M/s. Gujarat Cricket Association, Ahmedabad V. The Dy. CIT, Exemptions, Circle-1, Ahmedabad

ITA 2589/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6543 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 22-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA A GARWAL
• Assessee Lawyers: M K PATEL
• Keywords: Business income; Depreciation; Charitable institution; Retrospective amendment; Benefit of exemption; Unabsorbed depreciation; Capital expenditure
• Section: 143(3); 12AA; 205; 12; 10; 11

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER &MS. MADHUMITA ROY, JUDICIAL MEMBER ./I.T.A. NO. 2589/AHD/2017 ( / ASSESSMENT YEAR : 2014-15) M/S. GUJARAT CRICKET ASSOCIATION IIND FLOOR, AKSHAR ARCADE, OPP. MEMNAGAR FIRE STATION, NR. VIJAY CHAR RASTA, AHMEDABAD- 380015 / VS. DCIT, EXEMPTIONS, CIRCLE-1, AHMEDABAD ./ ./PAN/GIR NO. : AAA AG1 205 C ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : M. K. PATEL, AR / RESPONDENTBY: APARNA AGARWAL, CIT DR ! /DATE OFHEARING 20/03/2019 '# ! / DATE OF PRONOUNCEMENT 30/04/2019 $% /O R D E R PER AMARJIT SINGH - AM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE FOR A.Y. 2014-15, ARISE FROM ORDER OF THE CIT(A)-9, AHMEDABAD DATED 07.09.2017, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHOR T THE ACT. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE LD. A.O. HAS ERRED IN LAW AND ON FACTS IN A PPLYING PROVISO TO SECTION 2(15) AND THAT ASSESSEE IS ENGAGED IN ACTIVITY IN T HE NATURE OF BUSINESS AND CONSEQUENTLY SECTION 13(8) OF INCOME TAX ACT, 1961 AND THEREBY REJECTING THE APPLICABILITY OF SECTION 11 AND 12 CLAIMED BY THE A SSESSEE AND THE HONBLECIT(APPEALS) HAS ERRED IN CONFIRMING THE DEC ISION OF LEARNED A.O. 2. THE LEARNED A.O. AND HONBLE CIT(APPEALS) HAVE E RRED IN LAW AND ON FACTS IN REJECTING THE ASSESSEES CLAIM THAT IT IS ENGAGED I N EDUCATION AND HENCE THE PROVISION OF PROVISO TO SECTION 2(15) AND SECTION 1 3(8) ARE NOT APPLICABLE. ITA NO. 2589/AHD/2017 A.Y. 2014-15 2 3. (I) THE LEARNED A.O. AND HONBLE CIT(APPEALS) HA VE ERRED IN LAW AND IN FACTS IN REJECTING THE ASSESSEES CLAIM THAT VARIOUS AMOU NTS RECEIVED FROM BCCI, ARE CORPUS DONATIONS WHICH HAVE BEEN CREDITED AS CAPITA L RECEIPTS AND HOLDING THAT IT IS AN INCOME RECEIVED FROM BCCI. (II) THE LEARNED A.O. AND HONBLE CIT(APPEALS) HAV E ERRED IN LAW AND ON FACTS IN REJECTING THE ABOVE CLAIM OF CORPUS DONATI ONS EVEN THOUGH THE LEARNED A.O. IN THE CASE OF BCCI HAS HELD THAT THE AMOUNTS PAID TO VARIOUS STATE CRICKET ASSOCIATIONS IN THE FORM OF T.V. RIGHTS, IPL SUBSIDY ETC. IS A V OLUNTARY PAYMENT BY BCCI AND WHEN SUCH DISTRIBUTION BY BCCI HAS NOT BEEN GRANTED AS A DEDUCTION TO BCCI BY ITS A.O. (III) ALTERNATIVE GROUND OF APPEAL: THE LEARNED A.O. AND HONBLE CIT(APPEALS) HAV E ERRED IN LAW AND ON FACTS IN REJECTING THE CLAIM OF ASSESSEE THAT WHEN EXEMPT ION U/S. 11 AND 12, IS NOT GRANTED TO ASSESSEE BY APPLYING PROVISO TO SECTION 2(15) AN D SECTION 13(8), THE AMOUNTS PAID BY BCCI BEING NOT CONTRACTUAL PAYMENTS I.E. VOLUNTA RY PAYMENT, THESE RECEIPTS ARE NOT INCOME AS DEFINED IN SECTION 2(24) OF INCOME TA X ACT, 1961. 4. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW A ND IN FACTS IN NOT ALLOWING THE SET OFF BROUGHT FORWARD DEFICIT AS CLAIMED VIDE NOT E NO. 18 IN THE STATEMENT OF INCOME AND HON. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NO T ACCEPTING THE CLAIM OF THE ASSESSEE, WITHOUT ANY DISCUSSION ON THE POINT BY LE ARNED ASSESSING OFFICER AND HON. CIT(A). 5. THE LEARNED ASSESSING OFFICER AND HON. CIT(A) HA VE ERRED IN LAW AND ON FACTS IN MODIFYING THE INCOME FROM GCA CLUB HOUSE VIS-A-V IS MUTUAL INCOME AND OTHER INCOME AND ALSO APPLYING PROVISIONS OF SEC. 13(1)(C ) R.W.S 13(3) AND FORFEITING THE CLAIM OF EXEMPTION. 6. THE LEARNED A.O. HAS ERRED IN LAW AND ON FACTS I N NOT ALLOWING THE CAPITAL EXPENDITURE AS AN EXPENDITURE TOWARDS OBJECTS OF TR UST WHICH IS SUPPORTED BY VARIOUS DECISIONS OF HONOURABLE HIGH COURT AND HON. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE SAID CLAIM OF THE ASSESSEE. 7. THE LEARNED A.O. HAS ERRED IN LAW AND ON FACTS I N NOT ALLOWING 15% OF INCOME AS PER PROVISIONS OF SEC. 11 OF THE ACT AND HON. CI T(A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE CLAIM OF THE ASSESSEE. 8. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW A ND ON FACTS IN CHARGING INTEREST U/S. 234(A) FOR FOUR MONTHLY INSTEAD OF TW O MONTHS AND HON. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE SAME. 9. THE ASSESSEE CLAIMS LEAVE TO ADDUCE, ALTER AND/O R SUBMIT ANY/FURTHER GROUNDS OF APPEAL 3. THE BRIEF FACT OF THE CASE IS THAT RETURN OF INC OME DECLARING LOSS OF RS. 2,04,49,151/- WAS FILED ON 30.09.2014. SUBSEQUENTL Y, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 18.09.2015. ITA NO. 2589/AHD/2017 A.Y. 2014-15 3 4. THE ASSESSEE IS A TRUST ENGAGED ON PROMOTING THE GAME OF CRICKET IN THE STATE OF GUJARAT. THE MAIN OBJECT OF ASSESSEE TRUS T ARE TO PROMOTE, CONTROL, SUPERVISE, REGULATE OR ENCOURAGE, PROMOTE AND DEVEL OP THE GAMES OF CRICKET IN ALL TYPES OF CATEGORY. THE ASSESSEE TRUST IS REGIS TERED U/S. 12AA OF THE ACT VIDE ORDER NO. DIT(E)/12AA/806/02-03. THE TRUST HAS BEE N GRANTED EXEMPTION U/S. 80G(5) OF THE ACT BY THE DIT(E), AHMEDABAD VIDE ORD ER DATED 29.10.2009 VALID FROM 01.04.2009 ONWARDS. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAS OBSERVED THAT ASSESSEE HAD EARNED INCOME OUT OF SALE OF TICKETS, SALE OF SPACE, A/C CABIN TICKET, RENT OF GROUND ETC. OUT OF THE CRICKET MATC HES CONDUCTED AT THE GROUNDS OF GUJARAT CRICKET ASSOCIATION (GCA) AT AHMEDABAD. THEREFORE, THE AO WAS OF THE VIEW THAT GUJARAT CRICKET ASSOCIATION (GCA) WAS INVOLVED IN CARRYING ON THE ACTIVITY OF ADVANCEMENT OF OTHER OBJECTS OF GE NERAL PUBLIC UTILITY AND SUCH ACTIVITY WAS IN THE NATURE OF TRADE, COMMERCE OR BU SINESS. THE AO HAS ALSO REFERRED CBDT CIRCULAR NO. 395 DATED 24.09.1984, WH EREIN IT WAS HELD THAT PROMOTIONS OF SPORTS AND GAME IS ADVANCEMENT OF OB JECTS OF GENERAL PUBLIC UTILITY. THEREFORE, THE AO HAS ISSUED SHOW-CAUSE TO THE ASSESSEE TO EXPLAIN BY ITS ACTIVITIES WERE NOT COVERED BY THE PROVISO 1 & 2 OF SECTION 2(15) OF THE ACT. THE ASSESSEE HAS EXPLAINED THAT IT HAS BEEN ENGAGED IN THE FIELD OF EDUCATION THE DETAIL REPLY OF THE ASSESSEE IS REPRODUCED AS UNDER :- I.SECTION 2(15) : PROVISO : PARA 1TO 7 OF NOTICE DT . 13.12.2016) IT HAS BEEN STATED IN YOUR HONOURS NOTICE UNDER RE FERENCE IN THE ABOVE PARAGRAPHS THAT OUR ACTIVITIES ARE IN THE NATURE OF GENERAL PU BLIC UTILITY. WE ARE REQUESTED TO SHOW CAUSE AS TO WHY YOUR ACTIVITIES ARE NOT COVERE D BY FIRST AND SECOND PROVISO OF SEC. 2(15) OF THE I.T. ACT, 1961 AND THEREFORE WHY DEDUCTION CLAIMED U/S. 11 AND 12 MAY NOT BE DISALLOWED. IN RESPECT OF THE ABOVE OUR SUBMISSIONS ARE AS FOLL OWS: 1. WHETHER THE ASSESSEE IS ENGAGED IN THE FIELD OF ED UCATION? 1.1 THE ASSESSEE IS ENGAGED IN(I) PROVIDING INFRAST RUCTURE FOR THE GAME OF CRICKET; (II) EDUCATION FOR CRICKETERS FOR LEARNING INTRICACIES O F GAME OF CRICKET BY PLAYING MATCHES AND RUNNING A COACHING ACADEMY FOR TEACHING THE FIN ER ASPECTS OF THE GAME TO THE ITA NO. 2589/AHD/2017 A.Y. 2014-15 4 BUDDING CRICKETERS. THE ASSESSEE CARRIES OUT VARIO US ACTIVITIES FOR THE SOLE PURPOSE OF DEVELOPMENT OF THE GAME OF CRICKET IN GUJARAT. ITS ACTIVITIES SPAN THE ENTIRE YEAR IN THE CONDUCT OF CRICKET EDUCATION AND PROMOTION RELA TED ACTIVITIES. 1.2 THE ASSESSEE EMPLOYED VARIOUS RENOWNED PLAYERS AND UMPIRES FOR T HE PURPOSES OF IMPARTING KNOWLEDGE AND SKILLS TO BUDDING PLAYERS. THESE COA CHES/TRAINERS ARE PAID FEES FOR IMPARTING THE PRACTICAL ASPECTS OF THE GAME. 1.3 THE ASSESSEE WISHES TO SUBMIT THAT SECTION 2(15 ) OF THE ACT DEFINES CHARITABLE PURPOSE TO INCLUDE RELIEF OF THE POOR, EDUCATION, M EDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILD LIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTO RIC INTEREST AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 1.4 THE FIELD OF EDUCATION HAS EVOLVED AND GROWN BY LEAPS AND BOUNDS. THE NORMAL CONNOTATION OF THE TEAM EDUCATION CANNOT BE RESTR ICTED TO THE SCHOLASTIC EDUCATION AS ENUNCIATED BY THE APEX COURT IN THE CASE OF SOLE TRUSTEE, LOKSHIKHSANA TRUST V. CIT [101 ITR 234(SC)]. TO PUT IT IN THE WORDS OF H OUSE OF LORDS IN THE CASE OF IRC VS. MCMULLEN, [54 TC 413 (19860] THE EDUCATION MAN S IDEAS ABOUT EDUCATION ARE NOT STATIC, BUT ARE MOVING AND CHANGING. IN TAHT CASE THE HOUSE OF LORDS HELD THAT A TRUST CREATED TO ENCOURAGE THE PUPILS OF SCHOOLS AND UNIV ERSITIES TO PLAY GAMES AND SPORTS AND THEREBY GIVE DUE ATTENTION TO THEIR PHYSICAL ED UCATION AND DEVELOPMENT WAS ONE FOR THE ADVANCEMENT OF EDUCATION [SOURCE: THE LA W AND PRACTICE OF INCOME TAX BY KANGA, PALKHIVALA&VYAS VOLUME 1 (PAGE 532 9 TH EDITION)]. 1.5 IN ITS FINAL REPORT (SEPTEMBER 1978) THE DIRECT TAX LAWS COMMITTEE HS OBSERVED AS UNDER WITH REGARD TO THE MEANING OF THE TERM ED UCATION: THE EXPRESSION EDUCATION IS USED IN THE INCOME T AX ACT WHILST DEFINING EXPRESSION CHARITABLE PURPOSE IN SECTION 2(15). IT ALSO APP EARS AT OTHER PLACES IN THE INCOME TAX ACT, PARTICULARLY IN SOME OF THE EXEMPTION PROV ISIONS. THE SCOPE OF THE TERM EDUCATION HAS COME UP FOR DISCUSSION BY THE SUPRE ME COURT IN THE CASE OF SOLE TRUSTEE, LOKASHIKSHANA TRUST V CIT. THE OBSERVATIO NS OF ONE OF THE JUDGES KHANNA J. WITH WHOM GUPTA J GENERALLY CONCURRED WAS TAHT EDUC ATION IN THE CONTEXT OF SECTION 2(15) CONNOTES THE PROCESS OF TRAINING AND DEVELOPI NG THE KNOWLEDGE, SKILL; MIND AND CHARACTER OF THE STUDENTS BY NORMAL SCHOOLING. IN OTHER WORDS, IT IS LIMITED TO SCHOLASTIC INSTRUCTION AND DOES NOT EXTENT TO EVERY ACQUISITION OF FURTHER KNOWLEDGE WHATEVER BE THE MEDIUM FOR SUCH ACQUISITION. THE WORD EDUCATION IN THE CONTENT OF CHARITABLE P URPOSE HAS BEEN USED FOR SEVERAL DECADES AND HAS BEEN WIDELY CONSTRUED SINCE THE BEG INNING OF THE PREVIOUS CENTURY. IT HAS ALWAYS BEEN UNDER STOOD AS NOT BEING LIMITED WITHIN AN UNDULY NARROW AMBIT AND EXTENDING MUCH BEYOND THE NARROW COMPASS OF MER E SCHOLASTIC INSTRUCTION. THE QUESTION AS TO THE EXTENT OF THE AREA COVERED BY ED UCATION WOULD NATURALLY BE DECIDED BY THE COURT IN EACH CASE BUT IT WELL SETTLED LAW I N INDIA AND ENGLAND FOR SEVERAL DECADES THAT THE WORD IS NOT LIMITED IN ITS CHARACT ER TO MERE SCHOLASTIC INSTRUCTIONS. THE CONCEPT OF EDUCATION AS EXPLAINED IN THE OBSERV ATIONS OF KHANNA J ARE NOT SUPPORTED BY ANY JUDGMENT OF THE SUPREME COURT OF I NDIA OR THE APPELLATE COURTS IN ENGLAND. THE COURT OF APPEAL IN ENGLAND HAS IN THE CASE OF INCORPORATED COUNCIL OF LAW REPORTING FOR ENGLAND AND WALES V ATTORNEY GENE RAL, SUFFICIENTLY DEALT WITH THE SCOPE OF THE WORD EDUCATION AND THE SUPREME COURT HAS NOT EXPRESSED ANY DISSENT FROM THAT CASE NOT IS IT, REFERRED TO IN THE JUDGME NT. AS THE ISSUE OF WHAT CONSTITUTES EDUCATION GENERALLY, AS OPPOSED TO THE ISSUE WHETHE R THE ACTIVITIES IF THAT ITA NO. 2589/AHD/2017 A.Y. 2014-15 5 PARTICULARTRUST CONSTITUTED EDUCATION WAS NOT BEFOR E THE SUPREME COURT, THE OBSERVATIONS CANNOT BE CONSTRUED AS LAYING DOWN THE LAW ON WHAT CONSTITUTES EDUCATION GENERALLY IN THE CONTEXT OF CHARITABLE PURPOSE. WE THEREFORE, RECOMMENDED THAT AN EXPLANATORY DEFIN ITION OF THE TERM EDUCATION SHOULD BE INTRODUCED WITH RETROSPECTIVE OPERATION TO THE EFFECT THAT EDUCATION SHALL NOT BE RESTRICTED TO SCHOLASTIC IN STRUCTION ONLY. SINCE IT WOULD BE PURELY CLARIFICATORY AMENDMENT, IT IS APPROPRIATE T HAT IT SHOULD BE ENACTED WITH RETROSPECTIVE EFFECT AS FROM THE COMMENCEMENT OF TH E ACT. [EMPHASIS SUPPLIED] 1.6 THE TERMS EDUCATION AND SCHOOLING ARE BEING ERRONEOUSLY CONSIDERED SYNONYMOUS. EDUCATION IS MUCH WIDE IN ITS SPECTRUM . TO BELIEVE THAT EDUCATION AND SCHOOLING ARE THAT SAME IS IGNORANCE. MARK T WAIN SAID I HAE NEVER LET MY SCHOOLING INTERFERE WITH MY EDUCATION SCHOOLING IS ONE OF THE MEANS OF EDUCATION AND NOT THE ONLY MEANS. THEY CAN NEVER MEAN THE SA ME. THE CONCEPT THAT EDUCATION ONLY MEANS LITERACY HAS BEEN CONSTANTLY REDEFINED. EDUCATION IS NO MORE A THEORETICAL TEXT BOOK KNOWLEDGE. IT HAS EVOLVED OV ER A PERIOD OF TIME. EDUCATION COULD ASSUME VARIOUS SHADES IT COULD BE ACADEMIC, V OCATIONAL, PHYSICAL, THEORETICAL, ECONOMICAL ETC. TO PIN DOWN THE SCOPE OF EDUCATIO N ONLY TO SCHOLASTIC OR ACADEMIC PURPOSE IS NOT APPROPRIATE. 1.7 THE ASSESSEE IS ENGAGED IN THE DEVELOPMENT OF T HE GAME OF CRICKET. THIS GAME IS NOT MERELY A PLEASURE GAME TODAY. THE EVER GROWING POPULARITY OF CRICKET IN INDIA HAS CHANGED THE SCENARIO COMPLETELY. CRICKET IS NO W BEING PURSUED AS A CAREER. THIS IS EVIDENCED THROUGH THE INCREASING NUMBER OF CRICK ET COACHING INSTITUTES AND SUMMER CAMPS WHICH ARE SEEN EVERY NOOK AND CORNER OF THE C OUNTRY. THIS BEING THE CASE IT IS A FORM OF EDUCATION GIVEN TO THOSE INDIVIDUALS WHO WISH PURSUE THIS GAME AS THEIR PROFESSION OR CAREER. 1.8 CRICKET COACHING IS A SUBJECT OF PHYSICAL EDUCA TION. THE GUJARAT STATE EDUCATION BOARD HAVE A SUBJECT IN THEIR SYLLABUS AND A STUDEN T CAN OPT FOR THE SAME, AS ONE OF THE QUALIFYING SUBJECT, FOR PASSING IN THE BOARD EX AMS. 2. WHETHER THE ASSESSEE IS A CHARITABLE INSTITUTION BEING ENGAGED IN ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY? 2.1 WITHOUT PREJUDICE TO OUR SUBMISSION ABOVE, THE ASSESSEE WISHES TO SUBMIT THAT IT IS ENGAGED IN THE ACTIVITY THAT IS TO BE TREATED AS AD VANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY. THE ASSESSEE IS COVERED WITHIN THE LAST LIMB OF THE DEFINITION OF CHARITABLE PURPOSE U/S. 2(15) WHICH INCLUDE ADVANCE MENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THOUGH PROMOTION OF GAMES LIKE CRICKET MAY NOT BE ADVANTAGEOUS TO THE ENTIRE MANKIND, THE PROMOTION O F CRICKET IS ADVANTAGEOUS TO A SECTION OF THE SOCIETY WHICH PLAYS, FOLLOWS AND ENJ OYS IT. THIS HAS BEEN ACKNOWLEDGED BY CIRCULAR NO. 395 DATED 24.9.1984 ISSUED BY THE C ENTRAL BOARD OF DIRECT TAXES. 2.2 THE, PROMOTION AND DEVELOPMENT OF GAME OF CRICK ET IS RECOGNISED AS A CHARITABLE PURPOSE FALLING UNDER THE FOURTH LIMB OF SECTION 2( 15). THE DECISION OF CRICKET ASSOCIATION OF BENGAL V CIT (1959) 37 ITR 277 (CAL) AND BARODA CRICKET ASSOCIATIONV ITO (2006) 8 SOT 735 (AHD) BUTTRESS TH IS PROPOSITION. 3. WHETHER THE ASSESSEE IS COVERED WITHIN THE FIRST PROVISO TO SECTION 2(15)? ITA NO. 2589/AHD/2017 A.Y. 2014-15 6 3.1 THE DISPUTE IS WHETHER THE ASSESSEE IS COVERED WITHIN THE, GAMUT OF FIRST PROVISO TO SECTION 2(15) WHICH READS AS UNDER: 'PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYIN G ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR 'APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY''. 3.2 THE AFORESAID PROVISO WAS INSERTED BY FINANCE A CT 2008. THE PROVISO AIMS TO REDUCE THE SCOPE OF SECTION 2(15) BY NARROWING DOWN THE OBJECTS FALLING THEREUNDER. IT SEEKS TO PROVIDE THAT THE OBJECTS FOR ADVANCEMENT O F GENERAL PUBLIC UTILITY INVOLVING ACTIVITY WILL NOT BE CHARITABLE ANY LONGER. THE PRO VISO IS THEREFORE RESTRICTED ONLY TO THE FOURTH LIMB OF SECTION 2(15). THE FIRST THREE L IMBS FIRE -UNAFFECTED BY THE PROVISO. THIS HAS BEEN CLARIFIED BY THE CBDT CIRCULAR NO. 11 OF 2008 DATED09.1223009; THE RELEVANT PORTION OF WHICH READS AS UNDER: 2.) THE NEWLY INSERTED PROVISO TO SECTION 2(15) WIL L NOT APPLY IN RESPECT OF THE FIRST SHREE LIMBS OF SECTION 2(15) I.E. RELIEF OF THE POO R, EDUCATION OR MEDICAL RELIEF, CONSEQUENTLY WHERE THE PURPOSE OF A TRUST OR INSTIT UTION IS RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF, IT WIN CONSTITUTE CHAR ITABLE PURPOSE, EVEN IF IT INCIDENTALLY INVOLVES THE CARRYING ON OF COMMERCIAL ACTIVITIES.' 3.3 AS SUBMITTED EARLIER, THE ASSESSES IS INVOLVED IN CRICKET COACHING AND PROMOTION WHICH IS A FORM OF EDUCATION AND THEREBY QUALIFYI NG ITSELF AS CHARITABLE INSTITUTIONUNDERSECTION2(15). SINCE THE ASSESSEE IS CARRYING ON AN EDUCATIONAL ACTIVITY THE PROVISO TO SECTION 2(15) IS NOT APPLIC ABLE. ALTERNATIVE SUBMISSIONS: 3.4 ASSUMING WITHOUT AD MINING THAT THE ASSESSES IS NOT INVOLVED IN CARRYING OUT EDUCATIONAL ACTIVITIES BUT IS INVOLVED IN ADVANCEME NT OF ANY OTHER ABJECT OF GENERAL PUBLIC UTILITY, THE FOLLOWING SUBMISSIONS ARE MADE WITH REGARD TO APPLICABILITY OF THE AFORESAID PROVISO IN THE PRESENT CASE: 3.5 THE PROVISO WAS INSERTED WITH EFFECT FROM 01.04 .2009. EXPLAINING THE REASON FOR THE SUBSTITUTION OF THE SECTION 2(15), THE FINANCE MINISTER IN HIS BUDGET SPEECH DATED 29.02. 2008 [298 ITR (ST.) 33] STALED UNDER: CHARITABLE PURPOSE, INCLUDES RELIEF OF THE POOR, E DUCATION, MEDICAL RELIEF AND ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THESE ACTIV ITIES ARE TAX EXEMPT, AS THEY SHOULD BE. HOWEVER, SOME ENTITIES CARRYING ON REGULAR TRA DE, COMMERCE OR BIT STRUTS OR PROWLING SERVICES IN RELATION TO ANY TRADE, COMMERC E OR BUSINESS AND EARNING INCOMES HAVE SOUGHT TO CLAIM THAT THEIR PURPOSES WO ULD ALSO FALLUNDER CHARITABLE PURPOSE OBVIOUSLY, THIS WAS NOT THE INTENTION OF P ARLIAMENT AND, HENCE, I PROPOSE TO AMEND THE LAW TO EXCLUDE THE AFORESAID CASES. GENUI NE CHARITABLE ORGANIZATIONS WILL NOT IN ANY WAY BE AFFECTED .' 3.6 FROM THE ABOVE, IT WOULD BE EVIDENT THAT THE PROVISO IS NOT INTENDED TO BE APPLICABLE TO GENUINE CHARITABLE ORGANIZATION , WHICH DO NOT CARRY ON REGULAR TRADE, ITA NO. 2589/AHD/2017 A.Y. 2014-15 7 COMMERCE OR BUSINESS OR RENDERING SERVICE IN RELATI ON TO SUCH TRADE,, COMMERCE OR BUSINESS. 3.7 SIMILARLY THE MEMORANDUM EXPLAINING THE FINANCE BILL, 2008 [298 ITR (ST.) 190] STATES THAT THE PROVISO WILL APPLY TO ENTITIES WHIC H ARE RUN ON COMMERCIAL LINES AND NOT TO OTHER CHARITABLE ORGANIZATIONS. IT STATES: 'STREAMLINING THE DEFINITION OF CHARITABLE PURPOSE SECTION 2(15) OF THE ACT DEFINES CHARITABLE PURPOS E TO INCLUDE RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF A NY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. HE HAS BEEN NOTICED THAT A NUMBER OF ENTITIES OPERA TING ON COMMERCIAL LINES ARE CLAIMING EXEMPTION ON THEIR INCOME EITHER UNDER SEC TION 10(23C) OR SECTION11OFTHEACT ON THE GROUND THAT THEY ARE CHARI TABLE INSTITUTIONS. THIS IS BASED ON THE ARGUMENT THAT THEY ARE ENGAGED IN THE 'ADVANCE MENT OF AN OBJECT OF GENERAL PUBLIC UTILITYAS IS INCLUDED IN THE FOURTH LIMB OF THE CURRENT DEFINITION OF CHARITABLE PURPOSES. SUCH A CLAIM, WHEN MADE IN RESPECT OF AN ACTIVITY CARRIED OUT ON COMMERCIAL LINES, IS CONTRARY TO THE INTENTION OF T HE PROVISION. WITH A VIEW TO LIMITING THE SCOPE OF THE, PHRASE 'A DVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY', IT IS PROPOSED TO AMEND SE CTION 2(15) SO AS TO PROVIDE THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE IF IT INVOLVES THE CARRYING ON O F- (A) ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE O R BUSINESS OR, (B) ANY ACTIVITY OF RENDERING OF ANY SERVICE IN R ELATION TO ANY TRADE, COMMERCEORBUSINESSFOR ANY FEE OR CESS OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE ORAPPLICATION OF THE INCOME FROM SUCH ACTIVITY, OR THE RETENTION OF SUCH INCOME BY THE CONCERNED ENTITY. THIS AMENDMENT WILL TAKE EFFECT FROM THE 1 ST DAY OF APRIL, 2009 AND WILL ACCORDINGLY APPLY IN RELATION TO THE ASSESSMENT YEAR 2009-10 AN D SUBSEQUENT ASSESSMENT YEARS.' 3.8 THE FINANCE MINISTERS REPLY TO THE DEBATE IN T HE LOKSABHA ON THE FINANCE BILL 2008 IN RESPECT OF THE ABOVE AMENDMENT WAS AS UNDER . '6. CLAUSE 3 OF THE FINANCE BILL, 2008 SEEKS TO AME ND THE DEFINITION OF 'CHARITABLE PURPOSE' SO AS TO EXCLUDE ANY ACTIVITY M THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION T O ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRES PECTIVE OF THE NATURE OR USE OF APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. THE INTENTION IS TO LIMIT THE BENEFIT TO ENTITIES WHICH ARE ENGAGED IN ACTIVI TIES SUCH AS RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND ANY OTHER GENUINE CHA RITABLE PURPOSE, AND TO DENY IT TO PURELY COMMERCIAL AND BUSINESS ENTITIES WHICH WE AR THE MASK OF A CHARITY . A NUMBER OF HONOURABLE MEMBERS HAVE WRITTEN TO ME EXP RESSING THEIR CONCERN ON THE POSSIBLE IMPACT OF THE PROPOSAL ON AGRICULTURAL PRO DUCE MARKET COMMITTEES (APMC) OR STATE AGRICULTURAL MARKETING BOARDS (SAMB). SINC E THERE IS NO INTENTION TO TAX SUCH COMMITTEES OR BOARDS, AND IN ORDER TO REMOVE A NY DOUBTS I PROPOSE TO INSERT &NEW CLAUSE (26AAB) IN SECTION 10 OFTHEINCOME TAX A CT TO PROVIDEEXEMPTION TO ANY INCOME OF ON APMC OR SAMB CONSTITUTED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR THE PURPOSE OF REGARDING THE MARKETING OF AGRIC ULTURAL PRODUCE. I ONCE AGAIN ASSURE THE HOUSE THAT GENUINE CHARITABLE ORGANISATI ONS WILL NOT IN ANY WAY BE AFFECTED. THE CBDT WILL, FOLLOWING THE USUAL PRACTI CE, ISSUE AN EXPLANATORY CIRCULAR ITA NO. 2589/AHD/2017 A.Y. 2014-15 8 CONTAINING GUIDELINES FOR DETERMINING WHETHER AN EN TITY ISCARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY AC TIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. WHETHE R THE PURPOSE IS A CHARITABLE PURPOSE WILL DEPEND ON THE TOTALITY OF THE FACTS OF THECASE. ORDINARILY CHAMBERS OF COMMERCE AND SIMILAR ORGANIZATIONS RENDERING SERVIC ES TO THEIR MEMBERS WOULD NOT BE AFFECTED BY THE AMENDMENT AND THEIR ACTIVITIES W OULD CONTINUE TO BE REGARDED AS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY 3.9 FROM A CUMULATIVE READING OF THE ABOVE, ONE CAN DISCERN THAT THE FOLLOWING CONDITIONS HAVE TO BE FULFILLED, BEFORE THE PROVISO TO SECTION 2(15) BECOMES APPLICABLE TO AN INSTITUTION. A) THE CHARITABLE, PURPOSE OF THE ENTITY SHOULD BE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY; B SUCH ADVANCEMENT SHOULD INVOLVE THE CARRYING OF A NY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR OF RENDERING ANY SERVICE I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDER ATION; AND C) THE ENTITY SHOULD RUN ON COMMERCIAL FINES AND SH OULD NOT BE A GENUINE CHARITABLE ORGANIZATION. 3.10 ADDITIONALLY THE ASSESSEE-ASSOCIATION WAS ESTA BLISHED PRIOR TO THE COMMENCEMENT OF THE INCOME-TAX ACT 1961 IS COVERED WITHIN THE PROVISIONS OF SECTION 11(1)(B) WHICH EXEMPTS INCOME DERIVED FROM PROPERTY HELD UNDER THE TRUST FORMED ONLY PARTIALLY FOR CHARITABLE OR RELIGIOUS PURPOSES . UNDER THIS CLAUSE, THE EXEMPTIONIS AVAILABLE, TO THE EXTENT THE INCOME FROM PROPERTY H ELD UNDER THE TRUSTIS APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES. IN OTHER WORDS, T HE TRUST NEED NOT HOLD ITS PROPERTY WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, BUT ST ILL BE ENTITLED FOR EXEMPTION UNDER SECTION 11. 3.11THE EFFECT OF PROVISO TO SECTION 2(15) ON SUCH TRUSTS[COVERED UNDER SECTION 11(1)(A) ALSO WOULD VARY AS COMPARED TO TRUSTS COVE RED UNDER SECTION 11(1)(A) [WHOLLY CHARITABLE TRUSTS].IN CASE OF WHOLLY CHARIT ABLE TRUSTS UNDER SECTION 11(1)(A) IF ONE OF THE ACTIVITIES OF THE TRUST IS RENDERED NON- CHARITABLE; THEN THE PROVISO WOULD RENDER THE ENTIRE ENTITY INELIGIBLE FOR EXEMPTION. 3.12 CONTRASTINGLY, SIMILAR CONSEQUENCES WILL NOT E NSURE IN CASE OF AN ENTITY (LIKE THE ASSESSEE) ELIGIBLE FOR EXEMPTION UNDER SECTION 11(1 )(B). EVEN IF ONE OF THE OBJECTS IS HIT BY THE PROVISO, THE ENTITY CAN STILL CONTINUE T O CLAIM EXEMPTION FROM INCOME HELD UNDER TRUST FOR OBJECTS WHICH REMAIN CHARITABLE. 3.13 ACCORDINGLY, THE IMPACT OF THE PROVISO IS DILU TED IN THE PRESENT CASE. ASSURING WITHOUT ADMITTING IF ONE OF THE OBJECTS IS CONSIDER ED US 'NON CHARITABLE'; THE WHOLE ASSOCIATION CANNOT BE PAINTED AS A 'NON-CHARITABLE' ORGANISATION. AT THIS STAGE IT IS DENIED THAT ASSESSES IS ENGAGED IN ANY BUSINESS ACTIVITY. ROLE OF THE ASSESSEE 3.14 IN THIS REGARD, THE ASSESSED WISHES TO SUBMIT THAT THE IMPUGNED MATCHINCOME' ARISES FROM INTERNATIONAL MATCHES AND MATCHES ALLOT TED UNDER INDIAN PREMIER LEAGUE (IPL). THE ASSESSEE HAS NO ROLE TO PLAY IN FIXING T HE MATCH, MUCH LESS THE PLAYERS, THE OPPONENT COUNTRY, DATES OF MATCH, UMPIRES AND OTHER RELATED LOGISTICS. ALL THESE ARE WITHIN THE CONTROL OF BOARD OF CONTROL FOR CRICKET INDIA (BCCI). THE ASSESSEE IS AN ITA NO. 2589/AHD/2017 A.Y. 2014-15 9 AFFILIATE OF BCCI WHICH IS THE NATIONAL GOVERNING B ODY FOR CRICKET IN INDIA. IT IS ONE OF THE ORGANIZATIONS WHICH MAY GET THE PRIVILEGE OF HO STING ACRICKET TEST OR ONE DAY INTERNATIONALS. THE INTERNATIONAL MATCHES ARE ALLOT TED TO THE ASSESSEEBY THE BCCI AT ITS DISCRETION. THE PETITIONER HAS NO INHERENT RIGH T TO DEMAND THE ALLOTMENT OF SUCH MATCHES TO BE CONDUCTED BY IT,IPL MATCHES ARE NOT C ONDUCTED BY THE PETITIONER. IPL MATCHES ARE ORGANIZED AND CONDUCTED BY THE FRANCHIS EES.THEASSESSEE WHICH IS AFFILIATED TO THE BCCI HAS TO MAKE AVAILABLE THE ST ADIUM AT THE INSTANCE OF BCCI AND IT HAS NO DECISION MAKING AUTHORITY AS TO THE SCHED ULE / CONDUCT OF THESE MATCHES. 3.15 THE FREQUENCY OF THE INTERNATIONAL MATCHES IS VERY LOW. IN CASE OF ALL OTHER MATCHES THERE ARE NO FEES ORCHARDS COLLECTED FROM T HE SPECTATORS. APART FROM THE INTERNATIONAL MATCHES, THE ASSESSES HAS CONDUCTED N UMEROUS MATCHES AT STATE LEVEL. NO FEES HAVE BEEN CHARGED IN SUCH MATCHES. 3.16 THE MAIN OBJECT OF THE ASSESSES IS TO PROMOTE AND DEVELOP THE GAME OF CRICKET IN THE STATE OF GUJARAT. NONE OF THE OBJECTS OF THE ASSESSEE ARE COMMERCIAL OR IN THE NATURE OF BUSINESS OR TRADE ARID ALL THE ACTIVITIES ARE UNDERTAKEN WITH A SOLE VIEW TO PROMOTE CRICKET AND NOT TO CARRY ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. 3.17 IT IS INEVITABLE THAT IN CARRYING ON THE ACTIV ITIES CERTAIN SURPLUS MAY ENSURE. THE EARNING OF SURPLUS ITSELF WOULD NOT MEAN THAT THE A SSESSEE EXISTED FOR PROFIT.PROFITS MEANS DIAL SURPLUS OVER WHICH THEOWNERS OF THE ENTI TY HAVE A RIGHT TO WITHDRAW FOR ANY PURPOSE INCLUDING THE PERSONAL PURPOSE. PROFIT MAKING WOULD THEREFORE MEANS PRIVATE PROFIT. PROFIT MAKING WOULD NOT MEAN THE SU RPLUS THAT RESULTS FROM CERTAIN ACTIVITIES FOR WHICH THE ORGANIZATION IS DEVOTED IS PLOUGHED BACK FOR THE PROMOTION OF THE VERY SAME ACTIVITIES. 3.18 IN THE ASSESSEES CASE, IT HAS CONDUCTED ONLY THREE MATCHES WHICH HAVE YIELDED A SURPLUS. IT HAS ALSO CONDUCTED NUMEROUSMATCHES WHER E IT HAS INCURRED A HUGE LOSS. THE ASSESSES HAS NOTBEENFORMED FIND IS NOT CARRYING ONACTIVITIES WITH PROFIT MOTIVE. THERE IS NO INTENTION TO MAKE PROFITS. THE OBJECTS OF ASSESSES ARE TO PROFITING THE GAME OF CRICKET IN GUJARAT. THE SURPLUS IF ANY ARI SING FROM THE ACTIVITIES ARE SOLELYUTILIZED FOR THE ACHIEVEMENT OF ITS OBJECTS A ND NO PORTION IS UTILIZED FOR DISTRIBUTION OF ANY INCOME OR PROFITS. THE ACTIVITI ES OF ASSESSES ARE THEREFORE CHARITABLE IN NATURE, FURTHER, FOR THE REASONS GIVE N ABOVE, THE REQUIREMENTS OF PROVISO TO SECTION 2(15) WOULD ALSO NOT BE SATISFIED. 3.19 FURTHER, THE PROVISO TO SECTION 2(15) IS ONLY INTENDED TO EXCLUDE OPERATING ON COMMERCIAL LINES. THE LEGISLATIVE INTENT WAS NEVER TO DISTURB THE GENUINE CHARITABLE ORGANISATIONS, LIKE THE ASSESSEE. TO CONCLUDE, THE IS COVERED WITHIN THE AMBIT OF SECTION 2(15) AND ITS CLAIM AS A CHARITABLE ORGANIS ATION IS UNAFFECTED BY FILE PROVISO THEREUNDER. 3.20 BEFORE CONCLUDING THE SUBMISSIONS ON THIS ASPE CT, IT MAY BE RELEVANT IN PERUSE THE LEGISLATIVE HISTORY OF TAXABILITY OFCRICKET ASS OCIATIONS. SECTION 10(23) [NOW OMITTED]EXEMPTED ANY INCOME OF AN INDIAN ASSOCIATIO N OR INSTITUTION HAVING AS ITS OBJECTTHE CONTROL, SUPERVISION, REGULATION OR ENCOU RAGEMENT IN INDIA OF THE GAMES OF CRICKET, HOCKEY, FOOTBALL, TENNIS OR SUCH OTHER NOT IFIED GAMES. THUS, HISTORICALLY, THE LEGISLATURE HAS ALWAYS ENVISAGED AN EXEMPTION REGIM E FOR CRICKET ASSOCIATIONS FINANCE ACT 1987 REVISED THE EXISTING PROVISION WHE REIN INTER ALIA IT REQUIRED SUCH EXEMPTED CRICKET ASSOCIATIONS TO COMPLY WITH CERTAI N PROVISIONS OF SECTION 11. ITA NO. 2589/AHD/2017 A.Y. 2014-15 10 3.21 THIS INDICATES THE MINDSET OF THE LEGISLATURE. THE CRICKET ASSOCIATION ENGAGED IN PROMOTION OF CRICKET WAS ALWAYSCONSIDERED BY THE PR OVISIONS OF SECTION 11. IT WAS ALWAYS CONSIDERED TO BE A CHARITABLE ORGANISATION R EQUIRING COMPLIANCE WITH CONDITIONS LAID OUT IN SECTION 11. THIS EXPRESS PR OVISION IS TODAY SUBSUMED WITHIN THE WIDE AMBIT OF SECTION 2(15) WHICH EMBRACE CRICKET A SSOCIATIONS WITHIN ITS WINGS. IF CRICKET ASSOCIATION ISNOT CHARITABLE ENTITY, THEN T HERE WAS NO NEED FOR THE LAW ENVISAGING COMPLIANCE WITH SECTION 11. BEING AN ASSESSEE WHICH HAS ALWAYS BEEN HELD TO BE CHARITABLE CANNOT BE JETTISONED ON CERTAIN INTERPRETATION AND INFERENCES. THE OBJEC TIVE OF THE ASSOCIATION, CONDUCT AND DOCUMENTATION SUFFICIENTLY SPELL OUT THAT THE ASSES SEEIS A CHARITABLE ORGANISATION STRIVING TOWARDS WELFARE AND PROMOTION OF THE GAME OF CRICKET. II. CORPUS DONATION FROM BCCI: 1. IN RESPECT OF THE CLAIM OF CORPUS DONATION BEING EXEMPT ASSESSEE SUBMITTED DETAILS AS UNDER:- IN THE ALTERNATIVE, (I) WAS SUBMITTED THAT IF THE C ORPUS DONATION IS NOT CONSIDERED AS EXEMPT THEN ANALTERNATIVE SUBMISSION, IT WAS SUBMIT TED THAT CAPITAL ACCRETION CANNOT BE HELD TO BE INCOME. IN THE MATTER ASSESSEE SUBMITTED AS UNDER: TAXABILITY OF CORPUS DONATION BEING T.V. SUBSIDY ET C 1.1. DURING THE YEAR UNDER CONSIDERATION. THE ASSES SEE RECEIVED FROM BCC1 AS 'CORPUS DONATIONS'. 1.2 THE SAID AMOUNTS HAVE BEEN RECEIVED BY CHEQUES . 1.3 THERE ARE TWO LETTERS OF BCCI WHICH ACKNOWLEDGE D THE PAYMENTS MADE TO THE ASSESSEE TO CONSTITUTE CORPUS OF THE TRUST. FURT HER, A RESOLUTION PASSED BY THE BCCI AT ITS ANNUAL GENERAL MEETING HELD ON 29 TH AND 30 TH OF SEPTEMBER 2001 WAS PRODUCED. THE RELEVANT EXTRACT OF THE RESOLUTION IS AS UNDER. 5. CHAIRMAN SUGGESTED THAT AS ALREADY DECIDED IN T HE WORKING COMMITTEE HENCE FORTH THE TV SUBSIDIES SHOULD BE SENT TOWARDS CORP US FUND AND THIS DECISION CAN ALSO BE APPROVED BY THE MEMBERS OF THIS MEETING. T HEREAFTER THE MEMBERS UNANIMOUSLY APPROVED THAT HENCEFORTH THE TV SUBSIDIES SHOULD BE SENT BY THE BRAND TO THE MEMBERS ASSOCIATION TOWARDS CORPUS FUND IN STEAD OF SUBSIDY FUND. 1.4 THE COPIES OF TWO LETTERS OF BCCI ARE INCORPORA TED BELOW: (A) LETTER DT. 12.10.2001 ------------------------ REF. BCCI/A-10/C-103/1302 DATE: 12.10.2001 MR.VIKRAM PATEL, THE HONY, SECRETARY, GUJARAT CRICKET ASSOCIATION, AHMEDABAD. ITA NO. 2589/AHD/2017 A.Y. 2014-15 11 DEAR SIR, AS DECIDED IN THE 72 ND ANNUAL GENERAL MEETING OF THE BOARD OF CONTROL FOR CRICKET IN INDIA HELD AT CHENNAI ON 29 TH & 30 TH SEPTEMBER 2001. I AM ENCLOSING HEREWITH CHEQUE NO. 950920 DAT ED 12.10.2001 FOR RS. 1,38,36,800/- AS CONTRIBUTION OF THE BOARD TOWARDS THE CORPUS OF YOUR ASSOCIATION. YOU ARE REQUESTED TO CREDIT THIS AMOUNT TO THE CORPUS FUND OF YOUR ASSOCIATION. WISHING YOU ALL THE BEST, YOURS TRULY, (KISHORE RUNGTA) HONY. TREASURE ------------------------------------------------- (B) LETTER DT. 13.12.2001 -------------------- REF: BCCI/A-10/C-103/1313 DATE: 13.10.2001 MR.VIKRAM PATEL, THE HONY. SECRETARY, GUJARAT CRICKET ASSOCAITION AHMEDABAD. DEAR SIR, VIDE MY LETTER NO. BCCI/A-10/C-103/1302 DATED 12.10 .2001,I HAD SENT CHEQUE NO. 990920 DATED 12.10.2001 FOR RS. 1,3 8,36,800/- AS CONTRIBUTION OF THE BOARD TOWARDS THE CORPUS OF YOU R ASSOCIATION. PLEASE SENT YOUR ACCEPTANCE THAT YOU ARE TREATING T HIS MONEY AS CORPUS FOR THE PURPOSE OF OUR RECORDS. WISHING YOU ALL THE BEST, YOURS TRULY, (KISHORE RUNGTA) HONY. TREASURE EMPHASIS SUPPLIED 1.5 IT NEEDS TO BE CLARIFIED THAT THERE IS NO DISPU TE THAT THE PAYMENTS MADE WERE INDEED TOWARDS TV SUBSIDY AND IPL SUBVENTION. HOWE VER, THE RESOLUTION HAS AMPLY CLARIFIED THAT THE TV SUBSIDY SHOULD BE TREATED AS CORPUS FUND. ITA NO. 2589/AHD/2017 A.Y. 2014-15 12 1.6 THE RESOLUTION STATES THAT HENCEFORTH THE TV SUBSIDIES SHOULD BE SENT BY THE BRAND TO THE MEMBERS ASSOCIATION TOWARDS CORPUS FUND IN STEAD OF SUBSIDY FUND. DUE WEIGHTAGE NEEDS TO BE GIVEN TO THE TERM HENCEFORTH . THIS INDICATES ALL PAYMENTS (NOT ONLY FOR ONE YEAR BUT FOR ALL SUBSEQUENT YEAR) AFTE R THE RESOLUTION WOULD ASSUME THE CHARACTER OF A CORPUS. THE INTENT BEING SO DISCR EETLY DOCUMENTED, THERE WAS NO NECESSITY FOR MENTIONING THE SUBSEQUENT PAYMENTS TO BE CORPUS. THE BCCI HAS DEFINITELY STUCK TO ITS RESOLUTION AND THE ASSESSEE HAS ACCORDINGLY TREATED THE RECEIPT AS CORPUS'. MERE FACT THAT THE TERM CORPUS FUND IS NOT SPECIFIED IN EVERY PAYMENT DOES NOT MEAN THAT THE SPIRIT OF RESOLUTION IS NO T MAINTAINED. SUCH CONTENTION WOULD AN ULTRA TECHNICAL PROPOSITION TO DENY THE CLAIM OF THE ASSESSEE. 