ACIT(E), circle-1(1), New Delhi V. Delhi & District Circket Association, New Delhi

ITA 243/DEL/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7782 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 09-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Depreciation; Charitable institution
• Section: 40A(3); 12A; 201; 12; 11

Judgement Text

1 ITA NO. 243/DEL/2018 IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBE R AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 243/DEL/2018 ( A. Y 2013-14) (THROUGH VIDEO CONFEREN CING) ACIT (E) E-2, BLOCK PRATYAKASH KAR BHAWAN, DR. SHYAMA PRASAD MUKHERJEE CIVIC CENTRE, NEW DELHI (APPELLANT) VS DELHI & DISTRICT CRICKET ASSOCIATION FEROZSHAH KOTLA GROUND, BAHADURSHAH ZAFAR MARG, NEW DELHI AAATD0828P (RESPONDENT) APPELLANT BY MS. NIDHI SRIVASTAVA, CIT DR RESPONDENT BY SH. VED JAIN, ADV ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 30/10/2017 PASSED BY CIT (A)-40, DELHI FOR ASSESSMENT YEAR 201 3-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- (I) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, LD CIT (A) HAS ERRED IN DIRECTING THE AO TO ALLOW EXEMPTION U/S. 1 1 OF THE ACT PARTICULARLY WHEN THE ASSESSEE HAS SHOWN RECEIPTS FROM SPONSORSH IP INCOME, SALE OF LIQUOR, INCOME FROM CORPORATE BOXES AND SALE OF TIC KETS WHICH ARE PURELY COMMERCIAL IN NATURE. (II) ON THE FACTS & IN CIRCUMSTANCES OF THE CASE A ND IN LAW, LD CIT (A) HAS ERRED IN TREATING PRIOR PERIOD EXPENSES AND PROVISI ONS FOR GRATUITY AND LEAVE DATE OF HEARING 27.08.2020 DATE OF PRONOUNCEMENT 28.08.2020 2 ITA NO. 243/DEL/2018 ENCASHMENT AS CONSEQUENTIAL TO ALLOWING EXEMPTION T O THE ASSESSEE IGNORING THE FACT THAT SUCH EXPENSES ARE NOT INCURRED DURING THE YEAR AND CANNOT BE TREATED AS APPLICATION OF INCOME. 3. THE ASSESSEE IS A COMPANY REGISTERED U/S 25 OF T HE COMPANIES ACT, 1956 WITH AN OBJECT TO ENCOURAGE AND PROMOTE THE GAME OF CRICKET. THE SOCIETY WAS REGISTERED U/S 12A VIDE ORDER DATED 6/3/1997. THE REGISTRATION WAS WITHDRAWN WITH EFFECT FROM 1/4/2009 FOR ASSESSMENT YEAR 2009-10 ONWARDS VIDE ORDER DATED 21/5/2012. THE TRIBUNAL VIDE ORDE R DATED 13/1/2015 IN ITA NO. 3095/DEL/2015 QUASHED THE ORDER OF WITHDRAWAL O F REGISTRATION U/S 12A. IN THE MEANWHILE, THE RETURN OF INCOME DECLARING NI L INCOME WAS FILED ON 7/2/2014 FOR THE PRESENT ASSESSMENT YEAR BY THE ASS ESSEE. DURING THE ASSESSMENT PROCEEDINGS, THE ACTIVITIES WERE EXAMINE D WITH REFERENCE TO THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT. TH E ASSESSING OFFICER DENIED EXEMPTION U/S 11 MAINLY ON THE GROUND THAT THE ASSE SSEE IS INVOLVED IN BUSINESS ACTIVITIES AS PER THE PROVISO OF SECTION 2 (15). SINCE, THE ASSESSEE RECEIVES SPONSORSHIP FEE, CASUAL MEMBERSHIP FEE, RE NT FROM THE GROUND, COLLECTION FROM THE HEALTH CLUB, TICKET SALE FROM P UBLIC AND THE CORPORATE HOUSES, RESTAURANT AND TELECASTING RIGHTS FEES ETC AND THAT THESE ACTIVITIES ARE COMMERCIAL IN NATURE. PROVISIONS OF THE PROVISO TO SECTION 2(15) WERE INVOKED DURING THE ASSESSMENT YEARS 2009-10, 2010-11, 2011 -12 & 2012-13. RELYING ON THE AMENDED DEFINITION OF CHARITABLE PURPOSE, TH E ASSESSING OFFICER WAS OF THE VIEW THAT THE AMENDED DEFINITION IT IS CLEAR TH AT PROMOTION OF SPORTS CARRIED OUT BY THE SPORTS ASSOCIATION