRUCTURE FACILITIES OF THE CRICKET STADIUM, WHICH IS OF COMMERCIAL NATURE. THE CIT(E) FURTHER OBSERVED THAT IT IS PERTINENT TO MENTION THAT THE TRIBUNAL IN ITA NO.232/CTK/20 10 DATED 27.06.2014 ALSO COMMENTED ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 8 IN PARA 5.10 THAT, IT IS NOT THE CASE OF THE ASSESSEE THAT IT IS RUNNING A NORMAL SCHOOLING FOR SPORTS. THEREFORE, WE HOLD THAT THE ASSESSEES ACTIVITIES DO NOT FALL WITHIN THE TERM EDUCATION. THE CIT(E), THEREFORE, H ELD THAT IN VIEW OF THE FOREGOING, THOUGH THE OBJECTS OF THE ASSOCIATION ARE APPEARING TO BE FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, WHICH IS CHARITABLE IN NATURE, THE ACTIVITIES CARRIED OUT AND THE MANAGEMENT OF FUNDS OF THE ASSOCIA TION ARE NOT SERVING THE CAUSE OF CHARITY DISCUSSED IN THE PRECEDING PART OF THIS ORDER. THE FUNDS OF THE ASSOCIATION WERE DIVERTED FOR PERSONAL BENEFIT OF THE EXECUTIVES OF THE ASSOCIATION IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT. THE UN DERSIGNED CANNOT IGNORE THE VIOLATIONS OF LAW THE ASSESSEE INDULGED IN AND CANNOT GRANT REGISTRATION ON THE BASIS OF ONLY THE AIMS AND OBJECTS, WRITTEN IN MEMORANDUM OF THE ASSOCIATION. THE CIT(E) OBSERVED THAT THE HE WAS SATISFIED THAT THE ACTIVITIES OF T HE ASSOCIATION ARE NOT GENUINE AND CHARITABLE BASED ON FACTS OF THE CASE. THEREFORE, HE REJECTED THE APPLICATION DATED 31.03.2003 FILED BY THE ASSESSEE IN FORM NO.10A. 4. LD. AR OF THE ASSESSEE SHRI S.K.TULSIYAN, ADVOCATE APPEARED AND FILED WRITTEN SUBMISS IONS WHICH READ AS UNDER : - THE APPELLANT WAS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 ON 08/03/ 1961 UNDER REGISTRATION NO. 346/44 OF 1960 - 61, HAVING ITS REGISTERED OFFICE AT BARABATI STADIUM, CUTTACK. A COPY OF THE SAID CERTIFICATE OF REGIST RATION IS ENCLOSED AT PAGE NO. 01 OF THE PAPER BOOK FILED. THE APPELLANT HAD BEEN CREATED FOR THE PROMOTION, ENCOURAGEMENT, GROWTH AND DIFFUSION OF KNOWLEDGE IN RELATION TO GAMES AND SPORTS WITH SPECIAL EMPHASIS ON CRICKET IN THE STATE OF ORISSA AND TO T AKE ALL STEPS NECESSARY TO ASSIST THE CITIZENS OF ORISSA TO DEVELOP THEIR ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 9 PHYSIC AND HAVE A HEALTHY MIND AND A HEALTHY BODY AND TO SUBSCRIBE TO BECOME A MEMBER OF ANY OTHER ASSOCIATION OR CLUB WHOSE OBJECTS ARE SIMILAR. THE APPELLANT HAD BEEN ALLOWED EXE MPTION U/S 10(23) OF THE INCOME TAX ACT, 1961 FOR THE A.Y'S 1991 - 92 TO 1993 - 95. ON 31/0312003 THE APPELLANT FILED WITH THE COMMISSIONER OF INCOME TAX, CUTTACK CHARGE, CUTTACK, AN APPLICATION IN FORM 10 A OF THE ACT, DULY COMPLYING WITH THE REQUIREMENTS OF RULE 17A OF THE INCOME TAX RULES, 1962, APPLYING FOR REGISTRATION U/S 12A OF THE ACT, CLAIMING THE STATUS OF A CHARITABLE INSTITUTION W.E.F 01.04.1997. ALSO AN APPLICATION FOR CONDONATION OF DELAY WAS FILED MENTIONING THEREIN THAT INADVERTENTLY THE APPLIC ATION WAS NOT FILED BY THE THEN ADVOCATE WHO WAS LOOKING AFTER TAXATION MATTERS OF THE APPELLANT AND THERE WAS ALSO A COMPLETE CHANGE IN THE OFFICE BEARERS OF THE APPELLANT. COPY OF THE SAID APPLICATION IN FORM NO. 10 A DATED 31103/2003 (ALONGWITH APPLICATI ON FOR CONDONATION OF DELAY) IS ENCLOSED AT PAGE NOS. 02 TO,03 OF THE PAPER BOOK. HOWEVER NO ORDER U/S 12AA OF THE INCOME TAX ACT, 1961 WAS PASSED BY THE COMPETENT INCOME TAX AUTHORITY EITHER REFUSING OR ALLOWING REGISTRATION TO THE APPELLANT AS A TRUST EVEN THOUGH SEVERAL YEARS HAD PASSED AFTER RECEIPT OF THE APPLICATION FOR REGISTRATION. IN THE MEANTIME, SEARCH & SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT IN THE RESIDENCE OF THE HONORARY SECRETARY OF THE APPELLANT ON 28/0312006, PURSUANT TO WHICH A SURVEY 133A OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE OFFICE OF THE APPELLANT. CONSEQUENT TO THE SEARCH OPERATION, ASSESSMENT IN THE CASE OF THE APPELLANT U/S IS3C/143(3) OF THE INCOME TAX ACT, 1961 FOR THE A.Y'S 2000 - 2001 TO 2006 - 2007 ( COPIES OF THE SAID ASSESSMENT ORDERS ARE ENCLOSED AT PAGES 41 TO 59 OF THE PAPER BOOK) WAS FRAMED VIDE ASSESSMENT ORDERS DATED 31112/2007 ASSESSING THE INCOME AS PER THE AUDITED INCOME & EXPENDITURE ACCOUNTS IN THE ABSENCE OF REGISTRATION U/S 12AA OR GRANT OF EXEMPTION U/S 10(23) OF THE INCOME TAX ACT, 1961. IT IS HERE HOWEVER BEING MENTIONED THAT NO UNDISCLOSED INCOME OR ASSET WAS FOUND DURING THE COURSE OF THE SURVEY/SEARCH ACTION. BEING AGGRIEVED BY THE ASSESSMENT ORDERS PASSED BY THE LD. AO U/S 153C /143(3) OF THE INCOME TAX ACT, 1961 THE APPELLANT FILED APPEAL BEFORE THE LD. CIT(A) WHO BEING THE FIRST APPELLATE AUTHORITY, CONFIRMED THE ASSESSMENT ORDERS PASSED BY THE LD. AO. BEING AGGRIEVED BY THE LD. CIT(A)'S ORDER, THE APPELLANT FILED A SECOND AP PEAL BEFORE THE HON'BLE ITAT, CUTTACK. THE APPELLANT PLEADED BEFORE THE HON'BLE ITAT THAT ITS APPLICATION FILED U/S 12A OF THE INCOME TAX ACT, 1961 WAS STILL PENDING BEFORE THE LD. CIT, ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 10 CUTTACK FOR CONSIDERATION WHICH WAS NOT DISPOSED OFF BY HIS GOODSELF T ILL THAT DATE FOR REASONS BEST KNOWN TO HIM AND UNTIL SUCH APPLICATION WAS DISPOSED OFF, THE FINDINGS OF THE ASSESSING OFFICER/FIRST APPELLATE AUTHORITY ON THE QUANTIFIED ASSESSABLE TOTAL INCOME FOR THE CONCERNED ASSESSMENT YEARS COULD NOT BE ADJUDICATED U PON BY THE HON'BLE ITAT. THEREAFTER, CONSIDERING THE SUBMISSIONS MADE BY THE APPELLANT AND BEING CONVINCED BY THE PLEA OF THE APPELLANT, THE HON 'BLE ITA T HAD SET ASIDE THE ASSESSMENT ORDERS FRAMED BY THE ASSESSING OFFICER AND HAD DIRECTED THE ASSESSMEN T ORDERS TO BE RE - FRAMED AFTER THE DISPOSAL OF THE PENDING PETITIONS U/S 12A OF THE INCOME TAX ACT, 1961. CONSEQUENT TO THE ABOVE, PETITION WAS FILED BY THE APPELLANT BEFORE THE LD. CIT, CUTTACK VIDE LETTER 25/0312008 (COPY ENCLOSED AT PAGES 60 TO 61 OF THE PAPER BOOK). WHILE REITERATING THE PENDENCY OF THE ORIGINAL APPLICATION FILED ON 3110312003, THE APPELLANT ALSO SUBMITTED THE MAIN OBJECTS OF THE ASSOCIATION. IT WOULD BE OF RELEVANCE HERE TO MENTION THAT UNDER SECTION 12AA OF THE INCOME TAX ACT, 196 1 THE APPLICATION FILED BY THE APPELLANT U/S 12A OF THE INCOME TAX ACT, 1961 ON 31/ 03/2003 WAS REQUIRED TO BE DISPOSED OFF WITHIN A PERIOD OF 6 MONTHS, IS 30/09/2003. HOWEVER NO SUCH ORDER WAS FRAMED. HOWEVER, ON THE BASIS OF THE PETITION FILED BY THE AP PELLANT ON 25/03/2008, THE COMPETENT TAX AUTHORITIES, APPLYING THE RATIO OF THE DECISION IN THE CASE OF SRIKHETRA, A. C. BHAKTI VEDANTA SWAMI CHARITABLE TRUST VS. ACIT, WP(C) 12347 OF 2005 PRONOUNCED BY THE HON'BLE CUTTACK HIGH COURT, ASSUMED LAWFUL JURISD ICTION OVER T HE ORIGINAL APPLICATION FILED U/ S 12A OF THE ACT, DATED 31 / 03 / 2003 (EVEN THOUGH, AS STATED EARLIER, THE STATUTORY PERIOD OF SIX MONTHS HAD LAPSED DURING WHICH THE ORIGINAL APPLICATION HAD NOT BEEN DISPOSED OFF GRANTING/ REFUSING REGISTRATION). ACCORDINGLY, A FRESH HEARING WAS PROVIDED TO THE APPELLANT AND CLARIFICATIONS HAD BEEN CALLED FOR FROM THE APPELLANT BY THE LD. CIT, CUTTACK, VIDE LETTER DATED 10 / 08 / 2009 (COPY ENCLOSED AT PAGES 62 TO 65 OF THE PAPER BOOK) ON VARIOUS ISSUES AS PER QUESTI ONNAIRE WHICH WAS RESPONDED TO, BY THE APPELLANT VIDE A WRITTEN REPLY DATED 21 / 10 / 2009 (COPY ENCLOSED AT PAGES 66 TO 87 OF THE PAPER BOOK). IT WAS DULY EXPLAINED IN THE SAID SUBMISSION THAT THE DOMINANT OBJECT OF THE APPELLANT WAS PROMOTION AND DEVELOPMENT OF THE GAME OF CRICKET AND OVERALL SPORTS AND HEALTH AND FITNESS OF THE CITIZENS OF ORISSA AND AS SUCH ITS OBJECTS ARE WELL COVERED WITHIN THE FOURTH LIMB OF THE DEFINITION OF 'CHARITABLE PURPOSE' AS LAID OUT IN SECTION 2(15) OF THE ACT AS IT STOOD ON 200 3, BEING THE YEAR OF THE APPLICATION U/ S 12A OF THE ACT. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 11 IT WAS SUBMITTED THAT PROFIT MOTIVE WAS NOWHERE THE OBJECT OF THE CHARITABLE ASSOCIATION. ALL THE RECEIPTS RECEIVED BY IT IN THE FORM OF SUBSIDY, CRICKET TICKET SALES, RENTS ETC, WERE ALL UTILIZED FOR PURPOSES OF THE ACTIVITIES SO THAT THE DOMINANT MOTIVE OF CHARITY COULD BE ADVANCED. IT WAS EXPLAINED THAT ALL' RECEIPTS OF THE APPELLANT WERE SPENT FOR ADVANCING THE OBJECTS OF THE APPELLANT ASSOCIATION WHICH WERE CHARITABLE IN NATURE. PURSUANT TO S UCH SUBMISSION OF THE APPELLANT, THE LD. CIT, CUTTACK PASSED ORDER U/S 12AA( 1 )(B) OF THE INCOME TAX ACT, 1961 ON 22/0312010 (COPY ENCLOSED AT PAGES 88 TO 127 OF THE PAPER BOOK) REFUSING THE GRANT OF REGISTRATION TO THE APPELLANT U/ S 12AA OF THE INCOME TAX ACT, 1961. PURSUANT TO THE SAID ORDER OF THE LD. CIT, APPEAL WAS FILED BY THE APPELLANT BEFORE THE HON'BLE ITAT, CUTTACK AND DETAILED SUBMISSION DATED 08/0312011 (COPY OF THE WRITTEN SUBMISSION OF THE APPELLANT ENCLOSED AT PAGES 128 TO 174 OF THE PAPER B OOK) WAS FILED BEFORE THE BENCH REITERATING THE SUBMISSIONS MADE BEFORE THE LD. CIT, CUTTACK. THE POINT REGARDING THE APPELLANT'S APPLICATION FILED IN FORM NO. 10 A NOT BEING DISPOSED OFF BY THE LD. CIT WITHIN 6 MONTHS OF FILING THE APPLICATION AS PER SECTI ON 12AA(2) OF THE INCOME TAX ACT, 1961 WAS RAISED BY THE APPELLANT BEFORE THE HON'BLE ITAT. HOWEVER THE HON'BLE ITAT, CUTTACK INFLUENCED BY THE HON'BLE ORISSA HIGH COURT'S DECISION IN THE CASE OF SRIKHETRA, A.C. BHAKTI VEDANTA SWAMI CHARITABLE TRUST VS. ACIT, WP(C) 12347 OF 2005 WHICH HELD THAT 'IN OUR VIEW THE PERIOD OF SIX MONTHS AS PROVIDED IN SUB - SECTION (2) OF SECTION 12AA IS NOT MANDATORY' PASSED ITS ORDER ON 27/06 /2014 VIDE ITA NO. 232/CTK/ 2010 WITHOUT DIRECTING GRANT OF REGISTRATION TO THE APPELLA NT, SETTING ASIDE THE ORDER OF THE LD. CIT, CUTTACK, RESTORED THE ISSUE TO THE FILE OF THE CIT WITH THE FOLLOWING DIRECTIONS; TO LOOK INTO THE MATTER OF REGIS TRATION U/ S 12AA OF THE INCOME TAX ACT, 1961, IN THE CASE OF THE ASSESSEE AFRESH, AFTER GIVING P ROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PROVE THAT THE OBJECTS FOR WHICH IT WANTS TO BE REGISTERED AS A 'TRUST' ARE GENUINE AND SERVE CHARITABLE PURPOSES, THUS ESTABLISHING IT'S ELIGIBILITY FOR REGISTRATION U/S 12AA OF THE ACT. WHILE CONSIDER ING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION, THE CIT SHOULD NOT APPLY THE PROVISO TO SECTION 2(15) OF THE ACT RETROSPECTIVELY. IF THE LD. C IT DID THINK THAT IN VIEW OF THE PROVISO INSERTED W.E.F 01/04 / 2009, THE ACTIVITIES CARRIED ON BY THE ASSESSE E NO MORE REMAINED CHARITABLE IN NATURE, HE COULD PASS ORDER U/S 154 OF THE ACT, RECTIFYING HIS ORDER WITHDRAWING THE REGISTRATION OF THE ASSESSEE IN CASE HE HAD GRANTED REGISTRATION W.E.F. 01/04 / 2009 BY A SPEAKING ORDER. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 12 THE HON'BLE ITAT, CUTTACK HAS IN ITS ORDER DATED 27/06/2014 LAID OUT THE FOLLOWING SPECIFIC OBSERVATIONS T O BE FOLLOWED BY THE C IT WHILE CONSIDERING THE CASE OF THE APPLICANT AFRESH: THE PROVISIONS OF SECTIONS 12A MAKE IT AMPLY CLEAR THAT SECTIONS 11 AND 12 OF THE ACT COME INTO PLAY ONL Y AFTER REGISTRATION OF THE TRUST ULS 12A IS GRANTED. THUS SECTIONS 11 AND 12 HAVE NO APPLICABILITY AT THE STAGE OF REGISTRATION U/S 12AA OF THE ACT. THUS THE ONLY CRITERIA TO BE FULFILLED BY THE APPLICANT ASSESSEE FOR THE PURPOSE OF ITS REGISTRATION U/ S 12A O F THE ACT IS TO PROVE THAT IT HAS BEEN ESTABLISHED FOR CHARITABLE PURPOSE IN TERMS OF THE DEFINITION U/S 2(15) OF THE ACT THE HON'BLE ITAT HAS OBSERVED THAT THE LD. CIT HAS NOT DENIED THAT THE ASSESSEE WAS ENGAGED IN ADVANCEMENT OF ANY OTHER OBJECT S OF PUBLIC UTILITY. (PARA 5.3, PAGE 33 OF THE ORDER). THE LD. C IT HAD HELD THAT SINCE THE ASSESSEE WAS PROVIDING CERTAIN SERVICES TO THE GENERAL PUBLIC TO VIEW THE MATCH IN HIS PREMISES BY CHARGING FEES AND ALSO COMMERCIAL EXPLOITATION OF ITS PREMISES BY ADVERTISEMENT, BROADCASTING RIGHTS ETC, THEY STOOD HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT. THE HON 'BLE IT AT HAS HELD THAT THE C IT HAS TO LOOK INTO THE DEFINITION OF CHARITABLE PURPOSE AS ON THE DATE WHEN THE APPLICATION WAS MADE FOR REGISTRATIO N BY THE ASSESSEE FOR DECIDING WHETHER THE ASSESSEE'S OBJECTS ARE CHARITABLE OR NOT AND IF THE ASSESSEE'S OBJECT ARE IN CONSONANCE WITH SEC 2(15) OF THE ACT AS IT STOOD ON THAT DATE. (PAGE 36 OF ORDER) THE HON'BLE ITAT HAS THROUGH PARAS 5.5 TO 5.9 OF ITS ORDER DISCUSSED THE PROVISIONS OF SECTION 2(15) AS IT EXISTED PRIOR TO THE AMENDMENT AND THE RATIONALE BEHIND SUCH AMENDMENT. THE HON'BLE ITAT IN VIEW OF ALL THE DISCUSSIONS, HAS HELD THAT THE AMENDMENT TO SECTION 2(15) OF THE ACT IS NOT RETROSPECTIVE I N OPERATION AND THEREFORE, ON THAT BASIS, THE ID. C IT CANNOT REJECT THE APPLICATION FOR REGISTRATION, PROVIDED THE ASSESSEE COMPLIES WITH ALL OTHER CONDITIONS. THE HON'BLE IT AT FURTHER OBSERVED THAT IF THE LD. C IT THINKS THAT THE ASSESSEE IS HIT BY THE PR OVISO TO SEC. 2(15) W.E.F 1.4.2009, HE CAN PASS ORDER U/S 154 OF THE ACT, RECTIFYING THE ORDER GRANTING REGISTRATION TO THE ASSESSEE AS THAT WILL TANTAMOUNT TO A MISTAKE OF LAW APPARENT ON RECORD FROM THAT DATE.(PARA 5.9 PAGE 42) THE HONBLE ITAT HAS HELD THAT PROVISIONS OF SEC. 12AA(1)(A) & (B) OF THE ACT MANDATES THAT WHEN A CHARITABLE TRUST/INSTITUTION MAKES AN APPLICATION FOR REGISTRATION, THE CIT AT THIS STAGE IS NOT REQUIRED TO EXAMINE WHETHER THE APPLICANT TRUST HAD APPLIED ANY OF ITS INCOME FOR CHA RITABLE PURPOSE OR NOT. (PARA 5.10) ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 13 AT THE STAGE OF REGISTRATION, ALL THAT THE CIT SHOULD EXAMINE IS WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENT OF SEC, 12AA R.W.R. 17A OF THE INCOME TAX RULES, 1962 AND WHETHER FORM NO. 10A HAS BEE N PROPERLY FILLED UP. PURSUANT TO THE DIRECTIONS OF THE HON'BLE ITAT, CUTTACK BENCH VIDE ORDER DATED 27/06/2014, THE APPELLANT'S CASE WAS FIXED FOR HEARING BY THE LD. CIT(E), HYDERABAD ON 07/01/2016 WHEREIN THE APPELLANT APPEARED BEFORE THE LD. CIT(E), HY DERABAD AND FILED DETAILED WRITTEN SUBMISSIONS AND DOCUMENTARY EVIDENCES IN SUPPORT OF ITS APPLICATION FILED IN FORM NO. 10A U/S 12A OF THE INCOME TAX ACT, 1961. THE APPELLANT ORALLY AND VIDE WRITTEN SUBMISSIONS EXPLAINED ITS APPLICATION FILED FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 AND THE OBJECTS UNDERTAKEN AND ACTIVITIES CONDUCTED IN PURSUANCE OF THE SAID OBJECTIVES. THE APPELLANT SUBMITTED BEFORE THE LD. CIT(E) THAT ITS APPLICATION FILED IN FORM NO. 10A FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 ON 31/03/2003 HAD BEEN DISPOSED OFF BY THE LD. CIT, CUTTACK ONLY ON 22/03/2010 WHEREAS AS PER SECTION 12AA(2) OF THE INCOME TAX ACT, 1961 THE SAID APPLICATION SHOULD HAVE BEEN DISPOSED OFF BY THE LD. CIT, EITHER GRANTI NG/REFUSING REGISTRATION TO THE APPELLANT U/S 12AA OF THE ACT, WITHIN SIX MONTHS OF FILING THE APPLICATION. IT WAS ALSO SUBMITTED BY THE APPELLANT BEFORE THE LD. CIT(E) THAT THE HON'BLE ITAT, CUTTACK IN VIEW OF THE DECISION OF THE HON'BLE ORISSA HIGH COURT IN THE CASE OF SRIKHETRA, A.C. BHAKTI VEDANTA SWAMI CHARITA B LE TRUST VS. ACIT, WP(C) 12347 OF 2005 WHICH HELD THAT 'IN OUR VIEW THE PERIOD OF SIX MONTHS AS PROVIDED IN SUB - SECTION (2) OF SECTION 12AA IS NOT MANDATORY' PASSED ITS ORDER ON 27/06/2014 VIDE I TA NO. 232/CTK/2010 HAD SET ASIDE THE APPELLANT'S CASE TO THE CIT FOR FRESH ADJUDICATION. HOWEVER SINCE THE SAID DECISION OF THE ORISSA HIGH COURT STOOD REVERSED BY THE HON'BLE SUPREME COURT OF INDIA'S DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX, KANPUR & ORS. VS. SOCIETY FOR THE PROMOTION OF EDUCATION, ALLAHABAD DATED 16/02/2016 REPORTED IN [2016] 382 ITR 6 (SC) WHEREIN IT HAS BEEN HELD THAT ONCE AN APPLICATION U/S 12A OF THE INCOME TAX ACT, 1961 FOR REGISTRATION OF A TRUST HAS BEEN MADE BEFORE TH E CIT AS PER RULE 17A AND THE SAME IS NOT DISPOSED OFF WITHIN SIX MONTHS OF MAKING THE APPLICATION, THEN THE REGISTRATION SHALL BE DEEMED TO HAVE BEEN GRANTED TO THE TRUST U/S 12AA OF THE INCOME TAX ACT, 1961, THEREFORE THE APPELLANT STOOD REGISTERED U/S 1 2AA OF THE INCOME TAX ACT, 1961 SINCE ITS APPLICATION FOR REGISTRATION FILED ON 31/03/2003 (W.E.F 01/04/1997) HAD NOT BEEN DISPOSED OFF WITHIN SIX MONTHS OF FILING THE APPLICATION I.E. BY 30TH SEPTEMBER, 2003. UPON HEARING THE APPELLANT, THE IMPUGNED ORD ER DATED 26/05/2017 U/S 12AA(1)(B)(I) OF THE INCOME TAX ACT, 1961 WAS PASSED BY THE LD. CIT(E), HYDERABAD DENYING THE APPELLANT REGISTRATION AS A ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 14 CHARITABLE TRUST U/S 12AA OF THE INCOME TAX ACT, 1961 ON THE FOLLOWING ALLEGED PREMISES: INCRIMINATING DOCUM ENTS AND BOOKS OF ACCOUNTS WERE IMPOUNDED DURING THE SEARCH AND SEIZURE OPERATION CONDUCTED IN THE RESIDENTIAL PREMISES OF THE APPELLANT'S HONORARY SECRETARY AND TAX DEMAND FOR THE BLOCK PERIOD [A.Y.S 2000 - 01 TO 2006 - 07] WERE RAISED BY THE A O WHICH WERE SU BSEQUENTLY CONFIRMED BY THE CIT(A). THE INCRIMINATING DOCUMENTS AND BOOKS OF ACCOUNTS IMPOUNDED DURING THE SEARCH AND SEIZURE OPERATIONS HAVE BROUGHT OUT THE FACT THAT THE FUNCTIONING OF THE APPELLANT WERE CONDUCTED IN A MANNER SO AS TO CONFER CERTAIN FI NANCIAL BENEFITS/GAINS TO THE EXECUTIVES MANAGING THE AFFAIRS OF THE APPELLANT, IN VIOLATION OF SECTION 13 OF THE INCOME TAX ACT, 1961. SECTION 13 OF THE INCOME TAX ACT, 1961 EVEN THOUGH REQUIRES EXAMINATION DURING ASSESSMENT, IT CANNOT BE IGNORED WHILE CONSIDERING THE APPELLANT'S APPLICATION FILED FOR GRANT OF REGISTRATION U/S. 12AA OF THE INCOME TAX ACT, 1961. SUBSIDY RECEIVED BY THE APPELLANT FROM BCCI WAS TREATED AS CORPUS FUND INSTEAD OF REVENUE RECEIPTS FOR THE F.Y.S 2002 - 03 TO 2006 - 07 WITHOUT PRO DUCING ANY EVIDENCE FROM BCCI FOR TREATING THE SUBSIDY AS 'CORPUS DONATION'. THE APPELLANT DISTRIBUTED THE FUNDS RECEIVED FROM THE BCCI TO OTHER ORGANIZATIONS IN THE STATE OF ORISSA MERELY AS A NODAL AGENCY WITHOUT UNDERTAKING ANY CHARITABLE ACTIVITY AS PER THE OBJECTS OF THE ASSOCIATION, EXCEPT GENERATING INCOME BY SELLING TICKETS AND BY LETTING OUT THE INFRASTRUCTURE FACILITIES OF THE CRICKET STADIUM, WHICH IS OF COMMERCIAL NATURE. THAT THE HON'BLE ITAT, CUTTACK BENCH, CUTTACK VIDE ORDER IN ITA NO.232 /CTK / 2010 DATED 27/06/2014, ALSO COMMENTED IN PARA 5.10 THAT 'IT IS NOT THE CASE OF THE ASSESSEE THAT IT IS RUNNING A NORMAL SCHOOLING FOR SPORTS. THEREFORE, WE HOLD THAT THE ASSESSEE'S ACTIVITIES DO NOT FALL WITHIN THE TERM 'EDUCATION '. BEING AGGRIEVED BY THE IMPUGNED ORDER DATED 26/05 / 2017 PASSED BY THE LD. CIT(E), HYDERABAD THE APPELLANT IS IN APPEAL BEFORE YOUR HONOURS AND HAS RAISED 8 GROUNDS OF APPEAL IN FORM NO. 36 FILED ON 29/08/2017. DISCUSSING THE GROUNDS OF APPEAL SO RAISED, THE APPELLANT SU BMITS AS UNDER FOR YOUR CONSIDERATION. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 15 SUBMISSION: AT THE OUTSET THE APPELLANT WOULD LIKE TO SUBMIT THAT THE HON'BLE ITAT, CUTTACK WHILE SETTING ASIDE THE APPELLANT'S CASE TO THE LD. CIT VIDE ORDER DATED 04/07/2014 IN ITA NO. 334/CTK / 2011 HAD REJECT ED THE APPELLANT'S SUBMISSIONS THAT IT STOOD DEEMED TO BE REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961 IN VIEW OF ITS APPLICATION FILED IN FORM NO. 10 A FOR GRANT OF REGISTRATION NOT BEING DISPOSED OFF WITHIN SIX MONTHS OF FILING THE APPLICATION. THE SA ID REJECTION WAS MADE BY THE HON'BLE ITAT, CUTTACK IN INFLUENCE OF THE HON'BLE ORISSA HIGH COURT'S DECISION IN THE CASE OF SRIKHETRA, A.C. BHAKTI VEDANTA SWAMI CHARITABLE TRUST VS. ACIT, WP(C) 12347 OF 2005 WHICH HELD THAT THE STATUTORY PERIOD OF SIX MONTH S AS PRESCRIBED BY SECTION 12AA(2) OF THE INCOME TAX ACT, 1961 FOR PASSING ORDERS EITHER REFUSING/GRANTING REGISTRATION TO APPLICANTS FILING APPLICATION ULS 12A OF THE ACT, WITHIN SIX MONTHS OF FILING AN APPLICATION, IS NOT MANDATORY. HOWEVER SUBSEQUENTL Y, THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX, KANPUR & ORS. VS, SOCIETY FOR THE PROMOTION OF EDUCATION, ALLAHABAD DATED 16/02/2016 REPORTED IN [2016] 382 ITR 6 (SC) HELD THAT ONCE AN APPLICATION U/S 12A OF THE INCOME TAX ACT, 1961 FOR REGISTRATION OF A TRUST HAS BEEN MADE BEFORE THE CIT AS PER RULE 17A AND THE SAME IS NOT DISPOSED OFF WITHIN SIX MONTHS OF MAKING THE APPLICATION, THEN THE REGISTRATION SHALL BE DEEMED TO HAVE BEEN GRANTED TO THE TRUST U/S 12AA OF THE INCOME TAX ACT, 1961. THE ABOVE DECISION OF THE HON'BLE SUPREME COURT OF INDIA HAVING REVERSED THE ORISSA HIGH COURT'S DECISION IN THE CASE OF SRIKHETRA, A.C. BHAKTI VEDANTA SWAMI CHARITABLE TRUST (SUPRA), (IN VIEW OF WHICH THE HON'BLE ITAT, CUTTACK DENIED TO G RANT THE APPELLANT REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961), THE APPELLANT IS DEEMED TO BE REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961 W.E.F 01.04.1997 SINCE ITS APPLICATION FILED IN FORM NO. 10 A ON 31/03 /2003 FOR REGISTRATION U/ S 12AA HAD NO T BEEN DISPOSED OFF WITHIN SIX MONTHS OF FILING THE APPLICATION I.E. BY SO' SEPTEMBER, 2010. HAVING SUBMITTED THE ABOVE BUT WITHOUT PREJUDICE TO THE SA M E, THE APPELLANT WOULD LIKE TO SUBMIT THAT (AS DETAILED ABOVE IN THE SUBMISSION) THE HON'BLE ITAT, CU TTACK IN ITA NO. 232/CTK / 2010 HAD SPECIFICALLY DIRECTED THE LD. CIT(E) TO ONLY EXAMINE WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENT OF SEC, 12AA R.W.R. 17 A OF THE INCOME TAX RULES, 1962 AND WHETHER FORM NO. 10 A HAS BEEN PROPERLY FILLE D UP, AT THE STAGE OF GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 AND IN DOING SO, THE AMENDMENT TO SECTION 2(15) OF THE ACT W.E.F 1.4.2009 SHOULD NOT BE APPLIED AS IT IS NOT RETROSPECTIVE IN OPERATION, THUS REQUIRING THE LD. CIT(E) TO LOOK INTO THE DEFINITION OF CHARITABLE PURPOSE AS ON THE ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 16 DATE WHEN THE APPLICATION HAD BEEN MADE BY THE APPELLANT, I.E IN THE YEAR 2003, PRIOR TO THE AMENDMENT. IN VIEW OF THE ABOVE, THE APPELLANT WOULD LIKE TO QUOTE THE SECTION 12AA OF THE INCOME TAX ACT, 19 61 WHICH READS AS FOLLOWS: (RELEVANT EXTRACT REPRODUCED.) 12AA. PROCEDURE FOR REGISTRATION> (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) OR CLAUSE (AA) OF SUB - SECTION (1)] OF SECTI ON 12A, SHALL - (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NEC ESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE - ( I ) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; ( II ) SHALL, IF HE IS NOT SO SATISFIED PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION. AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: PROVIDED . PROVIDED THAT NO ORDER OF BEING HEARD. A CLEAR READING OF THE FOREGOING PROVISION SUGGESTS THAT THE PROCEDURE TO GR ANT REGISTRATION TO A TRUST OR INSTITUTION U/S 12AA OF THE INCOME TAX ACT, 1961 IS THAT THE COMMISSIONER OF INCOME TAX ON RECEIPT OF APPLICATION FOR REGISTRATION U/S 12A OF THE ACT HAS TO CALL FOR DOCUMENTS OR INFORMATION FROM THE TRUST/INSTITUTION TO VERI FY THE GENUINENESS OF THE ACTIVITIES OF THE TRUST/INSTITUTION AND HE HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST/INSTITUTION. FURTHER RULE 17 A OF THE INCOME TAX RULES, 1962 LAYS DOWN HOW AN APPLICATION FOR REGISTRATION OF CHARITABLE OR RELIGIO US TRUST IS TO BE MADE. RULE 17 A OF THE INCOME - TAX RULES, 1962, PROVIDES AS UNDER: '17 A. AN APPLICATION UNDER CLAUSE (A) OF SECTION 12A FOR REGISTRATION OF A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION SHALL BE MADE IN DUPLICATE IN FORM NO.1 0 A AND S HALL BE ACCOMPANIED BY THE FOLLOWING DOCUMENTS, NAMELY: -- (A) WHERE THE TRUST IS CREATED, OR THE INSTITUTION IS ESTABLISHED, UNDER AN INSTRUMENT, THE INSTRUMENT IN ORIGINAL, TOGETHER WITH ONE COPY ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 17 THEREOF, AND WHERE THE TRUST IS CREATED, OR THE INSTITUTI ON IS ESTABLISHED, OTHERWISE THAN UNDER AN INSTRUMENT, THE DOCUMENT EVIDENCING THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, TOGETHER WITH ONE COPY THEREOF: PROVIDED THAT IF THE INSTRUMENT OR DOCUMENT IN ORIGINAL CANNOT CONVENIENTLY BE PRODUCED, IT SHALL BE OPEN TO THE CHIEF COMMISSIONER OR COMMISSIONER TO ACCEPT A CERTIFIED COPY IN LIEU OF THE ORIGINAL. (B) WHERE THE TRUST OR INSTITUTION HAS BEEN IN EXISTENCE DURING ANY YEAR OR YEARS, PRIOR TO THE FINANCIAL YEAR IN WHICH THE APPLIC ATION FOR REGISTRATION IS MADE, TWO COPIES OF THE ACCOUNTS OF THE TRUST OR INSTITUTION RELATING TO SUCH PRIOR YEAR OR YEARS (NOT BEING MORE THAN THREE YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH THE SAID APPLICATION IS MADE) FOR WHICH SUCH ACCOUNTS HAVE BEEN MADE UP. IT THUS PRESCRIBES FORM NO. 10 A AND IT ALSO REQUIRES THAT THE APPLICATION FOR REGISTRATION CAN BE MADE ONLY BY A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION. THUS WHAT TRANSPIRES FROM A CONJOINT READING OF SECTION 12AA OF THE INCOME TAX A CT, 1961 AND RULE 17A OF THE IT RULES IS THAT THE MANDATE OF LAW AS REGARDS REGISTRATION U/S 12AA OF THE ACT REQUIRES THE CIT TO SATISFY HIMSELF ABOUT THE OBJECTIVES AND THE GENUINENESS OF ACTIVITIES OF THE TRUST AND HE MAY ALSO MAKE SUCH INQUIRIES AS HE M AY DEEM NECESSARY FOR THE SAID PURPOSE. THE SECTION DOES NOT MANDATE ANYTHING BEYOND THIS. IN THE ABOVE CONTEXT, IT IS FIRSTLY STATED THAT FOLLOWING THE PRESCRIBED GUIDELINES AS LAID IN SECTION 12AA OF THE ACT R.W.RULE 17A, THE APPELLANT APPLIED FOR REGI STRATION U/S.12A(1) OF THE ACT WITH A DULY FILLED UP APPLICATION FOR REGISTRATION IN THE PRESCRIBED FORM NO. 10 A (COPY ENCLOSED AT PAGES 02 TO 03 OF THE PAPER BOOK) READ WITH RULE 17A OF THE INCOME TAX RULES, 1962 BEFORE THE LD. CIT, CUTTACK, ON 31.03.2003 THUS COMPLYING WITH THE SECTION 12AA(1) OF THE INCOME TAX ACT, 1961. FURTHER, COPIES OF ACCOUNTS FOR THE F.Y.S. 1994 - 95 TO 2007 - 08 WERE ALSO FILED BEFORE THE LD. CIT(E) (COPIES ENCLOSED AT PAGES 296 TO 472 OF THE PAPER BOOK). IN THE ABOVE CONTEXT IT IS FIRSTLY SUBMITTED THAT THE LD. CIT(E) HAS NOT DOUBTED THAT THE APPELLANT'S OBJECTS ARE CHARITABLE IN NATURE FOR THE PURPOSE OF GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961. HOWEVER THE LD. CIT(E) HAS DOUBTED THE ACTIVITIES OF THE APPELLANT A S NOT BEING IN THE NATURE OF CHARITABLE ACTIVITIES AS PER THE OBJECTS OF THE ASSOCIATION BUT ONLY BEING OF COMMERCIAL NATURE LIKE GENERATING INCOME BY SELLING TICKETS AND LETTING OUT THE INFRASTRUCTURE FACILITIES OF THE CRICKET STADIUM. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 18 IN THIS CONNECTIO N THE APPELLANT WOULD FIRSTLY LIKE TO SUBMIT THAT IT WAS DULY NOTIFIED BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE HAVING REGARD TO THE FACT THAT IT HAS, AS ITS OBJECTS THE CONTROL, SUPERVISION, REGULATION OR ENCOURAGEMENT OF THE GAME OF CRICKET IN I NDIA. FOR SUCH NOTIFICATION POST AMENDMENT VIDE FINANCE ACT, 1992 W.E.F. 01/04/1992, THE APPELLANT WAS REQUIRED TO MAKE AN APPLICATION FOR IDENTIFICATION AS A SPORTS BODY FOR IT S INCOME QUALIFYING EXEMPTION U/ S 10(23) OF THE ACT. THE CENTRAL GOVERNMENT BEF ORE NOTIFYING THE ASSOCIATION UNDER THIS CLAUSE CALLED FOR DOCUMENTS INCLUDING AUDITED ACCOUNTS, INFORMATION FROM THE ASSOCIATION TO SATISFY ITSELF ABOUT THE GENUINENESS OF ITS ACTIVITIES AND CONDUCTED NECESSARY ENQUIRY AS THEY THOUGHT FIT. THIS CAN BE SEE N FROM THE REQUIREMENT OF SECTION 10(23) AS IT EXISTED ON 01/04/1992. THE COPY OF THE NOTIFICATION ISSUED BY THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI ON 25 / 1 1/ 1991 AND NOTIFIED VIDE NOTIFICATION NO.8945 IS ENCLOSED AT PAGE 40 OF THE PAPER BOOK. FURTHER THE APPELLANT IS A MEMBER OF BOARD OF CONTROL FOR CRICKET IN INDIA (BCCI), WHICH IN TURN IS A MEMBER OF ICC HAVING AS ITS PRIMARY OBJECT AS, - 'THE PROMOTION, GROWTH, ENCOURAGEMENT AND DIFFUSION OF KNOWLEDGE IN THE FI ELD OF CRICKET AND OTHER GAMES AND SPORTS' ALONG WITH 'ENCOURAGING THE FORMATION OF CLUBS, ORGANISATIONS AND DISTRICT CRICKET ASSOCIATION FOR THE CONTROL OF THE GAME OF CRICKET IN THE TERRITORY ASSIGNED TO THEM BY THE APPLICANT - ASSESSEE, FOSTERING THE SPIRIT OF SPORTSMANSHIP AMONGST STUDENTS AND MEMBERS OF AFFILIATED ORGANIZATIONS, MAINTAINING A PANEL OF UMPIRES AND DOING SUCH ACTS AS MAY BE NECESSARY FOR GOOD SUPERVISION AND CONTROL OF THE GAME, FRAMING, ADDING, ALTERING, MAINTAINING AND ENFORCING RULE S, BYE - LAWS AND REGULATIONS FOR THE CONTROL AND GOVERNANCE OF THE GAME OF CRICKET IN ORISSA AND MAINTAINING DISCIPLINE AMONG ITS MEMBERS AND AMONG PLAYERS, OFFICIALS AND AFFILIATED ORGANIZATIONS AND ALSO OTHER INSTITUTIONS/BODIES CONNECTED WITH THE GAME OF CRICKET IN ORISSA TO CO - ORDINATE THE ACTIVITIES OF ITS MEMBERS AND AFFILIATED ORGANISATIONS. THE BCC I IS A CHARITABLE ENTITY REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961 AND IS ASSESSED U/S 11 OF THE INCOME TAX ACT, 1961. HAVING STATED THE ABOVE THE APPELLANT FINDS IT RELEVANT TO QUOTE CLAUSE 3 OF ITS MEMORANDUM OF ASSOCIATION (COPY ENCLOSED AT PAGE 7 OF THE PAPER BOOK) STATING THE OBJECTIVES OF THE ASSOCIATION IN ORDER TO SHOW THAT ITS ACTIVITIES ARE IN CONSONANCE WITH ITS OBJECTIVES. CLAUSE 3 OF TH E MEMORANDUM OF ASSOCIATION READS AS UNDER: '3. THE OBJECTS OF THE ASSOCIATION ARE: ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 19 A. DIFFUSION OF USEFUL KNOWLEDGE OF SPORTS OF ALL KINDS, PARTICULARLY, THE GAME OF CRICKET. B. FOSTERING AND DEVELOPMENT OF KNOWLEDGE OF SPORTS AND HEALTH. C. ESTABLIS HMENT OF LIBRARIES AND READING ROOMS/GYMNASIUM WHERE ONE CAN READ BOOKS, JOURNALS AND PAPERS ON SPORTS AND HEALTH. D. TO CONTROL THE GAME OF CRICKET IN AND THROUGHOUT THE STATE OF ORISSA. E. TO ADVANCE AND SAFEGUARD THE INTEREST OF GAME OF CRICKET IN AC CORDANCE WITH THE LAW AND REGULATIONS OF THE MC.C. F TO HOLD AND MAINTAIN THE LAWS OF CRICKET AND RULES AND REGULATIONS OF THE BOARD OF CONTROL FOR CRICKET IN INDIA. G. TO PROMOTE, ENCOURAGE AND IMPROVE THE GAME OF CRICKET IN THE STATE OF ORISSA. H. TO PROCURE FROM THE GOVERNMENT OF ORISSA, THE ORISSA COUNCIL OF SPORTS AND OTHER INSTITUTIONS AND/OR PERSONS, FACILITIES AS MAY BE NECESSARY FOR THE ACHIEVEMENT OF ITS OBJECTS. I. TO ARRANGE AND REGULATE 'REPRESENTATIVE MATCHES' IN ORISSA AND OUTSIDE, BY TEA MS REPRESENTING THE ASSOCIATION AND TO SELECT TEAMS TO REPRESENT THE ASSOCIATION AND STATE OF ORISSA AND TO PROVIDE INCENTIVE IN CASH/KIND TO PLAYERS, COACHES, MANAGERS AND TEAMS FOR THEIR EXCELLENCE OR FOR ARRANGEMENT OF COMPETITIONS ETC. J - TO ENCOURAGE THE FORMATION OF CLUBS, ORGANISATIONS AND DISTRICT CRICKET ASSOCIATION FOR THE CONTROL OF THE GAME OF CRICKET IN SUCH TERRITORY AS IS OR MAY BE ASSIGNED TO THEM BY THE ASSOCIATION. K. TO FOSTER THE SPIRIT OF SPORTSMANSHIP AMONGST STUDENTS AND MEMBERS OF AFFILIATED ORGANIZATIONS. I. TO MAINTAIN A PANEL OF UMPIRES AND TO DO SUCH ACTS AS MAY BE NECESSARY FOR THIS PURPOSE (PARTICULARLY FOR GOOD SUPERVISION AND CONTROL OF GAME). M. TO ARRANGE, ORGANIZE, AUTHORIZE OR CONTROL LEAGUE AND KNOCK - OUT TOURNAMENTS A ND OTHER REPRESENTATIVE MATCHES, INCLUDING MATCHES WITH OTHER STATES AND COUNTRIES. N. TO FRAME, ADD, ALTER, MAINTAIN AND ENFORCE RULES, BYE - LAWS AND REGULATIONS FOR THE CONTROL AND GOVERNANCE OF THE GAME OF CRICKET IN ORISSA AND TO MAINTAIN DISCIPLINE AM ONG IT MEMBERS AND AMONG PLAYERS, OFFICIALS AND AFFILIATED ORGANIZATIONS AND ALSO OTHER INSTITUTIONS/BODIES CONNECTED WITH THE GAME OF CRICKET IN ORISSA. O. TO TAKE SUCH AC TIONS AS MAY BE NECESSARY TO COO ORDINATE THE ACTIVITIES OF ITS MEMBERS AND AFFILIAT ED ORGANIZATIONS IN RELATION TO THIS ASSOCIATION OR AMONGST THEMSELVES. ' A CLEAR READING OF THE ABOVE OBJECTIVES AS ENSHRINED IN CLAUSE 3 OF THE MEMORANDUM OF ASSOCIATION (MOA) OF THE APPELLANT, MAKES IT AMPLY CLEAR THAT IT WAS ESTABLISHED WITH THE SOLE AND DOMINANT PURPOSE OF PROMOTING, DEVELOPING, ENCOURAGING THE GROWTH AND SPIRIT OF CRICKET AS A GAME ALONGWITH OTHER SPORTS AND FOR INCULCATING AND SPREADING KNOWLEDGE ABOUT THE GAME OF CRICKET ALONG WITH OTHER GAMES AND SPORTS IN GENERAL. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 20 FURTHER, WIT H PARTICULAR REFERENCE TO CRICKET, THE OBJECT OF THE APPELLANT INCLUDED THE CONTROL OF THE GAME OF CRICKET THROUGHOUT THE STATE OF ORISSA ALONG WITH THE ADVANCEMENT AND SAFEGUARDING OF THE INTEREST OF GAME OF CRICKET BY DEVELOPING AND CONDUCTING IT IN TERM S OF RULES AND REGULATIONS FRAMED BY THE MCC AND THE BCCI . IT'S OBJECTS ALSO PROVIDES FOR DEVELOPMENT OF SPORTS IN GENERAL BY SETTING UP GYMS, LIBRARIES, READING ROOMS ETC. AND BY IMPARTING KNOWLEDGE ON HEALTH AND FITNESS. THROUGH THE MEDIUM OF CRICKET, THE APPLICANT ASSESSEE WAS ALSO TO ASSIST THE CITIZENS OF THE COUNTRY TO DEVELOP THEIR PHYSIQUE AND HAVE A HEALTHY MIND AND A HEALTHY BODY, THUS FOSTERING AND DEVELOPING HEALTH AND FITNESS IN THE COUNTRY. THE OBJECTS ALSO STATES WERE TO CREATE, FOSTER AN D MAINTAIN FRIENDLY RELATIONS WITH AND AMONG THE POPULATION OF THE AREA UNDER ITS CONTROL THROUGH SPORTS, TOURNAMENTS AND COMPETITIONS CONNECTED THEREWITH, TO CREATE, DEVELOP AND FOSTER A HEALTHY SPIRIT OF SPORTSMANSHIP AND A BROAD AND GENEROUS OUTLOOK DEV OID OF ALL PREJUDICES AND TO MOULD THE CHARACTER OF CITIZEN THROUGH THE MEDIUM OF SPORTS IN GENERAL AND CRICKET IN PARTICULAR. FURTHER IT'S OBJECTS AIMED AT SPREADING THE IDEALS OF CRICKET AND ALL THAT IT STANDS FOR THROUGHOUT THE LENGTH AND BREADTH OF I TS AREA BY ARRANGING SCHOOLS FOR COACHING, LECTURES, TOURNAMENTS AND RUN INTERNATIONAL MATCHES BETWEEN INDIA AND OTHER LEADING FOREIGN COUNTRIES SO AS TO DEVELOP MUTUAL GOODWILL AND BETTER UNDERSTANDING BETWEEN INDIA AND OTHER COUNTRIES. THE ABOVE BEING THE OBJECTIVES OF THE APPELLANT WHICH HAVE BEEN HELD TO BE CHARITABLE, FOLLOWING ARE THE ACTIVITIES CARRIED OUT BY THE APPELLANT IN PURSUANCE OF ITS OBJECTIVES: CONDUCTING OF CRICKET MATCHES IN THE NATURE OF LEAGUE AND KNOCK OUT TOURNAMENTS. CONDUCTING CRICKET TOURNAMENTS IN THE NATURE OF DISTRICT, NATIONAL AND INTERNATIONAL LEVEL TOURNAMENTS CONDUCTING JUNIOR INTER STATE TOURNAMENT - UNDER 22 YEARS, UNDER 25 YEARS, UNDER 27 YEARS, UNDER 17 YEARS, UNDER 15 YEARS, UNDER 16 YEARS, UNDER 19 YEARS AND UND ER 14 YEARS. THE APPELLANT ALSO PROVIDES GRANTS TO DISTRICT LEVEL ASSOCIATIONS, INSTITUTIONS AND CLUBS, FOR UP KEEPING TURF WICKETS FOR CONDUCTING MATCHES. CONDUCTING OF PARTICULAR TOURNAMENTS LIKE THE RANJI TROPHY, DULEEP TROPHY, DEODHAR TROPHY, C.K. NAYUDU TOURNAMENT, CUTTACK LEAGUE TOURNAMENT, INTER CLUB CRICKET TOURNAMENT AND RANJI TROPHY MULTI DAYS TOURNAMENT. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 21 CONDUCTING OF INTER DISTRICT TOURNAMENTS LIKE THE KALAHANDI CUP, JUNIOR UNDER DISTRICT TOURNAMENT - UNDER 22 YEARS, UNDER 16 YEARS, UNDER 19 YEARS AND UNDER 14 YEARS, CONDUCTING OF INTER SCHOOL CRICKET TOURNAMENT, INTER COLLEGE CRICKET TOURNAMENT, STATE LEVEL INTER SCHOOL CRICKET TOURNAMENT AND STATE LEVEL INTER CLUB CRICKET TOURNAMENT. THE APPELLANT HAD ALSO CONDUCTED THE INDIA - AUSTRALI A UNDER 19 YEARS TOURNAMENT DURING THE F.Y.2003 - 04, 2004 - 05. FURTHER THE APPELLANT HAS ALSO CONDUCTED RANJI TROPHY ONE DAYERS, T 20 Z ONAL TOURNAMENT, VINOD MANKAD TROPHY UNDER 19 (ONE DAY) TOURNAMENT, COOCH BEHAR TROPHY UNDER 19 (MULTI DAYS) TOURNAMENT, VIJAY MERCHANT TROPHY UNDER 17 TOURNAMENT, POLLY UMRIGARH TROPHY UNDER 15 TOURNAMENT, WOMEN CRICKET TOURNAMENT, ZCA (EAST) UNDER 15 AT CUTTACK, ONE DAY INTERNATIONAL MATCHES, SAIL TROPHY, FRIENDLY JUNIOR CRICKET SERIES. THE APPELLANT ALSO PROVIDES GRANTS TO DISTRICT LEVEL ASSOCIATIONS, INSTITUTIONS AND CLUBS FOR UP KEEPING TURF WICKETS FOR CONDUCTING MATCHES. THE APPELLANT ALSO CONDUCTS COACHES SEMINAR, UMPIRES SEMINAR, SELECTION TRIALS AND COACHING CAMPS FOR VARIOUS AGE GROUPS, VIDEO ANALYST COURSE, NCA UNDER 17 AT BANGALORE. THE APPELLANT HAS THE FACILITY OF GYMNASIUMS FOR ENHANCEMENT OF SPORTS AND HEALTH. THE APPELLANT ALSO PROVIDES INCENTIVE TO PLAYERS, COACHES, MANAGERS AND TEAMS FOR THEIR EXCELLENCE OR FOR ARRANGEMENT OF COMPETITIONS ETC. EVIDEN CING THE ABOVE ACTIVITIES CARRIED OUT BY THE APPELLANT, COPIES OF ITS ACTIVITY REPORTS FOR THE YEARS 1995 - 96 TO 2008 - 09 ARE ENCLOSED AT PAGES 473 TO 573 OF THE PAPER BOOK. THE ABOVE ACTIVITIES OF THE APPELLANT ARE IN CONSONANCE WITH ITS OBJECTIVES AS DETAI LED OUT IN CLAUSE 3 OF ITS MEMORANDUM OF ASSOCIATION, WHICH HAVE BEEN HELD TO BE CHARITABLE BY THE LD. CIT(E). ALSO THE BOARD ISSUED A CIRCULAR NO. 395 DATED 24/09/1984 (CPPY ENCLOSED AT PAGE 284 OF THE PAPER BOOK) WHEREIN IT WAS CLARIFIED THAT CHARITABL E PURPOSE AS PER SECTION 2(15) OF THE INCOME TAX ACT, 1961 SHALL INCLUDE THE PROMOTION, CONTROL, REGULATION AND ENCOURAGEMENT OF SPECIFIED SPORTS AND GAMES. THEREFORE THE APPELLANT'S ACTIVITIES CONSISTING O F PROMOTION, CONTROL AND ENCOURAGEMENT OF CRICKET IN THE STATE OF ORISSA QUALIFY TO BE CHARITABLE ACTIVITIES AS PER SECTION 2(15) OF THE INCOME TAX ACT, 1961 IN LIGHT OF THE ABOVE CIRCULAR. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 22 THUS THE APPELLANT'S OBJECTIVES ON HAVING BEEN ACCEPTED TO BE CHARITABLE BY THE LD. CIT(E) AS PER SECTION 2(15) OF THE INCOME TAX ACT, 1961 AND ITS ACTIVITIES BEING IN CONSONANCE WITH ITS CHARITABLE OBJECTIVES ALONGWITH THE BOARD VIDE NOTIFICATION DATED 25/11/1991 GRANTING EXEMPTION TO THE APPELLANT U/S 10(23) OF THE INCOME TAX ACT, 1961 AFTER CONDUCTING NECESSARY ENQ UIRIES REGARDING THE APPELLANT'S ACTIVITIES AND FINDING THEM TO BE IN CONFORMITY WITH SECTION 10(23) OF THE INCOME TAX ACT, 1961, THE APPELLANT'S REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 196 1 ON A VALID APPLICATION MADE U/ S 12A SHOULD HAVE BEEN AUTOMAT IC. HOWEVER THE LD. CIT(E) HAS REFUSED REGISTRATION TO THE APPELLANT U/ S 12AA OF THE INCOME TAX ACT, 1961 VIDE HIS ORDER DATED 26.05.2017 EVEN AFTER THE APPELLANT'S OBJECTIVES ARE HELD TO BE CHARITABLE AND REQUIREMENTS FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 STOOD SATISFIED IN THE APPELLANT'S CASE, ON THE BASIS OF VARIOUS ALLEGATIONS. HEREIN THE APPELLANT WOULD LIKE TO PLACE RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: THE HON'BIE KARNATAKA HIGH COURT IN THE CASE DIT(E) VS . MEENAKSHI AMMA ENDOWMENT TRUST REPORTED IN [2013] 354 ITR 219 (KAR) HELD THE FOLLOWING: '5. ON A PERUSAL OF THE RECORDS WE NOTE THAT THE TRUST WAS FORMED ON JANUARY 23, 2008, AND WITHIN A PERIOD OF NINE MONTHS THEY HAD FILED AN APPLICATION UNDER SECTIO N 12A FOR ISSUANCE OF THE REGISTRATION CLAIMING EXEMPTION. THE FACT THAT THE CORPUS OF THE TRUST IS NOTHING BUT THE CONTRIBUTION OF RS. 1,000 BY EACH OF THE TRUSTEES AS CORPUS FUND GOES TO SHOW THAT THE TRUSTEES WERE CONTRIBUTING THE FUNDS BY THEMSELVES IN A HUMBLE WAY AND WERE INTENDING TO COMMENCE CHARITABLE ACTIVITIES. IT IS NOT EVEN THE CASE OF THE REVENUE THAT BY THE TIME THE APPLICATION OF THE ASSESSEE CAME TO BE CONSIDERED BY THEM, THE ASSESSEE HAD COLLECTED LOTS OF DONATIONS FOR THE ACTIVITIES OF TH E TRUST. ON THE OTHER HAND, THE GRIEVANCE OF THE CONCERNED AUTHORITIES SEEMS TO BE THAT THERE WAS NO ACTIVITY WHICH COULD BE TERMED AS CHARITABLE AS PER THE DETAILS FURNISHED BY THE ASSESSEE, THEREFORE, SUCH REGISTRATION COULD NOT BE GRANTED. WHEN THE TRUS T ITSELF WAS FORMED IN JANUARY, 2008, WITH THE MONEY AVAILABLE WITH THE TRUST, ONE CANNOT EXPECT THEM TO DO ACTIVITY OF CHARITY IMMEDIATELY AND BECAUSE OF THAT SITUATION THE AUTHORITY CANNOT COME TO A CONCLUSION THAT THE TRUST WAS NOT INTENDING TO DO ANY A CTIVITY OF CHARITY. IN SUCH A SITUATION THE OBJECTS OF THE TRUST HAVE TO BE TAKEN INTO CONSIDERATION BY THE AUTHORITY AND THE OBJECTS OF THE TRUST COULD BE READ FROM THE TRUST DEED ITSELF IN THE SUBSEQUENT RETURNS FILED BY THE TRUST, IF THE REVENUE COMES A CROSS THAT FACTUALLY THE TRUST HAS NOT CONDUCTED ANY CHARITABLE ACTIVITIES, IT IS ALWAYS OPEN TO THE AUTHORITIES CONCERNED TO WITHDRAW THE REGISTRATION ALREADY GRANTED OR CANCEL THE SAID REGISTRATION UNDER SECTION 12AA (3) OF THE ACT. ' ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 23 THE HON 'BIE ALLA HABAD HIGH COURT IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY VS. CIT REPORTED IN [1990] 185 ITR 634 (ALL) HELD THE FOLLOWING : - '2. A READING OF THE SECTION SHOWS THAT THE REGISTRATION UNDER SECTION 12A IS A PRECONDITION FOR AVAILING THE BENEFIT UN DER SECTIONS 11 AND 12 OF THE ACT. SECTION 11 PROVIDES FOR EXEMPTION OF INCOME WHICH IS APPLIED FOR CHARITABLE PURPOSES. SECTION 12 IS IN THE NATURE OF AN EXPLANATION TO SECTION 11. BEFORE A PERSON CAN CLAIM THE BENEFITS OF SECTION 11 OR SECTION 12, AS THE CASE MAY BE, HE MUST OBTAIN REGISTRATION UNDER SECTION 12A. THE APPLICATION FOR REGISTRATION UNDER SECTION 12A HAS TO BE MADE IN FORM NO. 10 A PRESCRIBED BY RULE 17 A BEFORE EXPIRY OF ONE YEAR FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, WHICHEVER IS LATER. IT HAS TO BE MADE BY THE PERSON IN RECEIPT OF THE INCOME OF THE TRUST. IT IS EVIDENT THAT AT THIS STAGE, THE COMMISSIONER IS NOT TO EXAMINE THE APPLICATION OF INCOME. ALL THAT HE MAY EXAMINE IS WHETHER THE APPLICA TION IS MADE IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 12A READ WITH RULE 17 A AND WHETHER FORM 10 A HAS BEEN PROPERLY FILLED UP. HE MAY ALSO SEE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT AT THIS STAGE, IT IS NOT PROPER TO EXAMINE THE APPL ICATION OF INCOME. ' THE HON'BLE ITAT, KOLKATA IN THE CASE OF MAA KAMAKHYA NARMADESHWAR EDUCATIONAL CHARITABLE TRUST VS. CIT(E), ITA NOS. 355 & 356/KOL / 2017 HELD THE FOLLOWING: 'WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVAN T MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION OF HON 'BLE DELHI HIGH COURT IN THE CASE DIRECTOR OF INCOME TAX VS FOUNDATION OF OPTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE (ITA 1687 12010 DATED 16.12.201 0) IN SUPPORT OF THE ASSESSEE'S CASE. IN THE SAID CASE, THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/ S 12AA WAS REJECTED BY THE DIT (EXEMPTION) ON THE GROUND THAT NO CHARITABLE ACTIVITY HAD IN FACT TAKEN PLACE SINCE THE SOCIETY WAS A NEWLY ESTABLISHE D ONE BY RELYING ON THE DECISION OF HON 'BLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYER SERVICE SOCIETY (SUPRA). THE TRIBUNAL HOWEVER SET ASIDE THE ORDER OF THE LD. DIT (EXEMPTION) AND DIRECTED HIM TO GRANT THE REGISTRATION U/ S 12A TO THE ASSESSEE BY R ELYING ON THE DECISION OF HON 'BLE ALLAHABAD HIGH COURT IN THE CASE OF S' GENERATION EDUCATION SOCIETY (SUPRA) WHEREIN IT WAS HELD THAT THE NON COMMENCEMENT OF CHARITABLE ACTIVITY COULD NOT BE A GROUND FOR REJECTION OF APPLICATION FOR REGISTRATION U/S 12A. WHEN THE MATTER TRAVELLED TO THE HON 'BLE DELHI HIGH COURT ON APPEAL BY THE DEPARTMENT, THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF DIT (EXEMPTIONS) VS. MEENAKSHI AMMA ENDOWMENT TRUST 50 DTR (KAR) 243 WAS RELIED UPON BY THE ASSESSEE IN SUPPORT OF HIS CASE WHILE ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 24 THE REVENUE RELIED ON THE DECISION OF HON 'BLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYER SERVICE SOCIETY (SUPRA) IN SUPPORT OF ITS CASE. AFTER CONSIDERING THE RELEVANT PROVISIONS OF SECTION 12AA OF THE ACT, HON 'BLE DELHI HIGH COURT PRE FERRED TO FOLLOW THE VIEW TAKEN BY HON 'BLE KARNATAKA HIGH COURT IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA) AND UPHELD THE DECISION OF TRIBUNAL VIDE PARAGRAPH NO 9 TO 11 OF ITS ORDER WHICH READS AS UNDER: '9. THE PROVISION IN THIS CASE I. E. S ECTION - 12A STATES THAT WHEN A TRUST IS DESIROUS OF GETTING ITSELF REGISTERED AS CHARITABLE, IT HAS TO APPROACH THE COMMISSIONER UNDER SECTION - 12AA. THE POWERS OF THE COMMISSIONER TO REGISTER OR REFUSE THE APPLICATION ARE EXPRESSLY ITA - 168712010 PAGE 8 SPEL T OUT IN SECTION - 12AA ITSELF. RULE - 12AA (B) READS AS FOLLOWS: SECTION 12AA. PROCEDURE FOR REGISTRATION (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) OF SECTION 12A, SHALL - (A) CALL FO R SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH A INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION GENUINENESS OF ITS ACTIVITIES, HE - (I) SHALL PASS AN ORDER I N WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REF USING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: PROVIDED THAT NO ORDER UNDER SUB - CLAUSE (U) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. (1A) ALL APPLI CATIONS, PENDING BEFORE THE CHIEF COMMISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB - SECTION (1) BEFORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE COMMISSIONER AND THE COMMISSIONER MAY PROCEED WITH SUCH APPLIC ATIONS UNDER THAT SUB - SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY. (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION UNDER CLAUSE (B) OF SUB - SECTION (1) SHALL BE PASSED BEFORE THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPL ICATION WAS RECEIVED UNDER CLAUSE (A) OF SECTION 12A. 10. FACIALLY, THE ABOVE PROVISION WOULD SUGGEST THAT THERE ARE NO RESTRICTIONS OF THE KIND WHICH THE REVENUE IS READING INTO IN THIS CASE. IN OTHER WORDS, THE STATUTE DOES NOT PROHIBIT OR ENJOIN THE C OMMISSIONER FROM REGISTERING TRUST SOLELY BASED ON ITS OBJECTS, ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 25 WITHOUT ANY ACTIVITY, IN THE CASE OF A NEWLY REGISTERED TRUST. THE STATUTE DOES NOT PRESCRIBE A WAITING PERIOD, FOR A TRUST TO QUALIFY ITSELF/OR REGISTRATION. 11. IF THE REVENUE'S CONTENTION S ARE CORRECT THEN, NECESSARILY, A CONDITION WOULD HAVE TO BE READ IN TO THE PROVISION THAT THE COMMISSIONER SHOULD BE SATISFIED THAT THE TRUST IS IN FACT ENGAGED IN CHARITABLE ACTIVITIES WHICH WOULD IN TURN INJECT CONSIDERABLE DEAL OF SUBJECTIVITY. IT IS QUITE POSSIBLE THAT IF SUCH FLEXIBILITY IS INTRODUCED, IT WOULD BE SUSCEPTIBLE TO VARIED INTERPRETATION BY THE DIFFERENT AUTHORITIES, IN THAT SOME WOULD BE SATISFIED WITH ACTIVITY OF FEW MONTHS, WHILE OTHERS MAY WISH TO EXAMINE THE ACTIVITIES OF THE ORGANI ZATION FOR LONGER TIME. IN THIS VIEW OF THE MATTER, THIS COURT IS PERSUADED TO FOLLOW THE INTERPRETATION GIVEN TO SECTION - 12AA BY THE KARNATAKA HIGH COURT IN DIRECTOR OF INCOME TAX (EXEMPTIONS) V. MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA). ' 4. IN OUR OPINI ON, THE ISSUE INVOLVED IN THE PRESENT CASE THUS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON 'BLE DELHI HIGH COURT IN THE CASE OF FOUNDATION OF OPTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE (SUPRA) AND RESPECTFULLY FOLLOWING THE S AME, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(EXEMPTIONS) AND DIRECT HIM TO GRANT THE REGISTRATION TO THE ASSESSEE U/S 12A OF THE ACT. ' THE HON'BLE ITAT, KOLKATA IN THE CASE OF THE NEOTIA UNIVERSITY VS. C. I T. (EXEMPTIONS), ITA NOS. 32 & 33/KOL / 2017 HE LD THAT: 10 . THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE CASE LAWS DEMONSTRATE THAT THE ID. CIT(EXEMPTIONS) CAN REFUSE THE REGISTRATION OF A TRUST OF INSTITUTION U/S 12AA OF THE ACT ONLY WHEN (A) HE SHOULD BE SATISFIED THAT THE OBJECTS OF THE TRUST O R INSTITUTION ARE NOT CHARITABLE IN NATURE OR HE FINDS THAT THE ACTIVITIES OF THE TRUST OF INSTITUTION ARE NOT GENUINE. ' IN VIEW OF THE ABOVE IT STANDS CRYSTAL CLEAR THAT EVEN ON THE BASIS OF CHARITABLE OBJECTS, A TRUST CAN BE REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961. THEREFORE THE LD. CIT(E) HAVING CONSIDERED THE APPELLANT'S OBJECTIVES AS CHARITABLE, REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 SHOULD HAVE BEEN GRANTED TO THE APPELLANT BY HIM. HOWEVER THE LD. CIT(E) REFUSED TO GRANT REGIST RATION TO THE APPELLANT U/S 12AA OF THE INCOME TAX ACT, 1961 ON THE BASIS OF VARIOUS ALLEGATIONS AS DISCUSSED HEREUNDER: 1. INCRIMINATING DOCUMENTS AND BOOKS OF ACCOUNTS WERE IMPOUNDED DURING THE SEARCH AND SEIZURE OPERATION CONDUCTED IN THE RESIDENTIAL PREMISES OF THE APPELLANT'S HONORARY SECRETARY AND TAX DEMAND FOR THE BLOCK PERIOD [A.Y.S 2000 - 01 TO 2006 - 07] WERE RAISED BY THE AO WHICH WERE SUBSEQUENTLY CONFIRMED BY THE CIT(A) AND ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 26 SUCH INCRIMINATING DOCUMENTS AND BOOKS OF ACCOUNTS IMPOUNDED DURING THE SEARCH AND SEIZURE OPERATIONS HAVE BROUGHT OUT THE FACT THAT THE FUNCTIONING OF THE APPELLANT WERE CONDUCTED IN A MANNER SO AS TO CONFER CERTAIN FINANCIAL BENEFITS/GAINS TO THE EXECUTIVES MANAGING THE AFFAIRS OF THE APPELLANT, IN VIOLATION OF SECTION 13(1) ( C) OF THE INCOME TAX ACT, 1961. THE ABOVE BEING ONE OF THE ALLEGED PREMISES OF THE LD. CIT(E) FOR REFUSING THE GRANT OF REGISTRATION TO THE APPELLANT U/S 12AA OF THE INCOME TAX ACT, 1961 IT IS BEING SUBMITTED THAT SECTION 13(L)(C) OF THE INCOME TAX ACT , 1961 CAN BE INVOKED ONLY AT THE STAGE OF ASSESSMENT AND NOT AT THE STAGE OF GRANTING REGISTRATION. IN FACT THE LD. CIT(E) HAS HIMSELF ACCEPTED AND ACKNOWLEDGED THIS IN PAGE 5 PARA 9 OF THE ORDER PASSED BY HIM ON 26.05.2017. HEREIN THE APPELLANT WOULD L IKE TO SUBMIT THAT ITS APPLICATION FILED FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 WAS SET ASIDE TO THE LD. CIT(E) BY THE HON'BLE ITAT, CUTTACK ON 27/06 / 2014 IN ITA NO. 232/CTK / 2010 WITH THE SPECIFIC DIRECTION THAT' 'APPLICABILITY OF SECTION 13 ( 1 )(C) CANNOT BE LOOKED INTO AT THE TIME OF REGISTRATION BUT C I T IS TO LOOK INTO WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT. WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OR WHETHER THERE IS DEFAULT OF SECTION 13 HAS TO BE LO OKED INTO AT THE TIME OF FRAMING ASSESSMENT.' (PARA 5.10 AT PAGES 42 AND 43 OF THE ORDER, PAGE 281 OF THE PAPER BOOK). HEREIN THE APPELLANT WOULD LIKE TO SUBMIT THAT THE HON'BLE ITAT, DELHI IN THE CASE OF AGGARWAL MITRA MANDAL TRUST VS. DIT(E). NEW DELHI REPORTED IN [2007] 293 ITR 259 (ITAT[DEL]) HELD THAT WHILE GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT, THE CIT IS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES AND OBJECTS OF THE TRUST AND AS SUCH, THE SCOPE OF HIS POWERS WAS LIMITED IN T HIS REGARD TO MAKE SUCH ENQUIRIES AS HE DEEMED TO, IN RESPECT OF THESE TWO ASPECTS AND THAT IF THE COMMISSIONER HAD NOT DOUBTED THE GENUINENESS OF THE ACTIVITIES OF THE TRUST, HE COULD NOT REFUSE THE GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. IT W AS HELD THAT THE PROVISIONS OF SECTION 13(1) OF THE ACT WOULD BE APPLIED OR INVOKED ONLY AT THE TIME OF COMPUTATION OF TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON WHO WAS CLAIMING DEDUCTION UNDER SECTION 11 OR 12 OF THE ACT, BY THE ASSESSING OFFICER AN D NOT BY THE CIT, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT. RELEVANT EXTRACTS OF THE SAID JUDGMENT ARE REPRODUCED HERE FOR YOUR GOODSELFS PERUSAL: '7. AS ALREADY NOTED, THE PROCEDURE FOR REGISTRATION LAID DOWN IN SECTION 12AA REQUIRES THE C I T TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES AND OBJECT OF THE TRUST OR INSTITUTION AND AS SUCH, THE SCOPE OF HIS POWERS IS LIMITED IN THIS REGARD TO MAKE SUCH ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 27 ENQUIRIES, AS HE MAY DEEM FIT, TO SATISFY HIMSELF IN RES PECT OF THESE TWO ASPECTS. AS HELD BY HON 'BLE SUPREME COURT IN THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION (SUPRA), AN OBJECT BENEFICIAL TO THE SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY AND TO SERVE A CHARITABLE PURPOSE, IT IS SUFFICIE NT IF THE INTENTION IS TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM A SPECIFIED INDIVIDUAL. THIS DECISION OF HON 'BLE APEX COURT FOLLOWED SUBSEQUENTLY BY HON 'BLE ALLAHABAD HIGH COURT IN THE CASE OF SURJI DEVI KUNJI LAL JAIPURIA CHARITABLE TRUS T (SUPRA) AND IN THE CASE OF PT. RAM SHANKER MISRA TRUST (SUPRA) TO HOLD THAT THE EXPENDITURE INCURRED BY A TRUST FOR THE BENEFIT OF ONE COMMUNITY IS AN EXPENDITURE INCURRED ON A PUBLIC CHARITABLE OBJECT STILL HOLDS THE FIELD NOTWITHSTANDING THE PROVISIONS CONTAINED IN SECTION 13(1)(B) SINCE THE DEFINITION OF THE TERM 'CHARITABLE PURPOSE' GIVEN IN SECTION 2(15) CONTINUES TO REMAIN THE SAME. THE PROVISIONS OF SECTION 13(1) ARE THUS NOT DIRECTLY RELEVANT IN THIS REGARD. ON THE OTHER HAND, THE SAID SECTION BEG INS WITH THE WORDS 'NOTHING CONTAINED IN SECTION 11 O R SECTION 12 SHALL OPERATE SO AS TO EXCLUDE, FROM THE TOTAL INCOME OF THE PREVIOUS YEAR, OF THE PERSON .... ' WHICH CLEARLY ENVISAGES OPERATION OF SECTION 11 OR SECTION 12 BEFORE THE PROVISIONS OF SECTIO N 13 CAN BE APPLIED OR INVOKED IN A GIVEN CASE. IT ALSO SHOWS THAT THE SAID PROVISIONS CAN BE APPLIED OR INVOKED ONLY AT THE TIME OF COMPUTATION OF TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON WHO IS CLAIMING EXEMPTION UNDER SECTION 11 OR SECTION 12. BO TH THESE SITUATIONS CONTEMPLATED IN SECTION 13 CAN ARISE ONLY AND ONLY IF REGISTRATION UNDER SECTION 12A IS GRANTED TO THE SAID PERSON. IF THE SAME IS NOT GRANTED AND THE PERSON IS REFUSED THE REGISTRATION UNDER SECTION 12A, HE WOULD NOT BE ENTITLED TO CLA IM ANY BENEFIT AVAILABLE UNDER SECTION 11 OR 12 AND THERE WILL BE NO OCCASION TO THE ASSESSING OFFICER TO INVOKE OR APPLY SECTION 13 IN HIS CASE. THIS POSITION WOULD NOT ONLY BE CONTRARY TO THE SCHEME OF THE ACT AS LAID DOWN IN SECTIONS 11, 12, 12A, 12AA A ND 13 BUT THE SAME MAY ALSO CAUSE PREJUDICE/HARDSHIP TO THE PERSONS IN CERTAIN CASES. FOR INSTANCE, THE OBJECTS; FOR WHICH THE ASSESSEE TRUST IN THE PRESENT CASE IS ESTABLISHED, AS INDICATED IN OBJECT CLAUSES 3(1) AND 3(2), NO DOUBT ARE FOR THE BENEFITS OF A PARTICULAR COMMUNITY, VIZ., VAISH. NEVERTHELESS, AS PER OBJECT CLAUSE 3(4), IT WAS ALSO ESTABLISHED TO RUN SCHOOLS, COLLEGES, HOSPITALS ETC. FOR THE BENEFIT OF PUBLIC AT LARGE. IN THIS SITUATION, IF THE REGISTRATION APPLIED FOR UNDER SECTION 12A IS NOT GRANTED TO IT FOR VIOLATION OF PROVISIONS OF SECTION 13(1)(B) AND IT IS ULTIMATELY FOUND THAT THE ASSESSEE - TRUST ACTUALLY ACCOMPLISHED THE OBJECTS AS INDICATED IN CLAUSE 3(4) ONLY FOR THE BENEFIT OF PUBLIC AT LARGE WITHOUT THERE BEING ANY ACTIVITY UNDERTAK EN AS PER OBJECT CLAUSES 3(1) AND 3(2), IT WOULD BE DEPRIVED OF ANY BENEFITS WHICH OTHERWISE WERE AVAILABLE TO IT UNDER SECTION 11 OR SECTION 12. THIS CERTAINLY IS NOT THE LEGISLATIVE INTENTION AS REFLECTED IN THE SCHEME LAID DOWN IN SECTIONS 11, 12, 12A, 12AA AND 13. ON THE CONTRARY, THE PHRASEOLOGY OF SECTION 13, AS ALREADY DISCUSSED, MAKES IT EXPLICITLY CLEAR THAT THE SAID PROVISIONS BECOME OPERATIVE OR RELEVANT ONLY AT THE STAGE OF ASSESSMENT WHEN THE ASSESSING OFFICER IS REQUIRED TO EXAMINE THE CLAIM O F THE ASSESSEE FOR BENEFITS UNDER ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 28 SECTION 11 OR SECTION 12 WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF THE RELEVANT PREVIOUS YEAR. THE APPLICATION OF SECTION 13 THUS FALLS WITHIN THE EXCLUSIVE DOMAIN OF THE ASSESSING OFFICER AND THE PROVISIONS CONT AINED THEREIN CAN BE INVOKED BY HIM WHILE FRAMING THE ASSESSMENT AND NOT BY THE C IT WHILE CONSIDERING THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA. 8. KEEPING IN VIEW THE REASONS GIVEN ABOVE, WE ARE OF THE VIEW THAT THE ACTION OF THE LEARNED D.I ( EXEMPTION) IN REFUSING TO GRANT REGISTRATION TO THE ASSESSEE TRUST ON THE GROUND OF VIOLATION OF THE PROVISIONS OF SECTION 13(1)(B) WAS NOT JUSTIFIED ESPECIALLY WHEN HE HAD NOT DOUBTED EITHER THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE - TRUST OR THE N ATURE OF ITS OBJECT BEING CHARITABLE. IN THAT VIEW OF THE MATTER, WE SET ASIDE HIS IMPUGNED ORDER AND DIRECT THAT REGISTRATION APPLIED FOR BY THE ASSESSEE - TRUST UNDER SECTION 12A BE GRANTED TO IT. ' THE ABOVE JUDICIAL PRONOUNCEMENT THUS CLEARLY EXPLAINS THE LAW WITH REGARD TO GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 AND THE APPLICATION OF SECTION 13(1) OF THE INCOME TAX ACT, 1961 IN CONNECTION TO IT. IN VIEW OF THE ABOVE THE LD. CIT(E) DENYING TO GRANT REGISTRATION TO THE APPELLANT U/S 12AA OF THE INCOME TAX ACT, 1961 ALLEGING VIOLATION OF SECTION 13(1) OF THE INCOME TAX ACT, 1961 IS BAD IN LAW AND CANNOT BE A BASIS FOR REFUSAL OF REGISTRATION THUS THE LD. CIT(E) HAVING REFUSED THE GRANT OF REGISTRATION TO THE APPELLANT U/S 12AA OF TH E INCOME TAX ACT, 1961 AL LEGING VIOLATION OF SECTION 13(1 )(C) OF THE INCOME TAX ACT, 1961 (EVEN AFTER ACCEPTING THAT THE LAW DOES NOT PERMIT HIM TO INVOKE THE SAID PROVISION AT THE STAGE OF GRANTING/REFUSING REGISTRATION), HAS ACTED IN SHEER DISREGARD AND VIOLATION OF THE LAW AND THE DIRECTION OF THE HON'BLE ITAT, CUTTACK AND HENCE THE IMPUGNED ACTION OF THE LD. CIT(E) IS BAD IN LAW AND CANNOT BE A BASIS FOR DENYING REGISTRATION TO THE APPELLANT U/S 12AA OF THE INCOME TAX ACT, 1961. HOWEVER WITHOUT PREJUD ICE TO THE ABOVE, THE APPELLANT WITH REGARD TO THE LD. CIT(E)'S ALLEGATIONS WOULD LIKE TO SUBMIT THAT NO BOOKS OF ACCOUNTS, DOCUMENTS OR INCRIMINATING MATERIALS WERE IMPOUNDED DURING THE COURSE OF SEARCH AND SURVEY TO BASE THE ABOVE ALLEGATIONS ON. FURTH ER, IT WOULD BE OF RELEVANCE HERE TO BRING TO THE NOTICE OF YOUR HONOURS THAT NOTHING ADVERSE HAS BEEN MENTIONED IN. THE ASSESSMENT ORDERS PASSED U/S 153C/143(3) OF THE INCOME TAX ACT, 1961 (ENCLOSED AT PAGES 41 TO 59 OF THE PAPER BOOK) FOR THE SEVERAL YEA RS REGARDING THE ABOVE FINDINGS OF THE LD. CIT. THUS ON THE BASIS OF ALL THE ABOVE, IT IS BEING CONCLUDED BY THE APPELLANT THAT THE DENIAL OF REGISTRATION TO THE APPELLANT U/S 12AA OF ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 29 THE INCOME TAX ACT, 1961 ON THE BASIS OF THE ABOVE ALLEGATIONS, WHICH ARE BASELESS AND ALSO ARE NOT REQUIRED TO BE LOOKED INTO WHILE CONSIDERING AN APPLICATION FOR REGISTRATION U/S 12AA(L) OF THE INCOME TAX ACT, 1961, IS TOTALLY UNJUSTIFIED AND ILLEGAL. 2. SUBSIDY RECEIVED BY THE APPELLANT FROM BCCI WAS TREATED AS CORPUS FUND INSTEAD OF REVENUE RECEIPTS FOR THE F.Y.S 2002 - 03 TO 2006 - 07 WITHOUT PRODUCING ANY EVIDENCE FROM BCCI FOR TREATING THE SUBSIDY AS 'CORPUS DONATION'. IN THIS REGARD THE APPELLANT WOULD LIKE TO SUBMIT THAT WHEN ITS'S APPLICATION FILED FOR GRANT OF REG ISTRATION U/S. 12A OF THE INCOME TAX ACT, 1961 WAS BEING CONSIDERED, THE ONLY TWO THINGS WHICH WERE TO BE LOOKED INTO BY THE LD. CIT(E), FOR GRANTING/REFUSING REGISTRATION UNDER SECTION 12AA(1) OF THE INCOME TAX ACT, 1961 WERE WHETHER THE APPLICATION FOR GR ANT OF REGISTRATION HAD BEEN FILED PROPERLY IN FORM 10 A R.W.R 17A OF THE INCOME TAX RULES, 1962 AND WHETHER THE OBJECTIVES UNDERTAKEN BY THE TRUST ARE CHARITABLE OR NOT AND THE SUBSEQUENT ACTIVITIES CARRIED OUT FOR FULFILLMENT OF THE SAME ARE GENUINE OR NO T. WHILE LOOKING INTO AN APPLICATION FOR REGISTRATION OF A TRUST U/S 12AA(1) OF THE INCOME TAX ACT, 1961, SECTION 11 AND SECTION 13 OF THE INCOME TAX ACT, 1961 IS NOT REQUIRED TO BE LOOKED INTO. SECTION 11 AND SECTION 13 OF THE ACT CAN BE LOOKED INTO ONL Y AT THE TIME OF ASSESSMENT, AS ALREADY EXPLAINED ABOVE IN THIS SUBMISSION AND AS DIRECTED BY THE HON'BLE ITA T, CUTTACK VIDE ITA NO. 232/CTK/ 2010 IN PARA 5.10 AT PAGES 42 AND 43 OF ITS ORDER DATED 26/07 / 2014 ENCLOSED AT PAGE 281 OF THE PAPER BOOK. THEREF ORE, WHETHER THE RECEIPTS FROM BCC I WERE RIGHTFULLY CONSIDERED AS A PART OF 'CORPUS FUNDS' OR NOT BY THE APPELLANT AS PER SECTION L1(L)(D) OF THE INCOME TAX ACT, 1961 IS A SUBJECT MATTER OF ASSESSMENT OF A TRUST REGISTERED UNDER THE INCOME TAX ACT, 1961. THUS THE LD. CIT(E) HAVING REFUSED THE GRANT OF REGISTRATION TO THE APPELLANT U/S 12AA OF THE INCOME TAX ACT, 1961 ALLEGING VIOLATION OF SECTION 11(1) (D) OF THE INCOME TAX ACT, 1961 HAS ACTED IN VIOLATION OF THE LAW AND SHEER DISREGARD OF THE HON'BLE ITAT , CUTTACK'S DIRECTION AND HENCE THE IMPUGNED ACTION OF THE LD. CIT(E) IS BAD IN LAW AND CANNOT BE A BASIS FOR DENYING REGISTRATION TO THE APPELLANT U/S 12AA OF THE INCOME TAX ACT, 1961. HOWEVER WHEN A POINT REGARDING THE SAME HAS BEEN RAISED, WITHOUT PRE JUDICE TO THE ABOVE, THE APPELLANT WOULD LIKE TO SUBMIT THAT ALL THE RECEIPTS FROM BCCI FOR ALL THE RESPECTIVE YEARS HAS BEEN SPECIFICALLY DIRECTED BY B CCI TO BE TREATED AS PART OF THE CORPUS BY THE APPELLANT AND REGARDING RECEIPT OF SUBSIDY FOR INFRASTRUC TURE, IT HAS BEEN DIRECTED TO BE TREATED SEPARATELY. ALSO EVIDENCE REGARDING THE SAME (BEING A COPY OF THE SPECIFIC DIRECTION BY THE BCC I ) WAS PRODUCED BEFORE THE LD. CIT(E) AT PAGE NOS. 425 TO 426 OF THE ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 30 PAPER BOOK FILED BEFORE HIM AND IS FURTHER BEING EN CLOSED AT PAGE NOS. 285 TO 286 OF THE PAPER BOOK FILED BEFORE YOUR HONOURS. THEREFORE IT WAS NOT THE CASE OF THE APPELLANT THAT IT WAS TREATING THE RECEIPTS FROM BCCI AS CORPUS WITHOUT A SPECIFIC DIRECTION FROM BCCI AS NONE OF THE GRANTS OR SUBSIDIES PRO VIDED BY THE BCCI TO THE APPELLANT WERE WITHOUT A SPECIFIC DIRECTION OR PURPOSE SO AS TO BE CONSIDERED AS A REVENUE RECEIPT BY THE APPELLANT. FURTHER, THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF DIT(E) V SRI RAMAKRISHNA SEWA ASHRAMA REPORTED IN 3 57 ITR 731 (KAR) HELD THAT: 'THE WORD 'CORPUS' IS USED IN THE CONTEXT OF THE ACT. ONE HAS TO UNDERSTAND THE SAME IN THE CONTEXT OF A CAPITAL, AS OPPOSED TO AN EXPENDITURE. IT IS A CAPITAL OF AN ASSESSEE; A CAPITAL OF AN ESTATE; CAPITAL OF A TRUST; A CAPI TAL OF AN INSTITUTION. THEREFORE, IF ANY VOLUNTARY CONTRIBUTION IS MADE WITH A SPECIFIC DIRECTION, IT SHALL BE TREATED AS THE CAPITAL OF THE TRUST FOR CARRYING ON ITS CHARITABLE OR RELIGIOUS ACTIVITIES, THEN, SUCH AN INCO ME FALLS UNDER SECTION 11(1)(D ) AND IS NOT LIABLE TO TAX. THEREFORE, IT IS NOT NECESSARY THAT A VOLUNTARY CONTRIBUTION SHOULD BE MADE WITH A SPECIFIC DIRECTION TO TREAT IT AS CORPUS. IF THE INTENTION OF THE DONOR IS TO GIVE THAT MONEY TO A TRUST WHICH THEY WILL KEEP IT IN TRUST ACCOUNT IN D EPOSIT AND THE INCOME FROM THE SAME IS UTILIZED FOR CARRYING ON A PARTICULAR ACTIVITY, IT SATISFIES THE DEFINITION PART OF THE CORPUS. THE ASSESSEE WOULD BE ENTITLED TO THE BENEFIT OF EXEMPTIONS FROM PAYMENT OF TAX LEVIED. ' IN VIEW OF THE ABOVE THE LD. C IT(E)'S REFUSAL OF REGISTRATION TO THE APPELLANT U/S 12AA OF THE INCOME TAX ACT, 1961 ON THE ABOVE ALLEGED PREMISE DOES NOT HOLD GOOD AND IS NOT AS PER LAW. 3. THE APPELLANT DISTRIBUTED THE FUNDS RECEIVED FROM THE BCC I TO OTHER ORGANIZATIONS IN THE STATE OF ORISSA MERELY AS A NODAL AGENCY WITHOUT UNDERTAKING ANY CHARITABLE ACTIVITY AS PER THE OBJECTS OF THE ASSOCIATION, EXCEPT GENERATING INCOME BY SELLING TICKETS AND BY LETTING OUT THE INFRASTRUCTURE FACILITIES OF THE CRICKET STADIUM, WHICH IS OF COMMERCI AL NATURE. IN THIS RESPECT THE APPELLANT WOULD LIKE TO SUBMIT THAT IT HAS BEEN CARRYING OUT ITS ACTIVITIES (AS DETAILED OUT IN PAGES 14 AND 1 5 OF THIS SUBMISSION ABOVE) WHICH ARE IN CONSONANCE WITH ITS OBJECTIVES AS ENSHRINED IN CLAUSE 3 OF ITS MOA AND F URTHER EVIDENCING THE SAME HAS ALSO ENCLOSED THE ACTIVITY REPORTS AT PAGES 473 TO 573 OF THE PAPER BOOK. THEREFORE THE LD. CIT(E) S ALLEGATION THAT NO CHARITABLE ACTIVITIES WERE UNTAKEN BY THE APPELLANT IS FACTUALLY INCORRECT AND HENCE CANNOT BE RELIED UPO N. THEREAFTER WITH REGARD TO THE LD. CIT(E)'S ALLEGATION REGARDING THE APPELLANT GENERATING INCOME BY SELLING TICKETS AND LETTING OUT THE INFRASTRUCTURE FACILITIES, IT IS BEING SUBMITTED BEFORE YOUR HONOURS' ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 31 THAT TICKETS FOR MATCHES ARE SOLD BY IT ONLY W HEN INTERNATIONAL CRICKET MATCHES ARE CONDUCTED AT THE BARABATI STADIUM AND NOT FOR ANY OTHER CRICKET MATCHES CONDUCTED OF NATIONAL, DISTRICT, SCHOOL OR COLLEGE LEVELS. FURTHER INTERNATIONAL CRICKET MATCHES ARE USUALLY CONDUCTED ONCE A YEAR OR AT THE MOST TWICE WHEREAS THE STADIUM REQUIRES MAINTENANCE THROUGHOUT THE YEAR FOR WHICH THE APPELLANT INCURS A HUGE EXPENDITURE SINCE IT INCLUDES MAINTAINING THE GROUND, FLOODLIGHT, DISPLAY BOARD, SECURITY, SPORTS EQUIPMENT, GYMNASIUM IN THE STADIUM SO AS TO PROVIDE PLAYERS OF INTERNATIONAL STANDARDS AND REPUTE WITH STATE OF THE ART INFRASTRUCTURE FACILITY. ALL THIS INVOLVES A HUGE EXPENDITURE AND TO RAISE MONEY FOR THE SAME, TICKETS ARE SOLD BY THE APPELLANT RESTRICTING IT TO ONLY INTERNATIONAL CRICKET MATCHES. IT IS ALSO PERTINENT TO MENTION HERE THAT WHILE SELLING TICKETS FOR SUCH MATCHES, NOT ALL TICKETS ARE SOLD. A SUBSTANTIAL NUMBER OF TICKETS FROM AMONG THE TOTAL NUMBER OF THE TICKETS AR E NOT SOLD BUT DISTRIBUTED AS FREE ENTRY PASSES AMONG THE VARIOUS AFFILIAT ED CRICKET ASSOCIATIONS, ORGANIZATIONS AND CLUBS, THEREBY NOT DEFYING THE APPELLANT'S PREDOMINANT OBJECT OF DEVELOPING, PROMOTING AND ENCOURAGING THE GROWTH OF CRICKET IN THE STATE. THE APPELLANT AT THIS JUNCTURE WOULD ALSO LIKE TO INVITE YOUR HONOURS' ATTENTION TO THE FACT THAT SUCH INTERNATIONAL MATCHES ARE ALSO CONDUCTED BY THE APPELLANT SO THAT PLAYERS FROM THE AFFILIATED ASSOCIATIONS AND CLUBS CAN WATCH SUCH MATCHES FREE OF COST AND LEARN THE TECHNIQUES OF PLAYING CRICKET FROM CRICKETERS PLAYING INT ERNATIONAL CRICKET. THUS THE PREDOMINANT OBJECTIVE WITH WHICH THE APPELLANT HAS BEEN ESTABLISHED IS PRESERVED HOWEVER EXPENDITURE INCURRED ON THE SAME ARE RECOVERED BY SELLING PART OF THE TICKETS. FURTHER IN RESPECT OF THE REMAINING TICKETS WHICH ARE SOL D, THE APPELLANT WOULD LIKE TO SUBMIT THAT MAJORITY OF THE TICKETS ARE PRICED VERY REASONABLY IN THE RANGE OF RS.450 TO RS.500 SO AS TO MAKE IT AFFORDABLE TO THE GENERAL PUBLIC COMPRISING THE MAXIMUM NUMBER. ONLY FEW, LIMITED NUMBER OF TICKETS ARE PRICED O N THE HIGHER SIDE WHICH ARE ACCOMPANIED WITH ADDITIONAL FACILITIES AND AMENITIES WHILE WATCHING THE GAME (APART FROM JUST THE SEATS), AND ARE SOLD BY THE APPELLANT SO AS TO GENERATE A LARGE SUM OF MONEY AT ONE GO WHICH IS OTHERWISE NOT POSSIBLE FROM THE AV ERAGE PRICED TICKETS, THUS FACILITATING IN COVERING UP THE HUGE EXPENDITURE INCURRED ON INTERNATIONAL 4 MATCHES. THEREFORE IT IS REITERATED THAT THE APPELLANT IS A CHARITABLE INSTITUTION AND IS IN CONSTANT REQUIREMENT OF FUNDS, SUCH ACTIVITIES LIKE SELLI NG OF TICKETS (ONLY FOR CONDUCTING INTERNATIONAL CRICKET MATCHES) ARE UNDERTAKEN AS OBJECTS ANCILLIARY TO THE PRIMARY/DOMINANT OBJECTIVE OF DEVELOPING, AND PROMOTING THE GROWTH OF CRICKET IN THE STATE OF ORISSA. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 32 WITH REGARD TO THE LD. CIT(E).'S ALLEGATIO N REGARDING THE APPELLANT GENERATING INCOME BY LETTING OUT INFRASTRUCTURE FACILITIES, IT WOULD LIKE TO SUBMIT THAT FOR THE F.Y.S 2002 - 2003 TO 2008 - 2009, IN ADDITION TO RECEIPT OF PROCEEDS FROM SALE OF TICKETS OF CRICKET MATCHES, THE APPELLANT ALSO RECEIVED SERVICE CHARGES FOR HIRING OUT THE CRICKET GROUND PREMISES FOR ADVERTISEMENT. FURTHER THE APPELLANT'S RECEIPTS FROM HIRING OUT THE CRICKET GROUND PREMISES FOR ADVERTISEMENT ARE UTILIZED FOR THE DEVELOPMENT AND GROWTH OF CRICKET IN THE STATE OF ORISSA AN D FOR FULFILLING THE OTHER OBJECTIVES OF THE APPELLANT. THUS FEE CHARGED BY THE APPELLANT FOR HIRING OUT THE CRICKET GROUND PREMISES FOR ADVERTISEMENT IS INCIDENTAL TO THE FULFILLMENT OF ITS PRIMARY/PREDOMINANT OBJECTIVE SINCE APART FROM THE FUNDS RECEIVED BY IT FROM BCCI FOR SOME SPECIFIC PURPOSES, THERE IS NO OTHER SOURCE OF FUND FOR THE APPELLANT WITH THE HELP OF WHICH IT CAN EXECUTE ITS OBJECTIVES FOR WHICH IT HAS BEEN ESTABLISHED. FURTHER WITH REGARD TO THE APPELLANT SELLING TICKETS OF IPL MATCHES, T HE APPELLANT WOULD LIKE TO SUBMIT THAT IT HAD CHARGED FEES OF RS.70 LAKHS FROM THE CONCERNED ORGANIZERS FOR PROVIDING THE FACILITIES OF THE STADIUM AND OTHER INCIDENTAL AMENITIES ALONGWITH IT WHILE THE ORGANIZERS IN TURN HAD FIXED SELLING PRICE OF TICKETS SOLD TO THE PUBLIC VARYING FROM RS.600 TO RS.20,000 PER TICKET PER PERSON, FOR WATCHING LIVE CRICKET. WITH REGARD TO THIS ACTIVITY BEING COMMERCIAL IN NATURE WITHIN THE AMENDED PROVISION OF THE SECTION 2(15) OF THE INCOME TAX ACT, 1961 AND NOT CHARITABLE , THE APPELLANT WOULD FIRSTLY LIKE TO QUOTE CLAUSE 4 SUB CLAUSE (J) OF ITS MOA W HICH READS AS FOLLOWS: '4. FOR THE ATTAINMENT OF THE AFORESAID OBJECT OF THE ASSOCIATION MAY: (A) .... (I) (J) ACQUIRE MOVABLE OR IMMOVABLE PROPERTIES ON BEHALF OF THE ASSO CIATION AND SALE, LEASE, EXCHANGE, DISPOSE OF OR OTHERWISE DEAL WITH ALL OR ANY PART OF SUCH PROPERTIES. ' THEREAFTER THE APPELLANT WOULD LIKE TO QUOTE CLAUSE 5 OF THE MOA WHICH READS AS FOLLOWS: 'THE INCOME AND PROPERTY OF THE ASSOCIATION SHALL BE APP LIED SOLELY TOWARDS THE PROMOTION OF ITS OBJECTS AS SET FORTH IN THIS MEMORANDUM OF ASSOCIATION AND NO PORTION THEREOF SHALL BE PAID OR TRANSFERRED DIRECTLY OR INDIRECTLY BY WAY OF DIVIDENDS, BONUS OR OTHERWISE BY WAY OF PROFIT TO ITS MEMBERS, PROVIDED THA T NOTHING THEREIN SHALL PREVENT THE PAYMENT OF REMUNERATION TO ITS OFFICERS OR STAFF OR OTHER PERSONS IN RETURN FOR ANY SERVICES ACTUALLY RENDERED BY THEM TO IT. ' ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 33 FURTHER THE APPELLANT WOULD LIKE TO QUOTE ARTICLE 4 OF THE ORISSA CRICKET ASSOCIATION RULE S, WHICH READS AS: ' POWER WITHOUT PREJUDICE TO THE GENERALITY OF THE AIMS AND OBJECTIVES OF THE ASSOCIATION AS DEFINED IN THE MEMORANDUM AND THE MATTERS SPECIFICALLY DEALT WITHIN THESE RULES, THE ASSOCIATION SHALL HAVE POWER TO CONTROL THE GAME OF CRI CKET THROUGHOUT THE STATE OF ORISSA AND TO DO ALL SUCH ACTS AS SHALL BE DEEMED TO BE NECESSARY, INCIDENTAL AND CONDUCIVE TO THE ATTAINMENT OF THE AFORESAID OBJECTS. FROM A CONJOINT READING OF THE ABOVE CLAUSES AND RULE OF THE APPELLANT'S CONSTITUTION, I T IS EVIDENT THAT ITS MOA PROVIDES FOR THE APPELLANT'S INCOME AND PROPERTY TO BE APPLIED SOLELY FOR PROMOTION OF ITS OBJECTS AND THE APPELLANT'S RULES PROVIDES THE POWER TO DO ALL SUCH ACTS WHICH WOULD BE INCIDENTAL AND CONDUCIVE TO THE ATTAINMENT OF THE M AIN/DOMINANT OBJECTS OF THE APPELLANT. IN LIGHT OF THE ABOVE, THE APPELLANT WOULD LIKE TO SUBMIT THAT IT HAD CHARGED AN AMOUNT OF RS.70 LAKHS FOR PROVIDING ITS STADIUM TO THE ORGANIZERS OF THE IPL FOR CONDUCTING ONE OF THE MATCHES THERE. THE FEE CHARGED WAS FOR FULFILLING THE APPELLANT'S OBJECTIVES OF DEVELOPING AND PROMOTING CRICKET IN THE STATE OF ORISSA. IT WAS INCIDENTAL TO THE ATTAINMENT OF THE APPELLANT'S OBJECTS AND AS AUTHORIZED BY ITS MOA AND THE RULES (AS MENTIONED ABOVE). THUS, WITH THE HELP OF THESE ANCILLIARY ACTIVITIES OF SELLING TICKETS AND EARNING FROM LETTING OUT OF INFRASTRUCTURE FACILITIES, THE APPELLANT ACCUMULATES FUNDS TO ACCOMPLISH THE PREDOMINANT OBJECTIVE OF DEVELOPING, PROMOTING AND ENCOURAGING THE GROWTH OF CRICKET IN THE STATE OF ORISSA. IN ADDITION TO THE ABOVE THE APPELLANT WOULD LIKE TO SUBMIT THAT WITH REGARD TO SALE OF TICKETS OF THE IPL MATCHES, IT HAD NOTHING TO DO WITH THE AMOUNT CHARGED FOR THE TICKETS SINCE THAT WAS WITHIN THE CONTROL AND AMBIT OF THE ORGANISERS OF THE IPL MATCH AND THE APPELLANT WAS MERELY PROVIDING ITS STADIUM FOR CONDUCTING THE IPL MATCH THERE, IN RETURN OF A FEE WHICH WOULD FACILITATE IN ACCOMPLISHING ITS OBJECTS. THE MONEY RAISED BY SELLING THE TICKETS OF THE IPL MATCHES WENT TO THE INVESTORS AN D ORGANISERS OF THE IPL TOURNAMENT WHO MAY HAVE HAD A COMMERCIAL PURPOSE FOR CONDUCTING SUCH MATCHES SINCE THEY MIGHT BE DOING BUSINESS AND EARNING PROFIT MIGHT BE THEIR PRIMARY OBJECTIVE BUT THAT DOES NOT SUBJECT THE APPELLANT TO BE A PARTY TO ASPECTS OF COMMERCIALITY, MERELY BY PROVIDING ITS STADIUM TO THE INVESTORS OR ORGANISERS. IN SUPPORT OF ITS CONTENTION THE APPELLANT WOULD LIKE TO PLACE RELIANCE ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION VS. DIRE CTOR OF INCOME TAX ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 34 (EXEMPTIONS) AND OTHERS REPORTED IN [2014] 360 ITR 633 (MAD) WHEREIN THE FACTS WERE AS FOLLOWS: '6. AFTER CONSIDERING THE GENUINENESS OF THESE OBJECTS, AS EARLY AS 2003, THE ASSESSEE WAS GRANTED REGISTRATION AS A TRUST UNDER SECTION 12 AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE 'ACT''). HOWEVER, ON 19.07.2011. A NOTICE WAS ISSUED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS) UNDER SECTION 12AA(3) OF THE ACT THAT THE STATEMENT OF INCOME AND EXPENDITURE REVEALED THAT THE ASSESS EE DERIVED INCOME FROM THE FOLLOWING ACTIVITIES: - 1. SUBSCRIPTION 2. RENT FOR HIRING CRICKET GROUND, ROOMS AND PREMISES 3. FEES FOR PROVIDING SERVICES TO IPL 4. INCOME FROM ADVERTISEMENT 5. SUBSIDY FROM BCCI 6. SALE OF TICKET FOR CONDUCTING OF MATCH ES 7. RESTAURANT AND CATERING INCOME ETC. THUS, THESE RECEIPTS WERE HELD TO BE IN THE NATURE OF TRADE OR COMMERCE OR BUSINESS AND HIT BY THE PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE 'ACT''). IN THE CIRCUMSTANCES, N OTICE WAS ISSUED PROPOSING TO WITHDRAW THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. 7. IMMEDIATELY, ON THE RECEIPT OF THE NOTICE, THE ASSESSEE REPLIED THAT THE RECEIPTS WERE NOT IN THE NATURE OF TRADE OR COMMER CE OR BUSINESS, SINCE, THE INCOME OF THE ASSESSEE INCLUDED INTEREST INCOME EARNED FROM FIXED DEPOSITS WITH BANKS; SUBSIDY FROM BCCI WAS A VOLUNTARY GRANT FROM THE PARENT BODY FOR PROMOTION AND DEVELOPMENT OF THE GAME OF CRICKET IN TAMIL NADU; THERE WAS NO COMMERCIAL ACTIVITY INVOLVED IN THE CONDUCT OF THE IPL MATCHES FOR WHICH ONLY SUBSIDY WAS RECEIVED BY THE ASSESSEE FROM BCCI LIKE OTHER CRICKET ASSOCIATIONS; THUS, THE RECEIPT OF SUBSIDY WAS NOT A PAYMENT FOR CARRYING ON OF ANY TRADE, COMMERCE OR BUSINESS; THE TV SUBSIDY WAS GIVEN TO ALL STATE ASSOCIATIONS AND WAS PART OF THE SCHEME OF BCCL BEING A VOLUNTARY DONATION, THERE WAS NO COMMERCIAL CHARACTER ATTACHED TO THESE. RECEIPTS; SO TOO, THE DONATIONS AND CONTRIBUTIONS AND THE SALE OF TICKETS IN CONDUCTING MATCHES ORGANISED BY BCC I . POINTING OUT THAT THE ASSOCIATION WAS NOT RUNNING ANY CANTEEN OR RESTAURANT, THE ASSESSE E SUBMITTED THAT AS FAR AS FEE FOR PROVIDING SERVICES TO IPL IS CONCERNED, THE ENTIRE INCOME FROM THE SALE OF TICKETS BELONGED TO THE FRANCHI SEE, AND THEREFORE, THERE WAS NO SERVICE RENDERED OR CHARGES MADE BY THE ASSESSEE. ' THE HON'BLE MADRAS HIGH COURT ON CONSIDERATION OF THE FACTS OF THE ASSESSEE'S CASE AND THE LAW IN THIS REGARD, HELD THE FOLLOWING: ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 35 55. THE ASSESSEE IS A MEMBER OF BOAR D 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 ASSOCIATION WHICH ORGANISE THE MATCHE S 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 MAT CHES. BCCI EARNS REVENUE BY WAY OF SPONSORSHIP AND MEDIA RIGHTS AS WELL AS FRANCHISEE REVENUE FOR IPL AND IT DISTRIBUTES 70% OF THE REVENUE TO THE MEMBER CRICKET ASSOCIATION. THUS THE ASSESSEE IS ALSO THE RECIPIENT OF THE REVENUE. THUS, FOR INVOKING SECTIO N 12AA READ WITH SECTION 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 INCOME TAX APPELLATE TRIBUNAL'S VIEW T H AT IT IS AN ENTERTAINMENT AND HENCE OFFENDED SECTION 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 INCOME TAX APPELLATE TRIBUNAL RESTED ITS DECISION ON CONSIDERATION WHICH ARE NOT RELEVANT FOR CONSIDERING THE TEST SPECIFIED UNDER SECTION 12AA(3) TO IMPOSE COMMERCIAL CHARACTER TO THE ACTIVITY OF THE AS SOCIATION. IN THE CIRCUMSTANCES, WE AGREE WITH THE ASSESSEE THAT THE REVENUE HAS NOT MADE OUT ANY GROUND TO CANCEL THE REGISTRATION UNDER SECTION 12AA (3) OF THE ACT. 56. AS REGARDS THE OBSERVATION OF THE INCOME TAX APPELLATE TRIBUNAL THAT IPL MATCHES AN D 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 INCOME TAX (EXEMPTIONS) CASTS NO DOUBT ON THE GENUINENESS OF THE OBJECTS OF T HE TRUST. HENCE, IT IS FOR THE ASSESSING OFFICER TO TAKE NOTE OF ALL FACTS, WHILE CONSIDERING THE SAME UNDER SECTION 11 OF THE INCOME TAX ACT, 1961. WE DISAPPROVE THE APPROACH OF THE TRIBUNAL IN THIS REGARD. IN THE ABOVE SAID CIRCUMSTANCES, WE SET ASIDE TH E ORDER OF THE INCOME TAX APPELLATE TRIBUNAL. ' IN THE CASE OF DELHI AND DISTRICT CRICKET ASSOCIATION VS. DIT(E) REPORTED IN [2015] 38 ITR (TRIB) 326 (ITAT[DEL]), THE HON'BLE ITAT, DELHI HAS DEALT WITH SIMILAR ISSUES WHEREIN THE FOLLOWING HAS BEEN HELD: '36. THE CORE ACTIVITY OF THE ASSESSEE IS UNDISPUTEDLY, CHARITABLE IN NATURE. HENCE IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE IS ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 36 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, 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 ADVER TISEMENT 5. SUBSIDY FROM BCCI # 6. SALE OF TICKETS FOR CONDUCTING THE MATCHES AND 7. RESTAURANT AND CATERING INCOME. SUCH RECEIPTS OF MONEY BY THE TAMIL NADU CRICKET ASSOCIATION WERE NOT CONSIDERED BY THE HON 'BLE MADRAS HIGH COURT, AS ACTIVITIES IN T HE 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. 37. THUS RESPECTFULLY FOLLOWING T HE 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 BOOKI NG 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 RELATE D, 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. 38. WE NOW TAKE UP EACH OF THE I SSUES RAISED BY THE LD. DIT(E) IN HIS ORDER. . 44. 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 S PONSORSHIP 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, COMME RCE OR BUSINESS'. 49. 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. ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 37 50. 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 OF THE ACTIVITIE S WITH ANY PROFIT MOTIVE OR WITH ANY SELF INTEREST. THE CONTRIBUTION 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' A CTIVITY. THUS, THE APPELLANT HAVING PROVIDED ITS STADIUM TO THE ORGANISERS FOR HOLDING THE MATCH THERE AND FOR PUTTING UP ADVERTISEMENTS, IN RETURN OF A FEE WHICH WAS TO BE UTILIZED BY THE APPELLANT FOR ATTAINING ITS OBJECTS DOES NOT TANTAMOUNT TO ANY CO MMERCIAL ACTIVITIES BEING CARRIED ON INSTEAD OF CHARITABLE ACTIVITIES. FURTHER THE HON'BLE SUPREME COURT OF INDIA VIDE ITS FIVE JUDGES CONSTITUTIONAL BENCH, BY A MAJORITY OF 4 TO 1, IN ADDL. CIT V. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION REPORTED IN [1980] 121 ITR 1 (SC) HELD THAT THE CONDITION THAT THE PURPOSE SHOULD NOT INVOLVE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT WOULD BE SATISFIED IF PROFIT - MAKING WAS NOT THE REAL OBJECT. THE THEORY OF DOMINANT OR PRIMARY OBJECT OF THE TRUST HAD, THEREFOR E, BEEN TREATED TO BE THE DETERMINING FACTOR, EVEN IN REGARD TO THE FOURTH HEAD OF CHARITY, VIZ., THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, SO AS TO MAKE THE CARRYING ON OF THE BUSINESS ACTIVITY MERELY ANCILLARY OR INCIDENTAL TO THE MA IN OBJECT. FOLLOWING ARE THE RELEVANT EXTRACTS: 'IT IS OBVIOUS THAT THE EXCLUSIONARY CLAUSE WAS ADDED WITH A VIEW TO OVERCOMING THE DECISION OF THE PRIVY COUNCIL IN THE TRIBUNE'S CASE [L939] 7 ITR 415 (PC), WHERE IT WAS HELD THAT THE OBJECT OF SUPPLYING THE COMMUNITY WITH AN ORGAN OF EDUCATED PUBLIC OPINION BY PUBLICATION OF A NEWSPAPER WAS AN OBJECT OF GENERAL PUBLIC UTILITY AND HENCE CHARITABLE IN CHARACTER EVEN THOUGH THE ACTIVITY OF PUBLICATION OF THE NEWSPAPER WAS CARRIED ON COMMERCIAL LINES WITH THE OBJECT OF EARNING PROFIT. THE PUBLICATION OF THE NEWSPAPER WAS AN ACTIVITY ENGAGED IN BY THE TRUST FOR THE PURPOSE OF CARRYING OUT ITS CHARITABLE PURPOSE AND ON THE FACTS IT WAS CLEARLY AN ACTIVITY WHICH HAD PROFIT - MAKING AS ITS PREDOMINANT OBJECT, BUT EV EN SO IT WAS HELD BY THE JUDICIAL COMMITTEE THAT SINCE THE PURPOSE SERVED WAS AN OBJECT OF GENERAL PUBLIC UTILITY, IT WAS A CHARITABLE PURPOSE. IT IS CLEAR FROM THE SPEECH OF THE FINANCE MINISTER THAT IT WAS WITH A VIEW TO SETTING AT NAUGHT THIS DECISION T HAT THE EXCLUSIONARY CLAUSE WAS ADDED IN THE DEFINITION OF CHARITABLE PURPOSE . THE TEST WHICH HAS, THEREFORE, NOW TO BE APPLIED IS WHETHER THE PREDOMINANT OBJECT OF THE ACTIVITY INVOLVED IN CARRYING OUT THE OBJECT OF GENERAL PUBLIC UTILITY IS TO SUBSERVE THE CHARITABLE PURPOSE OR TO EARN PROFIT. WHERE PROFIT - MAKING IS THE PREDOMINANT OBJECT OF THE ACTIVITY, THE PURPOSE, THOUGH AN OBJECT OF GENERAL PUBLIC UTILITY, WOULD CEASE TO BE A CHARITABLE PURPOSE. BUT WHERE THE PREDOMINANT OBJECT OF THE ACTIVITY IS T O CARRY OUT THE CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT WOULD NOT LOSE ITS CHARACTER OF A CHARITABLE PURPOSE MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY. THE EXCLUSIONARY CLAUSE DOES NOT ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 38 REQUIRE THAT THE ACTIVITY MUST BE CARRIED ON IN SUCH A MANNER THAT IT DOES NOT RESULT IN ANY PROFIT. IT WOULD INDEED BE DIFFICULT FOR PERSONS IN CHARGE OF A TRUST OR INSTITUTION TO SO CARRY ON THE ACTIVITY THAT THE EXPENDITURE BALANCES THE INCOME AND THERE IS NO RESULTING PROFIT. THAT WOULD NOT ONLY BE DIFFICU LT OF PRACTICAL REALISATION BUT WOULD ALSO REFLECT UNSOUND PRINCIPLE OF MANAGEMENT. WE, THEREFORE, AGREE WITH BEG J WHEN HE SAID IN SOLE TRUSTEE, LOKA SIKHSHANA TRUST'S CASE [1975} 101 ITR 234, 256 (SC) THAT: ' IF THE PROFITS MUST NECESSARILY FEED A CHAR ITABLE PURPOSE UNDER THE TERMS OF THE TRUST, THE MERE FACT THAT THE ACTIVITIES OF THE TRUST YIELD PROFIT WILL NOT ALTER THE CHARITABLE CHARACTER OF THE TRUST. THE TEST NOW IS, MORE CLEARLY THAN IN THE PAST, THE GENUINENESS OF THE PURPOSE TESTED BY THE OBLI GATION CREATED TO SPEND THE MONEY EXCLUSIVELY OR ESSENTIALLY ON CHARITY. ' FURTHER UPHOLDING ITS EARLIER VIEW IN THE CASE OF SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (SUPRA), IT WAS ALSO HELD BY A MAJORITY DECISION OF THE LARGER BENCH IN THE CASE O F COMMISSIONER OF INCOME - TAX V. FEDERATION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY (130 ITR 186) DATED 15/04 / 1981 THAT THE INCOME DERIVED BY THE RESPONDENT FROM THE ACTIVITIES, SUCH AS HOLDING THE INDIAN TRADE FAIR AND SPONSORING THE CONFERENCE OF THE AF RO - ASIAN ORGANISATION, WERE FOR THE ADVANCEMENT OF THE DOMINANT OBJECT AND PURPOSE OF THE FEDERATION, VIZ., PROMOTION, PROTECTION AND DEVELOPMENT OF TRADE, COMMERCE AND INDUSTRY IN INDIA, AND WERE EXEMPT FROM TAX UNDER S. 11(1)(A) READ WITH S. 2(15). THE SAID APPEAL RAISED THE MUCH VEXED QUESTION AS TO WHETHER THE WORDS 'NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT' IN THE DEFINITION OF 'CHARITABLE PURPOSE' CONTAINED IN S. 2(15) OF THE ACT, GOVERNED THE WORD 'ADVANCEMENT' AND NOT THE WORDS 'OB JECT OF GENERAL PUBLIC UTILITY'. FOLLOWING ARE THE RELEVANT EXTRACTS OF THE SAID JUDGMENT: 'UNFORTUNATELY, FOR THE REVENUE, THE COURT HAS, IN A FIVE - JUDGES BENCH, BY A MAJORITY OF 4 TO 1, IN ADDL. CIT V. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION [ 1980} 121 ITR 1 (SC) REVERSED THESE TWO DECISIONS IN LOKA SHIKSHANA TRUST CASE [1975] 101 ITR 234 (SC) AND THE INDIAN CHAMBER OF COMMERCE CASE [1975] 101 ITR 796 (SC). THE COURT HAS APPROVED OF THE OBSERVATIONS OF BEG J . IN HIS SEPARATE BUT CONCURRING JUDG MENT IN THE LOKA SHIKSHANA TRUST CASE THAT (P. 256) ' IF THE PROFIT MUST NECESSARILY FEED A CHARITABLE PURPOSE, UNDER THE TERMS OF THE TRUST, THE MERE FACT THAT THE ACTIVITIES OF THE TRUST YIELD PROFIT WILL NOT ALTER THE CHARITABLE CHARACTER OF THE TRUST I F. IN OTHER WORDS, THE MAJORITY VIEW IN THE SURAT ART SILK CASE WAS THAT THE CONDITION THAT THE PURPOSE SHOULD NOT INVOLVE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT WOULD BE SATISFIED IF PROFIT - MAKING IS NOT THE REAL OBJECT. THE THEORY OF DOMINANT OR PRIM ARY OBJECT OF THE TRUST HAS, THEREFORE, BEEN TREATED TO BE THE DETERMINING ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 39 FACTOR, EVEN IN REGARD TO THE FOURTH HEAD OF CHARITY, VIZ., THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, SO AS TO MAKE THE CARRYING ON OF THE BUSINESS ACTIVITY MER ELY ANCILLARY OR INCIDENTAL TO THE MAIN OBJECT. ONE SHOULD HAVE THOUGH THAT THE CORRECT WAY TO APPROACH THIS QUESTION OF INTERPRETATION WAS TO GIVE THE WORDS USED BY PARLIAMENT THEIR ORDINARY MEANING IN THE ENGLISH LANGUAGE AND IF, CONSISTENTLY WITH THE ORDINARY MEANING, THERE WAS A CHOICE BETWEEN TWO ALTERNATIVE INTERPRETATIONS, THEN TO PREFER THE CONSTRUCTION THAT MAINTAINS A REASONABLE AND CONSISTENT SCHEME OF TAXATION WITHOUT DISTORTING THE LANGUAGE. WHEN THE GOVERNMENT DID NOT ACCEPT THE RECOMMENDATI ON OF THE DIRECT TAXES LAWS COMMITTEE IN CHAP. 2 (INTERIM REPORT, DECEMBER, 1977) FOR THE DELETION OF THE WORDS' NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT' OCCURRING IN S. 2(15) OF THE ACT, THE COURT HAS BY A PROCESS OF JUDICIAL CONSTRUCTION ACHIEVED THE SAME RESULT. '. THUS THROUGH THE YEARS UNTIL 1984, THE THEORY OF DOMINANT OR PRIMARY OBJECT OF THE TRUST WAS HELD TO BE THE DETERMINING FACTOR, EVEN IN REGARD TO THE FOURTH HEAD OF CHARITY, VIZ., THE ADVANCEMENT OF ANY OTHER OBJECT OF GENER AL PUBLIC UTILITY. THEREFORE IF DOMINANT/PRIMARY PURPOSE OF ANY ASSOCIATION/ BODY WAS THE ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY GIVING RISE TO INCOME WAS CARRIED ON. THE DOMI NANT PURPOSE OF THE TRUST SHOULD NOT INVOLVE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT AND THAT WOULD BE SATISFIED IF PROFIT - MAKING WAS NOT THE REAL OBJECT OF THE TRUST/INSTITUTION. FURTHER THE HON'BLE ITAT, KOLKATA IN THE CASE OF INDIAN CHAMBER OF COMM ERCE VS. ITO (EXEMPTIONS - I) REPORTED IN [2015] 37 ITR (TRIB) 688 (ITAT[KOL]) HELD THE FOLLOWING: '82. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND DETAILED READING OF THE VARIOUS JUDICIAL DECISIONS THROUGH THE YEARS, INTERPRETING THE DEFINITION OF 'CHARITABLE PURPOSE' AS LAID OUT IN SECTION 2(15) OF THE ACT AND ALSO THE DEFINITION OF 'BUSINESS' IN RELATION TO THE SAID SECTION AMPLY REVEALS' THAT THE THEORY OF DOMINANT PURPOSE HAS ALWAYS, ALL THROUGH THE YEAR S, BEEN UPHELD TO BE THE DETERMINING FACTOR LAYING DOWN WHETHER THE INSTITUTION IS CHARITABLE IN NATURE OR NOT. WHERE THE MAIN OBJECT OF THE INSTITUTION WAS 'CHARITABLE' IN NATURE, THEN THE ACTIVITIES CARRIED OUT TOWARDS THE ACHIEVEMENT OF THE SAID, BEING INCIDENTAL OR ANCILLARY TO THE MAIN OBJECT, EVEN IF RESULTING IN PROFIT AND EVEN IF CARRIED OUT WITH NON - MEMBERS, WERE ALL HELD TO BE 'CHARITABLE' IN NATURE. THE HON'BLE APEX COURT IN THE INDIAN CHAMBER OF COMMERCE V. ITO EARLIEST CASE OF ANDHRA CHAMBER OF COMMERCE [L965] 55 ITR 722 (SC) HAD CLEARLY LAID OUT THE PRINCIPLE THAT IF THE PRIMARY PURPOSE O} AN INSTITUTION WAS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 40 ANCILLARY ACTIVITY OR PURPOSE, FOR A CHIEVING THE MAIN PURPOSE, WAS PROFITABLE IN NATURE. IN OUR VIEW THE BASIC PRINCIPLE UNDERLYING THE DEFINITION OF 'CHARITABLE PURPOSE' REMAINED UNALTERED EVEN ON AMENDMENT IN SECTION 2(15) OF THE ACT WITH EFFECT FROM APRIL 1, 2009, THOUGH THE RESTRICTIVE F IRST PROVISO WAS INSERTED THEREIN. ACCORDINGLY, IN THE GIVEN FACTS OF THE CASE AS DISCUSSED ABOVE IN DETAIL, THE ASSESSEE ASSOCIATION'S PRIMARY PURPOSE WAS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY AND IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTA L OR ANCILLARY ACTIVITY OR PURPOSE, FOR ACHIEVING THE MAIN PURPOSE WAS PROFITABLE IN NATURE. HENCE, THE ASSESSEE IS NOT HIT BY NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT. THIS ISSUE OF THE ASSESSEE'S APPEAL IS ALLOWED. ' IN VIEW OF THE ABOVEMENTI ONED DECISIONS AND ALSO ON THE BASIS OF THE FACTUAL CIRCUMSTANCES OF THE APPELLANT'S CASE BEING SIMILAR TO THE ABOVEMENTIONED JUDGMENTS, IT IS THUS CONCLUDED BY THE APPELLANT THAT THE RECEIPTS FROM SELLING TICKETS AND HIRING OUT OF INFRASTRUCTURE FACILITIE S CANNOT BE CONSIDERED TO BE A COMMERCIAL ACTIVITY, AS ALLEGED BY THE LD. CIT(E). THEREFORE REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 CANNOT BE DENIED TO THE APPELLANT ON THIS ALLEGED PREMISE, ESPECIALLY WHEN THE APPELLANT'S OBJECTS HAVE BEEN CON SIDERED TO BE CHARITABLE BY THE LD. CIT(E) AND THE APPELLANT HAS ESTABLISHED ITS ACTIVITIES TO BE IN CONSONANCE OF THE OBJECTIVES. ALSO WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT WOULD LIKE TO REITERATE THAT THE HON'BLE ITAT, CUTTACK IN THE APPELLANT'S IN ITA NO. 232/CTK//2010 VIDE ORDER 27/06/ 2014 HAD CLEARLY DIRECTED THE CIT TO LOOK INTO THE DEFINITION OF CHARITABLE PURPOSE AS PER SECTION 2(15) OF THE INCOME TAX ACT, 1961 AS ON THE DATE WHEN THE APPLICATION WAS MADE FOR REGISTRATION BY THE APPELLANT, FOR DECIDING WHETHER IT'S OBJECT ARE CHARITABLE OR NOT AND IF ITS'S OBJECT ARE IN CONSONANCE WITH SECTION 2(15) OF THE ACT (PAGES 36 AND 37 OF THE ORDER, ENCLOSED AT PAGES 274 AND 275 OF THE PAPER BOOK). THE HON'BLE ITAT HELD THAT THE AMENDMENT TO SECTION 2(15) OF THE ACT WAS NOT RETROSPECTIVE IN OPERATION AND THEREFORE, ON THAT BASIS, THE LD. CIT COULD NOT REJECT THE APPLICATION FOR REGISTRATION, PROVIDED THE APPELLANT COMPLIED WITH ALL OTHER CONDITIONS. THUS, IN VIEW OF ALL THE ABOVE, IT IS SUBMITTED TH AT THE APPELLANT HA VING APPLIED FOR REGISTRATION U/ S 12A OF THE INCOME TAX ACT, 1961 ON 3110312Q03, THERE EXISTED NO LIMITATION REGARDING ANY ACTIVITY RESULTING INTO PROFIT. IF THE SIMPLE CRITERION OF THE OBJECT FALLING WITH THE FOUR LIMBS OF THE DEFINITIO N WAS FULFILLED THEN THE APPELLANT STOOD COVERED WITHIN THE AMBIT OF THE SECTION 2(15) OF THE ACT AND WAS ELIGIBLE FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 WHICH IS THE CASE OF THE APPELLANT BEFORE US. THUS THE APPELLANT STOOD IN ALL CORRECT NESS ELIGIBLE FOR THE REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 AND THE ACT OF ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 41 THE LD. CIT(E) IN REJECTING THE SAID APPLICATION IS ABSOLUTELY ILLEGAL AND CONTRARY TO LAW. 4. THAT THE HON'BLE ITAT, CUTTACK BENCH, CUTTAC K VIDE ORDER IN ITA NO. 232/ CTK/ 2010 DATED 27/06 / 2014, ALSO COMMENTED IN PARA 5.10 THAT 'IT IS NOT THE CASE OF THE ASSESSEE THAT IT IS RUNNING A NORMAL SCHOOLING FOR SPORTS. THEREFORE, WE HOLD THAT THE ASSESSEE'S ACTIVITIES DO NOT FALL WIT HIN THE TERM 'EDUCATION '. IN THIS REGARD TH E ASSESSEE WOULD LIKE TO SUBMIT THAT THE HON'BLE ITAT, CUTTACK BY OBSERVING THE ABOVE HAS NOWHERE STATED THAT THE APPELLANT'S ACTIVITIES ARE NOT CHARITABLE. IT HAS ONLY BEEN STATED THAT THE APPELLANT'S ACTIVITIES DO NOT FALL WITHI N THE TERM 'EDUCATION' AND NOTHING ELSE. FURTHER THE LD. CIT(E) HIMSELF HAS ACCEPTED IN HIS ORDER DATED 26/05 / 2017 (PAGE 4, PARA 8) THAT THE APPELLANT'S OBJECTIVES FALL UNDER THE FOURTH LIMB OF SECTION 2(15) OF THE INCOME TAX ACT, 1961, I.E. FOR THE ADVANCEMENT OF ANY OTHER OBJEC T OF GENERAL PUBLIC UTILITY SINCE IT HAS BEEN SET UP FOR ENCOURAGING CRICKET IN THE STATE OF ORISSA. THEREFORE WHEN THE LD. CIT(E) HIMSELF ACCEPTS THE APPELLANT'S CHARITABLE OBJECTS ARE FOR THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, ON THE OTHER HAND ALLEGING THAT THE APPELLANT'S ACTIVITIES IN PURSUANCE OF ITS CHARITABLE OBJECTIVES DO NOT FALL WITHIN THE TERM 'EDUCATION' AND HENCE ARE NOT CHARITABLE IS BASELESS AND IRRELEVANT. OBJECTS BEING CHARITABLE AS PER THE 4TH LIMB OF SECTION 2(15) OF THE INCOME TAX ACT, 1961, I.E. FOR THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, ACTIVITIES IN CONSONANCE WITH THE CHARITABLE OBJECTS CANNOT FALL WITHIN THE 2ND LIMB OF SECTION 2(15) OF THE INCOME TAX ACT, 1961, I.E. EDUCATION. THERE FORE THE CIT(E)'S REFUSAL TO GRANT REGISTRATION TO THE APPELLANT U/ S 12AA OF THE INCOME TAX ACT, 1961 ON THE ABOVE ALLEGED PREMISE DOES NOT HOLD GOOD. THUS AS SHALL BE EVIDENT FROM THE DISCUSSION MADE ABOVE, THE APPELLANT HAS ALREADY SATISFIED THE REQUIR EMENTS OF SECTION 12AA OF THE INCOME TAX ACT, 1961 AND IS THEREFORE A FIT CASE FOR GRANT OF REGISTRATION UNDER THE SAID SECTION. 5 . LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 6 . WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS A REGISTERED SOCIETY AND HAS APPLIED FOR REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961 ON 31.03.2003. THE SAID APPLICATION WAS ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 42 INITIALLY DECIDED FOR THE FIRST TIME BY T HE CIT(E) VIDE ORDER DATED 22.03.2010 WHEREIN HE REJECTED ASSESSEES APPLICATION FOR GRANT OF REGISTRATION. THERE AGAINST THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 27.06.2014 RESTORED THE MATTER BACK TO THE FILE OF CIT(E) FOR ADJUDICATION AFRESH. IN PURSUANCE TO THE SAID ORDER OF THE TRIBUNAL, THE IMPUGNED ORDER WAS PASSED BY THE CIT(E) ON 26.05.2017, WHEREIN THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION WAS REJECTED. THE CIT(E) HAS OBSERVED THAT THE OBJECTS OF THE ASSESSEE SOCIETY ARE OF GENERAL PUBLIC UTILITY AND CONSEQUENTLY, CHARITABLE IN NATURE, HOWEVER, HE REFUSED TO GRANT REGISTRATION MAINLY ON THE GROUND THAT THE FUNDS OF THE ASSESSEE SOCIETY WERE DIVERTED FOR PERSONAL BENEFIT OF THE EXECUT IVES OF THE SOCIETY IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE INCOME TAX ACT, 1961. FURTHER THE CIT(A) ALSO OBSERVED THAT IN THE FINANCIAL STATEMENTS THE ASSESSEE HAS REFLECTED RECEIPTS FROM BOARD OF CONTROL FOR CRICKET IN INDIA (BCCI) AS CORPU S FUND INSTEAD OF TREATING IT AS REVENUE INCOME. FURTHER, THE CIT(E) ALSO OBSERVED THAT AS THE ASSESSEE HAS DISTRIBUTED THE FUNDS RECEIVED FROM THE BCCI TO OTHER ORGANIZATIONS IN THE STATE OF ORISSA AND MERELY ACTED AS A NODAL AGENCY AND HAS NOT UNDERTAKEN ANY CHARITABLE ACTIVITY AS PER THE OBJECTS OF THE ASSOCIATION, EXCEPT, GENERATING INCOME BY SELLING TICKETS AND BY LETTING OUT THE INFRASTRUCTURE FACILITIES OF THE CRICKET STADIUM, WHICH IS OF COMMERCIAL NATURE. WE FIND THAT THE OBJECTS OF THE ASSESSEE SO CIETY ARE DIRECTED TOWARDS PROMOTION OF STATE CRICKET. THE ASSESSEE IS AN AFFILIATED MEMBER OF BCCI, THUS, IT IS NOT IN DISPUTE THAT THE ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 43 OBJECTS OF THE ASSESSEE SOCIETY FALLS UNDER THE CATEGORY OF GENERAL PUBLIC UTILITY WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. SIMILARLY, ASSOCIATION FORMED IN OTHER STATES HAVE BEEN GRANTED REGISTRATION U/S.12AA OF THE ACT. IT IS PERTINENT TO NOTE HERE THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION VS. DIT(EXEMPTIONS) & OTHERS, REPOR TED IN [2014] 360 ITR 633 (MAD) , WHILE ALLOWING THE APPEAL OF THE ASSESSEE HELD AS UNDER : - 55. THE ASSESSEE IS A MEMBER OF THE BOARD OF CONTROL FOR CRICKET IN INDIA (BCCI), WHICH IN TURN IS A MEMBER OF ICC (INTERNATIONAL CRICKET COUNCIL). BCCI ALLOTS TES T 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 AS SOCIATION 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 SECTION 12AA READ WITH SECTION 2(15) OF THE ACT, THE 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 INCOME - TAX APPELLATE TRIBUNAL'S VI EW THAT IT IS AN ENTERTAINMENT AND, HENCE, OFFENDED SECTION 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 CONSIDE RATION. 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 INCOME - TAX APPELLATE TRIBUNAL RESTED ITS DECISION ON CONSIDERATION WHICH ARE NOT RELEVANT FOR CONSIDERING THE TEST SPECIFIED UNDER SECTION 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 SECTION 12AA(3) OF THE ACT. 56. AS REGARDS THE OBSERVATION OF THE INCOME - TAX APPELLATE TRIBUNAL THAT IPL MATCHES AND CELEBRITY CRICKET MATCHES ARE ALSO BEING HELD BY THE ASSOCIATION AND, HENCE, IT IS AN ENTERTAINMENT INDUS TRY, WE NEED NOT GO INTO THESE ASPECTS FOR THE ORDER OF THE DIRECTOR OF ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 44 INCOME - TAX (EXEMPTIONS) CASTS NO DOUBT ON THE GENUINENESS OF THE OBJECTS OF THE TRUST. HENCE, IT IS FOR THE ASSESSING OFFICER TO TAKE NOTE OF ALL FACTS, WHILE CONSIDERING THE SAME UNDE R SECTION 11 OF THE INCOME - TAX ACT, 1961. WE DISAPPROVE THE APPROACH OF THE TRIBUNAL IN THIS REGARD. IN THE ABOVE SAID CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE INCOME - TAX APPELLATE TRIBUNAL. FURTHER, THE CIT(E) WAS ALSO NOT CORRECT IN OBSERVING THAT THE INCOME AND EXPENDITURE AMOUNT OF THE ASSESSEE REVEALS THAT NO EXPENDITURE WAS INCURRED BY IT TOWARDS ITS ATTAINING OF OBJECT AND THE ASSESSEE ACTED ONLY AS NODAL AGENCY ON BEHALF OF THE BCCI. A PERUSAL OF THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSE SSEE PLACED AT PAGE 458 & 459 OF THE PAPER BOOK SHOWS THAT THE ASSESSEE HAS ALSO INCURRED EXPENDITURE UNDER THE HEAD FLOODLIGHT OPERATION, GROUND PREPARATION, REPAIRING & MAINTENANCE BUILDING, REPAIRING TO GROUND EQUIPMENT, UPKEEPMENT & PREPARATION OF VENU E, PRINTING OF TICKETS, TRANSPORTATION OF PLAYERS, SECURITY & GATE CONTROL, DRESSING ROOM, SCOREBOARD & SCORER, FOOD CHARGES OF PLAYERS AND MATCH EXPENSES. THE ABOVE EXPENDITURES WERE CLEARLY FOR PROMOTION OF STATE CRICKET. FURTHER IN RESPECT OF DIVERSION OF FUNDS IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT, IT IS OBSERVED THAT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF AGGARWAL MITRA MANDAL TRUST VS. DIT(E), [2007] 293 ITR (A.T) 359 (ITAT[DEL]) HAS HELD AS UNDER : - 7. AS ALREADY NOTED, T HE PROCEDURE FOR REGISTRATION LAID DOWN IN SECTION 12AA REQUIRES THE CIT TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES AND OBJECT OF THE TRUST OR INSTITUTION AND AS SUCH, THE SCOPE OF HIS POWERS IS LIMITED IN THIS REGARD TO MAKE SUCH ENQUIRIES, AS HE MAY DEEM FIT, TO SATISFY HIMSELF IN RESPECT OF THESE TWO ASPECTS. AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION (SUPRA), AN OBJECT BENEFICIAL TO THE SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY AND TO SERVE A CHARITABLE PURPOSE, IT IS SUFFICIENT IF THE INTENTION IS TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM A SPECIFIED INDIVIDUAL. THIS DECISION OF HON'BLE APEX COURT FOLLOWED SUBSEQUENTLY BY ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 45 HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SDKI JAIPURIA TRUST (NO. 1) (SUPRA) AND IN THE CASE OF CIT V. RAM SHANKAR MISRA TRUST (SUPRA) TO HOLD THAT THE EXPENDITURE INCURRED BY A TRUST FOR THE BENE FIT OF ONE COMMUNITY IS AN EXPENDITURE INCURRED ON A PUBLIC CHARITABLE OBJECT, STILL HOLDS THE FIELD NOTWITHSTANDING PROVISIONS CONTAINED IN SECTION 13(1)(B) SINCE THE DEFINITION OF THE TERM 'CHARITABLE PURPOSE' GIVEN IN SECTION 2(15) CONTINUES TO REMAIN THE SAME. THE PROVISIONS OF SECTION 13(1) ARE THUS NOT DIRECTLY RELEVANT IN THIS REGARD. ON THE O THER HAND, THE SAID SECTION BEGINS WITH THE WORDS 'NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOM E OF THE PREVIOUS YEAR OF THE PERSON... 'WHICH CLEARLY ENVISAGES OPERATION OF SECTION 11 OR SECTION 12 BEFORE THE PROVISIONS OF SECTION 13 CAN BE APPLIED OR INVOKED IN A GIVEN CASE. IT ALSO SHOWS THAT THE SAID PROVISIONS CAN BE APPLIED OR INVOKED ONLY AT THE TIME OF COMPUTATION OF TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON WHO IS CLAIMING EXEMP TION UNDER SECTION 11 OR SECTION 12 . BOTH THESE SITUATIONS CONTEMPLATED IN SECTION 13 CAN ARISE ONLY AND ONLY IF REGISTRATION UNDER SECTION 12A IS GRANTED TO THE SAID PERSON. IF THE SAME IS NOT GRANTED AND THE PERSON IS REFUSED THE REGISTRATION UNDER SECTION 12A , HE WOULD NOT BE ENTITLED TO CLAIM ANY BENEFIT AVAILABLE UNDER SECTION 11 OR 12 AND THERE WILL BE NO OCCASION TO THE ASSESSING OFFICER TO INVOKE OR APPLY SECTION 13 IN HIS CASE. THIS POSITION WOULD NOT ONLY BE CONTRARY TO THE SCHEME OF THE ACT AS LAID DOWN IN SECTIONS 11 , 12 , 12A , 12AA AND 13 BUT THE SAME MAY ALSO CAUSE PREJUDICE/HARDSHIP TO THE PERSONS IN CERTAIN CASES. F OR INSTANCE, THE OBJECTS FOR WHICH THE ASSESSEE TRUST IN THE PRESENT CASE IS ESTABLISHED, AS INDICATED IN OBJECT CLAUSES 3(1) & 3(2), NO DOUBT ARE FOR THE BENEFITS OF A PARTICULAR COMMUNITY, VIZ., VAISH. NEVERTHELESS, AS PER OBJECT CLAUSE 3(4), IT WAS ALSO ESTABLISHED TO RUN SCHOOLS, COLLEGES, HOSPITALS ETC. FOR THE BENEFIT OF PUBLIC AT LARGE. IN THIS SITUATION, IF THE REGISTRATION APPLIED FOR UNDER SECTION 12A IS NOT GRANTED TO IT FOR VIOLATION OF PROVI SIONS OF SECTION 13(1)(B) AND IT IS ULTIMATELY FOUND THAT THE ASSESSEE TRUST ACTUALLY ACCOMPLISHED THE OBJECTS AS INDICATED IN CLAUSE 3(4) ONLY FOR THE BENEFIT OF PUBLIC AT LARGE WITHOUT THERE BEING ANY ACTIVITY UNDERTAKEN AS PER OBJECT CLAUSES 3(1) AND 3(2), IT WOULD BE DEPRIVED OF ANY BENEFITS WHICH OTHERWISE WERE AVAILABLE TO IT UNDER SECTION 11 OR SECTION 12 . THIS CERTAINLY IS NOT THE LEGISLATIVE INTENTION AS REFLECTED IN THE SCHEME LAID DOWN IN SECTIONS 11 , 12 , 12A , 12AA AND 13 . ON THE CONTRARY, THE PHRASEOLOGY OF SECTION 13 , AS AL READY DISCUSSED, MAKES IT EXPLICITLY CLEAR THAT THE SAID PROVISIONS BECOME OPERATIVE OR RELEVANT ONLY AT THE STAGE OF ASSESSMENT WHEN THE AO IS REQUIRED TO EXAMINE THE CLAIM OF THE ASSESSEE FOR BENEFITS UNDER SECTION 11 OR SECTION 12 WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF THE RELEVANT PREVIOUS YEAR. THE APPLICATION OF SECTION 13 THUS FA LLS WITHIN THE EXCLUSIVE DOMAIN OF THE AO AND THE PROVISIONS CONTAINED THEREIN CAN BE INVOKED BY HIM WHILE FRAMING THE ASSESSMENT AND NOT BY THE CIT WHILE CONSIDERING THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA . ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 46 8. KEEPING IN VIEW THE REASONS GIVEN ABOVE, WE ARE OF THE VIEW THAT THE ACTION OF THE LEARNED D.I.(EXEMPTION) IN REFUSING TO GRANT REGISTRATION TO THE ASSESSEE TRUST ON THE GROUND OF VIOLATION OF THE PROVISIONS OF SECTION 13(1)(B) WAS NOT JUSTIFIED ESPECIALLY WHEN HE HAD NOT DOUBTED EITHER THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST OR THE NATURE OF ITS OBJECT BEING CHARITABLE. IN THAT VIEW OF THE MATTER, WE SET ASIDE HIS IMP UGNED ORDER AND DIRECT THAT REGISTRATION APPLIED FOR BY THE ASSESSEE TRUST UNDER SECTION 12A BE GRANTED TO IT. FURTHER, THE HONBLE ALLAHABAD HIGH COURT FIFTH GENERATION EDUCATION SOCIETY VS. CIT, [19 90] 185 ITR 634 (ALL) , HELD AS UNDER : - A READING OF SECTION 12A OF THE INCOME - TAX ACT, 1961, SHOWS THAT REGISTRATION UNDER THE SECTION IS A PRECONDITION FOR AVAILING OF THE BENEFIT UNDER SECTIONS 11 AND 12. SECTION 11 PROVIDES FOR EXEMPTION OF INCOME WHI CH IS APPLIED FOR CHARITABLE PURPOSES. SECTION 12 IS IN THE NATURE OF AN EXPLANATION TO SECTION 11. BEFORE A PERSON CAN CLAIM THE BENEFIT OF SECTION 11 OR SECTION 12, AS THE CASE MAY BE, HE MUST OBTAIN REGISTRATION UNDER SECTION 12A. THE APPLICATION FOR RE GISTRATION UNDER SECTION 12A HAS TO BE MADE IN FORM NO. 10A PRESCRIBED BY RULE 17A OF THE INCOME - TAX RULES, 1962, BEFORE THE EXPIRY OF ONE YEAR FROM THE DATE OF CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, WHICHEVER IS LATER. IT HAS TO BE MADE BY THE PERSON IN RECEIPT OF THE INCOME OF THE TRUST. AT THAT STAGE, THE COMMISSIONER IS NOT REQUIRED TO EXAMINE THE APPLICATION OF INCOME. ALL THAT HE MAY EXAMINE IS WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 12A R EAD WITH RULE 17A OF THE INCOME - TAX RULES, 1962, AND WHETHER FORM NO. 10A HAS BEEN PROPERLY FILLED UP. HE MAY ALSO SEE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT. . IN VIEW OF THE ABOVE, WE FIND THAT , AS IN THE INSTANT CASE, IT IS ADMITTED IN THE IMPUGNED ORDER THAT THE OBJECTS OF THE ASSESSEE SOCIETY ARE CHARITABLE IN NATURE AND IN ABSENCE OF POINTING OUT ANY SPECIFIC ACTIVITIES OF THE ASSESSEE SOCIETY WHICH WERE NOT GENUINE, IN OUR CONSIDERED VIEW, REJECTION OF APPLICATION FOR REGISTRATION U/ S.12AA OF THE ACT ON THE GROUND OF DIVERSION OF FUNDS FOR THE BENEFIT OF EXECUTIVES OF THE ASSOCIATION IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT IS NOT JUSTIFIED. THE VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT IS A MATTER WHICH IS TO ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 47 BE LOOKED INTO BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENT AFTER GRANT OF REGISTRATION U/S.12AA OF THE ACT AND THE ASSESSING OFFICER HAS TO ACT AS PER THE PROVISIONS OF LAW. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(E) AND DIRECT HIM TO GRAN T REGISTRATION TO THE ASSESSEE SOCIETY U/S.12AA OF THE ACT. THUS, THIS APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.210/CTK/2016 (AY : 2011 - 2012) 7. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1. THAT THE ORDER PASSED BY THE LEARNED CIT( A), CUTTACK BY CONFIRMING THE ORDER OF THE LEARNED A.0 IS HIGHLY ILLEGAL, ARBITRARY, BAD IN LAW, WITHOUT ANY BASIS, CONTRARY TO FACTS & CONTRARY TO WEIGHT OF EVIDENCE ON RECORD AND THEREFORE IS LIABLE TO BE QUASHED AND/OR ANNULLED. 2. THAT LEARNED CIT(A ), CUTTACK HAS ERRED IN LAW AND IN FACT AND ACTED IN THE MOST UNJUSTIFIED MAN N ER BY DENYING THE EXEMPTION U/S 11 OF THE I.T. ACT WHEN THE IMPUGNED MATTER OF GRANTING THE REGISTRATION U/S 12A IS PENDING BEFORE THE LEARNED CIT, EXEMPTIONS AND THE SAID DENIAL BY THE LEARNE D CIT(A), CUTTACK IS ILLEGAL AND WITHOUT JU RI SDICTION AND THEREFORE IS LIABLE TO BE QUASHED AND/OR ANNULLED. 3. THAT LEARNED CIT(A), CUTTACK HAS ERRED IN LAW AND IN FACT AND ACTED IN THE MOST UNJUSTIFIED MANNER BY CONFIRMING THE ENTIRE ASS ESSMENT ORDER WHICH DESERVES TO QUASHED AND THE RETURNED INCOME DESERVES TO BE ACCEPTED ON THE GROUND THAT, THERE CANNOT BE ANY ADDITION OF RS.23,66,813/ - RECEIVED TOWARDS CORPUS FUND BY THE APPELLANT A CAPITAL RECEIPT AS IT CANNOT CHANGE ITS CHARACTER AND BECOMES REVENUE ON WHIMS & WISHES OF THE AUTHORITIES. 4. THAT THE LEARNED CIT(A), CUTTACK HAS ERRED IN LAW AND IN FACT BY CONFIRMING THE ADDITION MADE BY THE AO AMOUNTING TO RS.23,66,17,813/ - TO THE TOTAL INCOME TOWARDS REVENUE RECEIPT DESERVES TO BE D ELETED ON THE GROUND THAT, CORPUS FUND IS A GRANT A DONATION A CAPITAL IN NATURE BE ASSESSED AS INCOME. 5. THAT, THE APPELLANT CRAVES TO ADD/ALTER/AMEND FURTHER GROUNDS, IF ANY, AT TIME OF HEARING OF APPEAL. 8. THE APPEAL FILED BY THE ASSESSEE IS BARR ED BY LIMITATION OF 5 DAYS. THE ASSESSEE HAS FILED CONDONATION PETITION AND AFTER GOING THROUGH THE ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 48 SAME, WE FIND THAT THE ASSESSEE HAD REASONABLE CAUSE FOR FILING THE APPEAL BELATEDLY BEFORE THE TRIBUNAL. LD.DR HAD NO OBJECTION IN CONDONING THE DELAY OF 5 DAYS IN FILING THE APPEAL BY THE ASSESSEE. THEREFORE, WE CONDONE THE DELAY OF 5 DAYS AND APPEAL IS ADMITTED FOR HEARING. 9. AT THE TIME OF HEARING, BOTH PARTIES AGREED THAT THE APPEAL OF THE ASSESSEE WAS DISMISSED ON THE GROUND THAT THE ASSESSEE WAS NOT HAVING REGISTRATION U/S.12AA OF THE ACT, AND, THEREFORE, CANNOT BE ALLOWED THE CLAIM OF EXEMPTION OF INCOME FROM INCOME TAX U/S.11 AND 12 OF THE ACT. WHILE DECIDING THE APPEAL OF THE ASSESSEE AGAINST THE REFUSAL TO GRANT REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE SOCIETY, WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE AND DIRECTED THE CIT(E) TO GRANT REGISTRATION TO THE ASSESSEE U/S.12AA OF THE ACT. IN VIEW OF OUR ABOVE FINDING, THIS APPEAL IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER TO FRAME THE AS SESSMENT OF THE ASSESSEE SOCIETY AFRESH IN THE LIGHT OF REGISTRATION GRANTED TO THE ASSESSEE SOCIETY U/S.12AA OF THE ACT. THUS, THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 10 . IN THE RESULT, ITA NO. 335/CTK/2017 IS ALLOWED AND ITA NO. 21 0/CTK/2016 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 / 1 2 /201 7 . SD/ - ( PAVAN KUMAR GADALE ) SD/ - (N. S. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 26 / 12 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY ITA NO.335/CTK/2017 & ITA NO.210/CTK/2016 49 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - ORISSA CRICKET ASSOCIATION BARABATI STADIUM, CUTTACK - 753001, ODISHA 2. / THE RESPON DENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//