1.7 IT MAY BE RELEVANT TO QUOTE THE OBSERVATIONS OF THE KARNATAKA HIGH COURT IN THE CASE OF DIT V. SRI RAMAKRISHNA SEVAASHRAMA (2012) 2 05 TAXMAN 26 (KAR): THE PARLIAMENT INTENDED TO PASS ON THE BENEFIT OF EXEMPTION OF PAYMENT OF INCOME TAX TO THE CHARITABLE AND RELIGIOUS INSTITUTIONS. WE ARE REALLY SURPRISED AT THE ATTITUDES OF THESE AUTHORITIES WHO ARE OVER TECHNIC AL IN DENYING THE BENEFIT TO THE DESERVING INSTITUTIONS, WHICH ARE RENDERING LAUDABL E SERVICES TO THE RURAL MASSES. BY NOT GRANTING TAX EXEMPTIONS, WHICH THEY DESERVE, TH E AUTHORITIES HAVE HAMPERED THE SAID SOCIAL ACTIVITIES OF THE TRUST AND THEY ARE MA DE TO WASTE THEIR PRECIOUS TIME, ENERGY AND MONEY IN FIGHTING THIS LITIGATION. WE D O NOT APPRECIATE THIS ATTITUDE ON THE PART OF THE AUTHORITIES IN DENYING THE BENEFIT WHIC H THE PARLIAMENT HAS GIVEN TO SUCH PERSONS. THEREFORE, THE TRIBUNAL WAS FULLY JUSTIFI ED IN INTERFERING WITH SUCH AN ILLEGAL ORDER AND GRANTED THE RELIEF TO THE ASSESSEE FOR WH ICH IT IS ENTITLED TO. UNFORTUNATELY, THE PERSONS WHO TOOK A DECISION TO FILE AN APPEAL, BEFORE THIS COURT ARE WASTING THE PRECIOUS TIME OF THE TRUST WHICH COULD HAVE BEEN US ED IN THE SOCIAL SERVICE, PUBLIC MONEY AND THE TIME OF THIS COURT IS ALSO WASTED. TH IS ATTITUDE ON THE PART OF THE DEPARTMENT CANNOT BE COUNTENANCED. THEREFORE, WE FE EL IT APPROPRIATE TO IMPOSE COST INCURRED BY THE. ASSESSEE FOR FIGHTING LITIGATION S O THAT THE DEPARTMENT WOULD BE MORE CAREFUL IN FUTURE IN TAKING DECISION TO FILE APPEAL IN SUCH FRIVOLOUS CASES BY IGNORING THE POLICY OF THE GOVERNMENT, VIZ. NATIONAL LITIGAT ION POLICY, 2011.' 1.8 THE KARNATAKA HIGH COURT HAS CLARIFIED THAT AN ASSESSES ENTITLED TO GENUINE BENEFITS UNDER THE ACT SHOULD NOT BE HASSLED BY OV ER-TECHNICAL' CONTENTIONS BY THE REVENUE, APPLYING THESE SENTIMENTS IN THE PRESENT C ASE, THE ASSESSEE IS A GENUINE CHARITABLE ORGANISATION WORKING FOR THE DEVELOPMENT AND WELFARE OF CRICKET. IT IS IN RECEIPT OF TV SUBSIDY AND IPL SUBVENTION FEES FROM BCCI. THE AMOUNTS RECEIVED BY THE ASSESSEE TOWARDS SUBVENTION CANNOT COME WITHIN THE INDICIA OF BUSINESS. 1.9 THE ASSESSEE RECEIVES THE PAYMENT FROM BCCI AND HAS NO SAY IN THE AMOUNT OF GRANT/ PAYMENT FROM BCCI. THE PAYMENT OFSUBVENTION FEES IS AT THE DISCRETION OF BCCI. A RECEIPT TO BE CHARGEABLE TO TAX UNDER THE ACT MU ST COME TO THE ASSESSEE WITH A CHARACTER OF 'INCOME'. IT MUST ADDTO THE POCKET O F THE ASSESSEE AS A PROFIT OR GAIN. ANY RECEIPT BELONGING TO OTHER PERSON CANNOT BE REG ARDED AS AN 'INCOME' IN THE HANDS OF RECIPIENT. IN OTHER WORDS, THE ASSESSEE MUST CON TROL THE USEOFTHE IMPUGNED RECEIPT/ SUM. THE SUPREME COURT RECENTLY IN KANCHANGANGA SEA FOODS LTD. V. CIT (2010) 325 ITR 540 ON PAGE 549 OF ITR OBSERVED 'IT IS TRITE TO SAY THAT TO CONSTITUTE INCOME THE RECIPIENT MUST HAVE CONTROL OVER IT.' THE IMPUGNED SUM MUST BE AT THEDISPOSAL OF THE ASSESSEE. ONLY ON SATISFACTION OF THIS ESSENTIAL RE QUIREMENT, A RECEIPT COULD BE REGARDED AS 'INCOME' CHARGEABLE TO TAX UNDER THE AC T. ITA NO. 2589/AHD/2017 A.Y. 2014-15 13 1.10 IN THE PRESENT CASE, THE ASSESSEE DOES NOT HAVE &CONTROL ON THE 'QUANTUM AND 'FINDING' OF SUBVENTION FEES OR SUBSIDIES. THESE PAYMENTS ARE GIVEN BY THE BCCI TO VARIOUS, CRICKET ASSOCIATIONS ACROSS THE COUNTRY FO R DEVELOPMENTAL ACTIVITIES. THE ASSESSEE RECEIVES IT ON ACCOUNT OF ITS AFFILIATION WITH BCCI. FURTHER, THE PAYMENTS SO RECEIVED ARE USED BY THE ASSESSEEFOR OBJECTIVES OF THE TRUST (WELFARE OF CRICKET AND CANNOT RENDER THE RECEIPT ITSELF AS INCOME. INFERENCE FORM THE SUBMISSION OF BCCI IN ITAY2010-1 1 1.11 YOUR HONOUR, IN THE ASSESSMENT PROCEEDINGS OF ITAY 2010-11, HAVE RELIED ON THE ABOVESUBJECT VIDE LETTER OF THE BCCI DATED 21.0 1.2013 FURNISHED TO INCOME TAX DEPARTMENT IN ITS OWN ASSESSMENT PROCEEDINGS TO CON CLUDE THAT RECEIPT OF TV SUBSIDY IS NOTHING BUT REVENUE SHARING ON ACCOUNT OFTV AND MEDIA RIGHTS FOR VARIOUS MATCHES. YOUR HONOUR HAS STATED AS UNDER (PAGE 20 OF ORDER F OR ITAY2010-11): 'THE TV RIGHTS SUBSIDY' IS NOTHING BUT SALE OF MED IA RIGHTS WHICH WERE NEGOTIATED BY THE BCCI ON BEHALF OF THE STATE ASSOCIATIONS AS IT WAS NOT POSSIBLE FOR THE STATE. ASSOCIATIONS TO NEGOTIATE ON THEIR OWN. IT IS EVIDE NT FROM THE TABLE ABOVE, THAT SINCE 2001 THE BCCI IS MAKING PAYMENT OF 70% OF THE INCOM E FROM SALE OF MEDIA RIGHTS TO THE STATE ASSOCIATIONS. THE VERY NATURE OF THE SAID RECEIPT SHOWS THAT IT CANNOT BE ANYTHING BUT INCOME OF THE ASSESSEE WHICH IS DUE TO THE ASSESSEE ON ACCOUNT OF SALE OF MEDIA RIGHTS NEGOTIATED BY THE BCCI ON BEHALF OF TH E VARIOUS STATE ASSOCIATIONS. 1.12 YOUR HONOUR MAY GO THROUGH THE ASSESSMENT ORDE R OF BCCI FOR ITAY 2010-11, COPY OF WHICH IS FURNISHED TO US. IN THE SAID ORDER , THE DEPARTMENT HAS NOT ACCEPTED THE CLAIM OF BCCI THAT IT IS A PROFIT SHARING ARRAN GEMENT. ON THE CONTRARY IT HAS BEEN HELD THAT IT IS A GRATUITOUS PAYMENT I.E. DISTRIBUT ION OF PROFIT AND NOT SHARING OF PROFIT. AT THIS STAGE WE STATE THAT WE ARE NOT AWARE OF THE OUTCOME IN APPELLATE PROCEEDINGS IN THE CASE OF BCCI IN THE ABOVE MATTER.THEREWILL B E DOUBLE TAXATION OF THE SAID AMOUNT, IN THE CASE OF BCCIAND AGAIN THE HANDS OF T HE ASSESSEE, EVEN THOUGH ORDER IN THE CASE OF BCCI. 1.13 ALTERNATIVE SUBMISSION IN RESPECT OF CORPUS DONATION FROM BCCI, IT IS A VO LUNTARY CONTRIBUTION FROM BCCI, AS EXPLAINED HEREIN ABOVE. IN CASE IT IS HELD THAT THE INCOME OF ASSESSEE IS N OT FOR CHARITABLE PURPOSE AS DEFINED U/S. 2(15) OF INCOME TAX ACT, THEN THE CONTRIBUTION RECEIVED FROM BCCI IS NOT INCOME WITHIN THE MEANING OF SECTION 2(24) (II). UNDER SECTION 2(24)(IIA), THE VOLUNTARY CONTRIBUTION ARE INCOME ONLY WHEN THE PUB LIC CHARITABLE TRUST IS EXISTING FOR A CHARITABLE PURPOSE. IF IT IS HELD BY A.O. THAT ASSESSEE IS NOT EXISTING FOR CHARITABLE PURPOSE, THE CONTRIBUTION FROM BCCI IS N OT INCOME UNDER INCOME TAX ACT. III. SET OFF OF BROUGHT FORWARD DEFICIT: THE PAST LOSSES AND UNABSORBED DEPRECIATION IS AVAI LABLE FOR SET OFF. YOUR HONOUR IS REQUESTED TO GIVE THE SET OFF THE SAME. 6. THE AO HAS NOT ACCEPTED THE SUBMISSION OF THE AS SESSEE. THE AO WAS OF THE VIEW THAT EDUCATIONAL ACTIVITY OF THE ASSESSEE WAS NOT OF THE NATURE OF NORMAL ITA NO. 2589/AHD/2017 A.Y. 2014-15 14 SCHOOLING AND THE COACHING WAS GIVEN ONLY TO PERSON S WHO ARE INTERESTED IN THE GAME AND WHO HAD ALREADY REACHED CERTAIN LEVEL OF C OMPETENCE OF THE GAME. THE AO HAS REFERRED THE ORDER OF CIT(A)-9, AHMEDABA D IN ASSESSEES OWN CASE FOR A.Y. 2010-11 AND 2011-12 WHERE THE CIT(A) HAS D ISMISSED THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSEE WAS CARRYING ON THE ACTIVITY OF ADVANCEMENT OF OTHER OBJECTS OF GENERAL PUBLIC UTI LITIES AND WHICH WAS IN THE NATURE OF BUSINESS, TRADE, COMMERCE, AND NOT EDUCAT ION AS CLAIMED BY THE ASSESSEE. THEREFORE, THE ASSESSEE WAS COVERED BY T HE PROVISIONS OF SEC. 2(15) READ WITH PROVISO 1 AND 2 OF THE I.T. ACT. CONSEQU ENTLY, THE AO HAS TREATED THE RECEIPTS FROM BCCI TO THE AMOUNT OF RS. 81,18,20,30 5/- AS VOLUNTARY CONTRIBUTION AND NOT CORPUS DONATION AS CLAIMED BY THE ASSESSEE. THE AO HAS ALSO CONTRIBUTED NON-MUTUAL INCOME SURPLUS TO THE A MOUNT OF RS. 23,59,094/- AS CLUB INCOME OF THE ASSESSEE WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7. AGGRIEVED, ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSE E. 8. DURING THE COURSE OF APPELLATE PROCEEDING BEFORE US THE LD. COUNSEL SUBMITTED THAT ON IDENTICAL ISSUES AND FACTS THE IT AT AHMEDABAD VIDE ITA NOS. 1257/AHD/2013, 3303/AHD/2016, 3304/AHD/2016 AND 408 /AHD/2017 HAS ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE. T HEREFORE, HE HAS CONTENDED THAT THE ISSUE IN THE APPEAL ARE COVERED IN FAVOUR OF TH E ASSESSEE. THE LD. COUNSEL HAS ALSO FURNISHED A SYNOPSIS IN W HICH HE HAS REFERRED THAT THE DIFFERENT GROUND OF APPEAL ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION OF THE ITAT AHMEDABAD. 9. ON THE OTHER HAND, THE LD. DR WAS VERY FAIR ENOU GH TO COULD NOT CONTROVERTTHE SUBMISSION OF THE LD. COUNSEL WITH AN Y MATERIAL ON RECORD. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES WE HAVE G ONE THROUGH THE DECISION OF ITA NO. 2589/AHD/2017 A.Y. 2014-15 15 THE CO-ORDINATE BENCH OF THE ITAT VIDE ITA NOS. 125 7/AHD/2013, 3303/AHD/2016, 3304/AHD/2016 AND 408/AHD/2017 AND N OTICE THAT DIFFERENT GROUND OF APPEAL ON IDENTICAL FACTS HAVE ADJUDICATE D IN FAVOUR OF THE ASSESSEE AS BRIEFLY STATED BELOW: GROUND NO. 1 : DENYING EXEMPTION U/S. 11 OF THE ACT, BY HOLDING TH AT ASSESSEE IS CARRYING ON BUSINESS AS PER PROVISO TO SECTION 2(15): 10. IT WAS BROUGHT TO OUR NOTICE THAT THE AFORESAID GROUND NO.1 IS COVERED IN FAVOUR OF ASSESSEE BY ORDER OF ITATAHMEDABADDT. 24. 01.2019 IN OWN CASE FOR A.Y. 2009-10 TO A.Y. 2012-13 IN ITA NOS. 1257/AHD/2 013 AND OTHERS. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVE WE HAVE GO NE THROUGH THE AFORESAID ORDER AND RELEVANT PART IS REPRODUCED AS UNDER:- 31. AS WE PROCEED TO DEAL WITH THE IMPACT OF INSER TION OF PROVISO TO SECTION 2(15), WE CONSIDER IT APPROPRIATE TO LOOK AT A COORDINATE BENCH DECISION, IN THE CASE OF HOSHIARPUR IMPROVEMENT TRUST VS. ACIT [(2015) 155 I TD 570 (ASRL)], WHEREIN, SPEAKING THROUGH ONE OF US (I.E. THE VICE PRESIDENT ), THE COORDINATE BENCH HAS INTER ALIA, OBSERVED AS FOLLOWS. 40. WE HAVE NOTED THAT THERE ARE A LARGE NUMBER JUD ICIAL PRECEDENTS, IN THE CASES OF VARIOUS OTHER CRICKET ASSOCIATIONS- DETAILS OF W HICH ARE SET OUT EARLIER IN THIS ORDER, HOLDING THAT THE PROVISO TO SECTION 2(15) CANNOT BE INVOKED IN THE CASES OF SUCH SIMILARLY PLACED CRICKET ASSOCIATIONS. RESPECTFULLY FOLLOWING THE SAME, AND ALSO FOR THE DETAILED REASONS SET OUT ABOVE, WE UPHOLD THE P LEA OF THE ASSESSEE. WE ARE NOT REPRODUCING EXTRACTS FROM THESE DECISIONS, FOR THE SAKE OF BREVITY, BUT WE ADOPT, AND CONCUR WITH, THE REASONING OF THESE DECISIONS. WHEN PROVISO TO SECTION 2(15) CANNOT BE INVOKED ON THE FACTS OF THESE CASES, THE BENEFIT S OF SECTION 11 & 12, WHICH ARE DECLINED ONLY BY INVOKING THE PROVISO TO SECTION 2( 15), COULD NOT HAVE BEEN DECLINED ON THE FACTS OF THESE CASES. 41. WE HAVE NOTED THAT ALL THE LEARNED REPRESENTATI VES HAVE ADVANCED DETAILED ARGUMENTS ON THE PROPOSITION THAT SINCE THE ASSESSE E CRICKET ASSOCIATIONS ARE ENGAGED IN EDUCATIONAL ACTIVITIES, IT IS NOT REALLY MATERIA L WHETHER OR NOT THE ASSESSEE HAS ENGAGED ITSELF IN THE ACTIVITIES IN THE NATURE OF T RADE, COMMERCE OR BUSINESS. HOWEVER, IN THE LIGHT OF OUR CATEGORICAL FINDING TH AT THE ASSESSEE CRICKET ASSOCIATIONS WERE NOT REALLY ENGAGED IN THE ACTIVITIES IN THE NA TURE OF TRADE, COMMERCE OR BUSINESS, IT IS NOT REALLY NECESSARY TO ADJUDICATE ON THIS PL EA. WE LEAVE THE QUESTIONS OPEN FOR ADJUDICATION IN A FIT CASE. CONCLUSION ON THIS ISSUE: ITA NO. 2589/AHD/2017 A.Y. 2014-15 16 42. FOR THE DETAILED REASONS SET OUT ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW WERE IN ERROR IN INVOKING THE PRO VISO TO SECTION 2(15) AND THUS IN DECLINING THE BENEFIT OF SECTION 11 & 12 TO THE APP ELLANT CRICKET ASSOCIATIONS. TO THIS EXTENT, PLEA OF THE APPELLANTS MUST BE UPHELD. WE UPHOLD THE PLEA. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. GROUND NO. 2: REJECTING APPELLANTS CLAIM THAT IT IS ENGAGED IN EDUCATIONAL ACTIVITIES: 11. IT IS BROUGHT TO OUR NOTICE THAT THE ITAT AHMED ABAD IN THE CASE OF THE ASSESSEE VIDE ITA NOS. 1257/AHD/2013, 3303/AHD/2016 , 3304/AHD/2016 AND 408/AHD/2017 ORDER DATED 24.01.2019 HAS DECLARED TH E IDENTICAL ISSUE ON SIMILAR FACTS IN FAVOUR OF ASSESSEE VIDE PAGE NO. 86 AND PA RA 41 OF THE ORDER. THE SAME IS REPRODUCED AS UNDER: 41. WE HAVE NOTED THAT ALL THE LEARNED REPRESENTAT IVES HAVE ADVANCED DETAILED ARGUMENTS ON THE PROPOSITION THAT SINCE THE ASSESSE E CRICKET ASSOCIATIONS ARE ENGAGED IN EDUCATIONAL ACTIVITIES, IT IS NOT REALLY MATERIA L WHETHER OR NOT THE ASSESSEE HAS ENGAGED ITSELF IN THE ACTIVITIES IN THE NATURE OF T RADE, COMMERCE OR BUSINESS. HOWEVER, IN THE LIGHT OF OUR CATEGORICAL FINDING TH AT THE ASSESSEE CRICKET ASSOCIATIONS WERE NOT REALLY ENGAGED IN THE ACTIVITIES IN THE NA TURE OF TRADE, COMMERCE OR BUSINESS, IT IS NOT REALLY NECESSARY TO ADJUDICATE ON THIS PL EA. WE LEAVE THE QUESTIONS OPEN FOR ADJUDICATION IN A FIT CASE. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH AS SUPRA THE APPEAL OF THE ASSESSEE IS ALLOWED. GROUND NO. 3(I) & 3(II):- NOT ACCEPTING AMOUNT OF TV SUBSIDY RECEIVED FROM BC CI AS CORPUS DONATION: 12. IT IS BROUGHT TO OUR NOTICE THAT THE AFORESAID GROUND NO.3 IS COVERED BY THE ORDER OF ITAT AHMEDABDDT.24.01.2019 IN ASSESSEE S OWN CASE FOR A.Y. 2009-10 TO A.Y. 2012-13 IN ITA NOS. 1257/AHD/2013 A ND OTHERS. WITH THE ITA NO. 2589/AHD/2017 A.Y. 2014-15 17 ASSISTANCE OF THE LD. REPRESENTATIVE WE HAVE GONE T HROUGH THE AFORESAID ORDER AND RELEVANT PART IS REPRODUCED AS UNDER:- 48. IN GROUND NO. 3, THE ASSESSEE HAS RAISED THE F OLLOWING GRIEVANCES: (3)(A) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE SUBMISSIONS OF THE ASSESSEE WITH RELEVANT EVIDENCES IN RESPECT OF THE CLAIM THAT THE AMOUNT RECEIVED FROM BCCI, RS. 20,69,60,338/- IS TOWARDS C ORPUS DONATION. HON. CIT (APPEALS) HAS ERRED IN NOT CONSIDERING THE BCCI AGM RESOLUTION WHICH PROVIDES THAT ALL FUTURE PAYMENTS BY BCCI SHALL BE TOWARDS CORPUS BY USING WORK HENCEFORTH. (B) ALTERNATIVELY, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WHEN THE STATUS OF THE ASSESSEE IS HELD TO BE AOP AND SECTION 2(15) HELD T O BE NOT APPLICABLE, THEN AS PER THE PROVISIONS OF SEC. 2(24) (IIA) R.W.S. 13(8) AN 56, THE CORPUS DONATION OF RS. 20,69,60,338/- CANNOT BE ADDED AS INCOME. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH AS SUPRA THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. GROUND NO. 3(III) IS NOT PRESSED. THEREFORE, THE SAME IS NOT ADJUDICATED. ACCORDINGLY, THE SAME STAND DISMISSED. GROUND NO. 4: NOT ALLOWING SET OFF OF B/F DEFICIT: 13. IT IS BROUGHT TO OUR NOTICE THAT GROUND NO. 4 I S CONSEQUENTIAL IN NATURE. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVE WE HA VE GONE THROUGH THE AFORESAID AND RELEVANT PART IS REPRODUCED AS UNDER: - 1. THE LEARNED A.O HAS ERRED IN LAW AND ON FACTS I N APPLYING PROVISO TO SECTION 2(15) AND THAT ASSESSEE IS ENGAGED IN ACTIVITY IN T HE NATURE OF BUSINESS AND CONSEQUENTLY SECTION 13(8) OF INCOME TAX ACT, 1961 AND THEREBY REJECTING THE APPLICABILITY OF SECTION 11 AND 12 CLAIMED BY THE A SSESSEE AND THE HONBLECIT(APPEALS) HAS ERRED IN CONFIRMING THE DEC ISION OF LEARNED A.O. 65. IN GROUND NO. 7 TO 11, THE ASSESSEE HAS RA ISED THE FOLLOWING GRIEVANCES: (7) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT ALLOWING THE SET OFF OF BROUGHT FORWARD LOSSES AND UNABSORBED DEPREC IATION WHICH CLAIM IS SUPPORTED BY JURISDICTIONAL HIGH COURT AND OTHER HI GH COURTS DECISIONS (AMOUNT AS MAY BE DETERMINED IN PURSUANCE TO APPELL ATE ORDERS FROM A.Y. 2004-05 TO 2008-09). (8) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S DENYING THE DEDUCTION OF CAPITAL EXPENDITURE OF RS.4,61,70,970/- AS ALLOWABL E. ITA NO. 2589/AHD/2017 A.Y. 2014-15 18 (9) ALTERNATIVELY, THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT IN NOT GRANTING DEDUCTION OF EXPENDITURE INCLUDING DEPRECI ATION AND B/F DEFICIT AND UNABSORBED DEPRECIATION AFTER CONSIDERING THE ASSES SEE'S INCOME AS BUSINESS INCOME. (10) ALTERNATIVELY, THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE ASSESSEE'S CLAIM THAT IF THE AMOUNT R ECEIVED FROM BCCI RS.20,69,60,338/- IS NOT CONSIDERED AS CORPUS DONAT ION THEN THE SAME SHOULD BE CONSIDERED IN THE NATURE OF GRANT WITH SPECIAL P URPOSE TO UTILIZE THE SAME IN BUILDING INFRASTRUCTURE AND PROMOTE CRICKET ETC. (11) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS IN NOT GRANTING DEDUCTION OF 15% U/S 11(1)(B) AS COMPUTED AFTER MAK ING THE ADDITIONS. 66. AS REGARDS GROUND NO. 10 ABOVE, THIS HAS BECOM E INFRUCTUOUS IN VIEW OF THE RECEIPT IN QUESTION HAVING BEEN HELD TO BE IN CAPIT AL FIELD OUTSIDE THE AMBIT OF INCOME. AS REGARDS ALL OTHER GRIEVANCES NOTED ABOVE, LEARNE D COUNSEL FAIRLY STATES THAT THESE ARE CONSEQUENTIAL IN NATURE AND WILL REQUIRE TO BE TAKEN INTO ACCOUNT BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT. WE ARE, THERE FORE, OF THE CONSIDERED VIEW THAT NO SPECIFIC ADJUDICATION IS REQUIRED IN RESPECT OF THE SAME. THESE GRIEVANCES ARE DISMISSED AS INFRUCTUOUS AT THIS STAGE. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH AS ABOVE NO SPECIFIC ADJUDICATION IS REQUIRED IN RESPECT OF THI S GROUND OF APPEAL, THEREFORE, THE SAME IS DISMISSED AS INFRUCTUOUS. GROUND NO. 5 DENYING EXEMPTION OF INCOME OF CLUB ACTIVITIES ON P RINCIPAL OF MUTUALITY: 14. IT IS BROUGHT TO OUR NOTICE THAT THE ITAT HAS R ESTORED THIS ISSUE TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION VIDE PAGE 95, PARA 57 OF ORDER. THEREFORE, THIS ISSUE IS RESTORED TO THE FILE OF THE CIT(A) FOR ADJ UDICATION ON MERITS AS DIRECTED BY THE ITAT IN THE CASE OF THE ASSESSEE ITSELF VIDE ORDER DATED 24.01.2019. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR S TATISTICAL PURPOSE. GROUND NO. 6 NOT ALLOWING DEDUCTION OF CAPITAL EXPENDITURE: 15. IT IS BROUGHT TO OUR NOTICE THAT THE ITAT VIDE ORDER DATED 24.01.2019 HAS RESTORED THIS TO THE AO VIDE PAGE 105 PARA 77 OF TH E ORDER. THE SAME IS REPRODUCED AS UNDER:- ITA NO. 2589/AHD/2017 A.Y. 2014-15 19 77. WE FIND THAT IDENTICAL ISSUES CAME UP FOR OUR ADJUDICATION FOR THE ASSESSMENT YEAR 2009-10 AND WE HAVE ALLOWED THE PLEA OF THE AS SESSEE IN THE TERMS INDICATED EARLIER IN THIS ORDER WHILE DEALING WITH THE ASSESS MENT YEAR 2009-10. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER FOR TH IS ASSESSMENT YEAR. RESPECTFULLY FOLLOWING THE STAND TAKEN FOR THE ASSESSMENT YEAR 2 009-10, WE UPHOLD THE PLEA TO THAT EXTENT. AS REGARDS ALLOWING THE CAPITAL EXPENDITURE TOWARDS OBJECT OF TRUST, THAT ISSUE IS INFRUCTUOUS AT THIS STAGE AND WILL COME UP FOR C ONSIDERATION BEFORE THE ASSESSING OFFICER WHILE GIVING EFFECT TO THIS ORDER AND COMPU TING INCOME IN TERMS OF THE SEC. 11. THE AO SHALL DEAL WITH THE SAME BY WAY OF A SPEAKIN G ORDER. ACCORDINGLY, THIS ISSUE IS ALSO RESTORED TO THE FI LE OF THE A.O. FOR ADJUDICATING AS DIRECTED ABOVE BY THE COORDINATE BE NCH IN THE CASE OF THE ASSESSEE ITSELF. THEREFORE, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. GROUND NO. 7 NOT GRANTING DEDUCTION OF 15% U/S. 11 (1)(A) OF THE ACT: 16. IT IS BROUGHT TO OUR NOTICE THAT GROUND NO. 7 I S COVERED BY ITAT VIDE PAGE 106, PARA 79 & 80 OF THE ORDER. THE SAME IS R EPRODUCED AS UNDER:- 79. IN GROUND NO. 5, THE ASSESSEE HAS RAISED THE F OLLOWING GRIEVANCE: THE LEARNED A.O. HAS ERRED IN LAW AND ON FACTS IN N OT ALLOWING 15% OF INCOME AS PER PROVISIONS OF ACT BY NOT CONSIDERING THE ADD ITION MADE TO THE INCOME (THOUGH SUCH ADDITION IS NOT ACCEPTED BY ASSESSEE) AND HON. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE CLAIM OF THE ASSESSEE. 80. AS REGARDS THIS GRIEVANCE, ALL THAT LEARNED COU NSEL PRAYS IS THAT A DIRECTION MAY BE GIVEN TO COMPUTE THE INCOME AS PER PROVISION S OF SECTION 11 OF THE ACT, AFTER GIVING DEDUCTION OF 15%. LEARNED DEPARTMENTAL REPRE SENTATIVE DOES NOT OPPOSE THE PRAYER. WE, THEREFORE, DIRECT THE ASSESSING OFFICER ACCORDINGLY. AS DIRECTED BY THE COORDINATE BENCH ITAT AHMEDABAD VIDE ORDER DATED 24.01.2019 THE AO IS DIRECTED TO COMPUTE THE INCOME ACCORDINGLY. THEREFORE, THIS GROUND OF APPEAL IS ALLOWED SUBJECT TO THE TER MS AS ABOVE. ITA NO. 2589/AHD/2017 A.Y. 2014-15 20 GROUND NO. 8 CHARGING OF INTEREST U/S. 234A FOR FOUR MONTHS INST EAD OF TWO MONTHS: 17. CHARGING OF INTEREST U/S. 234(A) IS MANDATORY A S PER LAW THEREFORE WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THEREFORE, THE SAME IS DISMISSED. GROUND NO.9 18. GROUND NO. 9 IS GENERAL IN NATURE ANDNOT PRESSE D. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. SD/- S D/- (MADHUMITA ROY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 30/04/2019 TANMAY TRUE COPY / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. $ / ASSESSEE 3. &' ( / CONCERNED CIT 4. ( - / CIT (A) 5. )*+ ' , ! ' , ,-$&$ / DR, ITAT, AHMEDABAD 6. +. / / GUARD FILE. BY ORDER / $% , 0 / , ! ' , ,-$&$ 1 THIS ORDER PRONOUNCED IN OPEN COURT ON 30/04/2019