LIKE CRICKET ASSOCIATIONS FALLS IN THE CATEGORY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENE RAL PUBLIC UTILITY CAN BE REGARDED AS A CHARITABLE ACTIVITY ONLY IF IT DOES I NVOLVE ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS FOR CESS OR FEE OR A NY OTHER CONSIDERATION WHATSOEVER OF THE NATURE OF USE OR APPLICATION OR R ETENTION OF INCOME FROM SUCH ACTIVITIES. BENEFITS OF EXEMPTION UNDER SECTI ONS 11 & 12 WAS DENIED AND ONLY DEPRECIATION ON ASSETS PURCHASE TILL FINANCIAL YEAR 2009-10 AND ONWARDS WERE ALLOWED. FURTHER, EXPENDITURE INCURRED IN CAS H WAS DISALLOWED U/S 3 ITA NO. 243/DEL/2018 40A(3) BY THE ASSESSING OFFICER AND ADVANCE WERE A LSO MADE ON ACCOUNT OF TREATING MEMBERSHIP FEE SHOWN AS RECEIPT IN CORPUS FUND AS BEING REVENUE IN NATURE AS WELL AS DISALLOWANCE WAS MADE IN RESPECT OF PRIOR PERIOD EXPENSES PROVISIONS FOR GRATUITY AND LEAVE ENCASHMENT. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND SUBMITTED THAT THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW EXEMPTION U/S 11 OF THE ACT PARTICULARLY WHEN THE ASSESSEE HAS SHOWN RE CEIPTS FROM SPONSORSHIP FEE, INCOME OF CORPORATE HOUSES AND SALE OF TICKETS WHICH ARE PURELY COMMERCIAL IN NATURE. THE LD. DR FURTHER SUBMITTED THAT THE CIT(A) ALSO ERRED IN TREATING PRIOR PERIOD EXPENSES, PROVISIONS FOR G RATUITY AND LEAVE ENCASHMENT AS CONSEQUENTIAL TO ALLOWING EXEMPTION TO THE ASSES SEE IGNORING THE FACT THAT SUCH EXPENSES ARE NOT INCURRED DURING THE YEAR AND CANNOT BE TREATED AS APPLICATION OF INCOME. 6. THE LD. AR SUBMITTED THAT THE CIT(A) HAS CATEGOR ICALLY ALLOWED THE APPEAL OF THE ASSESSEE IN LIGHT OF THE TRIBUNALS D ECISION OF QUASHING THE ORDER OF WITHDRAWAL OF REGISTRATION U/S 12A IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10. THEREFORE, THE CIT(A) WAS RIGHT IN AL LOWING THE APPEAL IN THAT RESPECT AND CORRECTLY DIRECTED THE ASSESSING OFFIC ER TO ALLOW EXEMPTION U/S 11 OF THE ACT WITH ALL CONSEQUENTIAL BENEFITS. THE LD. AR, THEREFORE, SUBMITTED THAT APPEAL OF THE REVENUE DOES NOT SUSTAINABLE. 7. THE LD. DR IN REJOINDER SUBMITTED THAT THE TRIBU NAL VIDE ORDER DATED 30 TH JANUARY, 2015 HAS QUASHED THE ORDER OF THE WITHDRAW AL OF REGISTRATION U/S 12A OF THE ACT. THEREFORE, THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW EXEMPTION U/S 11 WITH ALL CONSEQUENTIAL BENE FITS. 4 ITA NO. 243/DEL/2018 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. BOTH THE PARTIES I.E. THE LD. AR AND THE L D. DR HAVE SUBMITTED THAT THE CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFIC ER TO ALLOW EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 TAKING COGNIZANCE OF TRIBUNALS DECISION FOR QUASHING THE WITHDRAWAL OF REGISTRATION U/S 12A OF THE ACT. IN LIGHT OF THIS, THE APPEAL FILED BY THE REVENUE DOES NOT SURVIVE ON MERIT. THUS, THE CIT(A) HAS RIGHTLY ADJUDICATED THE APPEAL OF THE ASSESSEE AND PARTLY ALLOWED THE SAME. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE, THE APPEAL OF THE REVENUE IS DISMISSED. 9. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28TH D AY OF AUGUST, 2020 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 28/08/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 243/DEL/2018 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER