The Director of Income tax(Exemption), Ahmedabad V. Gujarat Cricket Association, Ahmedabad

ITA 2680/AHD/2011

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 2926 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 25-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Cancellation of registration; Reassessment proceedings; Capital expenditure; TDS
• Section: 143(3); 12AA

Judgement Text

ITA NO 2680/AHD/2011 DIT VS. GUJARAT CRICKET ASSOCIATION AY : 2008-09 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH D , AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT, AND PRAMOD KU MAR, VICE PRESIDENT] ITA NO. 2680/AHD/2011 ASSESSMENT YEAR: 2008-09 DY. DIRECTOR OF INCOME TAX (EXEMPTION), AHMEDABAD . .....APPELLANT VS GUJARAT CRICKET ASSOCIATION ..........RES PONDENT 2 ND FLOOR, AKSHAR COMPLEX, OPP. FIRE STATION, VANIK GNYATI COMMERCE CROSS ROAD , AHMEDABAD 380 009. [PAN: AAAAG 1205 C] APPEARANCES BY MEHUL PATEL ALONGWITH JAYESH C SHAREDALAL FOR THE ASSESSEE O P VAISHNAV, COMMISSIONER (DR) FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 5, 2018 DATE OF PRONOUNCEMENT : MARCH 04, 2019 O R D E R PER PRAMOD KUMAR, VP: 1. THIS APPEAL, FILED BY THE ASSESSING OFFICER, IS DIRECTED AGAINST THE ORDER DATED 16 TH AUGUST 20111 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSM ENT YEAR 2008-09. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSING OFF ICER HAS RAISED THE FOLLOWING GRIEVANCE: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT IN D ELETING THE ADDITION OF RS.6,83,46,038/- WITHOUT CONSIDERING THE APPLICABIL ITY OF SECTION 11(1)(D) OF THE I.T. ACT. 3. THE CORPUS DONATION OF RS 6,83,46,038 IS RECEIVE D FROM THE BOARD OF CRICKET CONTROL OF INDIA (BCCI) WITH RESPECT OF TV ADVERTIS EMENTS. LEARNED REPRESENTATIVES FAIRLY AGREE THAT AN IDENTICAL ISSUE HAS COME UP FO R OUR CONSIDERATION IN THE APPEAL FOR THE ASSESSMENT YEAR 2004-05, WHICH WAS HEARD AL ONGWITH THIS APPEAL, AND WHATEVER WE DECIDE FOR THE SAID YEAR WILL APPLY MUTATIS MUTANDIS THIS YEAR AS WELL. ITA NO 2680/AHD/2011 DIT VS. GUJARAT CRICKET ASSOCIATION AY : 2008-09 PAGE 2 OF 6 4. VIDE OUR ORDER DATED 24 TH JANUARY, 2019, WHILE DEALING WITH THE ASSESSMENT YEAR 2004-05 IN ASSESSEES OWN CASE, WE HAVE UPHELD THE STAND OF THE ASSESSEE AND OBSERVED AS FOLLOWS: 12. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CON CERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE U S IS A CRICKET ASSOCIATION, REGISTERED UNDER THE SOCIETIES REGISTRATION ACT 186 0, AND IS ENGAGED IN PROMOTION OF CRICKET IN SPECIFIED AREAS OF GUJARAT STATE. IN THE COURSE OF THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOT ED THAT ASSESSEE HAS RECEIVED A SUM OF RS 1,58,00,000 FROM THE BOARD OF CRICKET CONTROL OF INDIA (BCCI, IN SHORT) AS TOWARDS THE TV RIGHTS. WHEN HE PROBED THE MATTER FURTHER, IT WAS EXPLAINED BY THE ASSESSEE THAT NOMENCLATURE OF THE RECEIPT APART, WHAT HAS BEEN RECEIVED BY THE ASSESSEE IS A CORPUS DONAT ION AND THE ASSESSEE DID NOT HAVE ANY RIGHT TO GET THE SAID MONEY FROM THE B CCI, UNDER A CONTRACT OR OTHERWISE. IT WAS ALSO EXPLAINED THAT SIMILAR AMOUN TS RECEIVED IN THE EARLIER YEARS HAVE BEEN TREATED ALL ALONG AS CORPUS DONATIO NS, AND, THEREFORE, THE CORPUS DONATION RECEIVED BY THE ASSESSEE, THOUGH TE RMED AS TV RIGHTS, IS NOT TAXABLE. THE ASSESSING OFFICER NOTED THIS CONTENTI ON AS ALSO THE FACT THAT UNDER SECTION 11(1)(D), WHAT CANNOT BE INCLUDED AS TOTAL INCOME OF THE ASSESSEE IS INCOME BY WAY OF VOLUNTARY CONTRIBUTIO NS MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS O F THE TRUST OR THE INSTITUTION. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHAT HAS BEEN PAID TO THE ASSESSEE IS A SHARE OUT OF EARNINGS BY THE BCCI , OUT OF PROCEEDS OF SALE OF TV RIGHTS, AND IS, AS SUCH, TAXABLE AS INCOME OF T HE ASSESSEE. IT WAS OBSERVED THAT IT CANNOT BE SAID TO BE VOLUNTARY CONTRIBUTION BY THE BCCI. THE ASSESSING OFFICER ALSO SHOWS THAT AS ACCEPTED BY THE AUDITOR OF THE COMPANY THE AMOUNT IS RELATABLE TO THE TV RIGHTS AND IT CANNOT, THEREF ORE, BE TREATED AS VOLUNTARY CONTRIBUTION IN THE NATURE OF CORPUS DONATIONS. HE ALSO NOTED THAT AS REGISTRATION OF THE ASSESSEE, UNDER SECTION 12AA, S TANDS CANCELLED, THE ASSESSEE IS ANYWAY NOT ELIGIBLE FOR THE BENEFIT OF SECTION 11(1)(D). ON THE BASIS OF THIS LINE OF REASONING, THE ASSESSING OFFI CER TREATED THE SAID AMOUNT OF RS 1,58,00,000 AS INCOME OF THE ASSESSEE. AGGRI EVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. IT WAS POINTED OUT TO THE CIT(A) THAT THE BCCI HAS PASSED A SPECIF IC RESOLUTION THAT THE AMOUNT COMPUTED AS TV SUBSIDY IS GIVEN TO THE MEMBE R ASSOCIATIONS AS CORPUS DONATION. THE CIT(A), IDENTIFIED THE CORE IS SUE FOR ADJUDICATION AS FOLLOWS: THE FUNDAMENTAL QUESTION WHICH NOW ARISES IS WHETHER THE SPECIFIC DIRECTION ONCE ISSUED IS SUFFICIENT FOR THE PURPOSE OF SECTION 11(1)(D) OR SPECIFIC DIRECTION IS REQUIRED FOR EACH YEAR INDIVI DUALLY. HE THEN PROCEEDED TO ANSWER THIS QUESTION BY OBSERVING AS FOLLOWS: AS PER SECTION 11(1)(D), A WRITTEN SPECIFIC DIRECTI ON IS NECESSARY TO CLAIM IT AS CORPUS DONATION. FOR A DONATION AS A CO RPUS DONATION, A WRITTEN DOCUMENT WITH SPECIFIC DIRECTION FROM THE D ONOR SHOULD BE OBTAINED AND SHOULD ACCOMPANY THE DONATION FROM THE DONOR. IN ABSENCE OF WRITTEN DIRECTION, FOR A DONATION IN A G IVEN ASSESSMENT YEAR, A DONATION WOULD NOT BE CONSIDERED AS A CORPUS DONA TION AND THE ITA NO 2680/AHD/2011 DIT VS. GUJARAT CRICKET ASSOCIATION AY : 2008-09 PAGE 3 OF 6 ORGANIZATION (IN THIS CASE, GCA) WOULD NOT BE ENTIT LED TO CLAIM FULL EXEMPTION. TO ADD, DONATION COVERED BY A WRITTEN DO CUMENT BUT WITHOUT ANY SPECIFIC DIRECTION CANNOT BE CLAIMED AS CORPUS DONATION 13. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 14. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 15. WE FIND THAT, AT PAGES 46 AND 47 OF THE PAPERBO OK, THE ASSESSEE HAS FILED SPECIFIC CONFIRMATIONS TO THE EFFECT THAT THE SE AMOUNTS WERE CORPUS DONATIONS. WE HAVE ALSO PERUSED THE BCCI RESOLUTION NO 5 DATED 29 TH SEPTEMBER 2001 WHICH SPECIFICALLY STATES THAT THE T V SUBSIDIES SHOULD HENCEFORTH BE SENT TO THE MEMBER ASSOCIATIONS TOWAR DS CORPUS FUNDS. THERE IS NO DISPUTE THAT THE TV SUBSIDY IN QUESTION IS SENT UNDER THIS RESOLUTION. ON THESE FACTS, AND IN THE LIGHT OF THE PROVISIONS OF SECTION 11(1)(D) WHICH ONLY REQUIRE THE INCOME TO BE BY WA Y OF VOLUNTARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT T HEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR THE INSTITUTION, WE ARE OF THE CONSIDERED VIEW THAT ANY PAYMENTS MADE BY THE BCCI, WITHOUT A LEGAL OBLIGATI ON AND WITH A SPECIFIC DIRECTION THAT IT SHALL BE FOR CORPUS FUND- AS ADMI TTEDLY THE PRESENT RECEIPT IS, IS REQUIRED TO BE TREATED AS CORPUS DONATION NOT IN CLUDIBLE IN TOTAL INCOME. WE ARE UNABLE TO FIND ANY LEGAL SUPPORT FOR LEARNED CIT(A)S STAND THAT EACH DONATION MUST BE ACCOMPANIED BY A SEPARATE WRITTEN DOCUMENT. THE CONTRIBUTION HAS TO BE VOLUNTARY AND IT HAS TO BE W ITH SPECIFIC DIRECTION THAT IT WILL FORM CORPUS OF THE TRUST. THESE CONDITIONS AR E CLEARLY SATISFIED. ANY PAYMENT WHICH THE ASSESSEE IS NOT UNDER AN OBLIGATI ON TO MAKE, WHATEVER BE THE MODE OF ITS COMPUTATION, IS A VOLUNTARY PAYMENT , AND, ANY PAYMENT WHICH IS WITH A SPECIFIC DIRECTION THAT IT FOR CORPUS FUN D IS A CORPUS DONATION. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE TWO SPECIFIC CONF IRMATIONS FILED BY THE ASSESSEE, IN THE LIGHT OF THE BCCI RESOLUTION UNDER WHICH THE PAYMENT IS MADE AND IN THE LIGHT OF THE PAYMENT NOT BEING UNDER ANY LEGAL OBLIGATION, THE CONDITIONS UNDER SECTION 11(1)(D) ARE SATISFIED. W E, THEREFORE, UPHOLD THE PLEA OF THE ASSESSEE. THE ASSESSING OFFICER IS ACCO RDINGLY DIRECTED TO DELETE THIS ADDITION OF RS 1,58,00,000. 5. CONSISTENT WITH OUR STAND ON THE SAME ISSUE FOR THE EARLIER ASSESSMENT YEAR, WE UPHOLD THE STAND OF THE ASSESSEE. ACCORDINGLY, W E CONFIRM THE RELIEF GRANTED BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 6. GROUND NO. 1 IS THUS DISMISSED. 7. IN GROUND NO. 2, THE ASSESSING OFFICER HAS RAISE D THE FOLLOWING GRIEVANCE: THE LD. CIT (A) HAS ERRED IN LAW AND ON FACT IN DEL ETING THE ADDITION OF RS.1,78,05,654/- WITHOUT CONSIDERING THE PROVISION OF SECTION 199. ITA NO 2680/AHD/2011 DIT VS. GUJARAT CRICKET ASSOCIATION AY : 2008-09 PAGE 4 OF 6 8. SO FAR AS THIS GRIEVANCE OF THE ASSESSING OFFICE R IS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CER TAIN ADVERTISEMENT RECEIPTS IN THE PRESENT YEAR WHICH HAVE NOT BEEN ACCOUNTED IN THIS YEAR, BUT IN THE SUBSEQUENT YEAR. THESE RECEIPTS INCLUDED RS 12,9,21,400 FROM FRONTIE R GROUP INDIA LTD, RS 20,00,000 FROM PRERNA INTERNATIONAL, RS 24,00,000 FROM PRERNA INTERNATIONAL AND RS 4,84,254 FROM BHAGWATI BANQUETS AND HOTELS. WHILE IT WAS NOT ED THAT THESE RECEIPTS WERE INCLUDED IN THE INCOME OF THE SUBSEQUENT ASSESSMENT YEAR, THE ASSESSING OFFICER WAS OF THE VIEW THAT AS THE ASSESSEE WAS FOLLOWING MERC ANTILE METHOD OF ACCOUNTING, AND AS THE ASSESSEE HAD CLAIMED THE TDS CREDIT IN THIS YEAR, IT WAS NOT OPEN TO THE ASSESSEE TO SHOW THE RELATED INCOME IN THE SUBSEQUE NT ASSESSMENT YEAR. HE THUS MADE AN ADDITION OF RS 1,78,05,654. AGGRIEVED, ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE ADDITION BY OBSE RVING AS FOLLOWS: DURING THE COURSE OF PROCEEDINGS BEFORE A.O. IT WA S NOTICED BY A.O. THAT CERTAIN TDS CERTIFICATES FOR WHICH TDS AMOUNT WAS C LAIMED DOES NOT PERTAIN TO THE CURRENT YEAR AND THE INCOME OF WHICH WAS SH OWN IN SUBSEQUENT YEAR. THE A.O. THEREFORE MADE AN ADDITION OF ABOVE AMOUNT . THE LEARNED AR HAS DRAWN MY ATTENTION TO THE PROVIS IONS OF SECTION 199 WHICH DEALS WITH THE TREATMENT OF INCOME OF THE PERSON FR OM WHOSE INCOME THE DEDUCTION WAS MADE AND CREDIT TO BE GRANTED. THE IN COME FOR WHICH CERTIFICATES ARE SUBMITTED PERTAINS TO SUBSEQUENT Y EAR. THE CREDIT IS TO BE GRANTED IN THE SUBSEQUENT YEAR, BECAUSE THE CREDIT OF TDS IS TO BE GRANTED IN THE YEAR IN WHICH INCOME IS SHOWN. IT IS SUBMITTED THAT THE SAID INCOME IS SHOWN IN TH E NEXT YEAR. AFTER CONSIDERING THE ABOVE, WHEN THE INCOME IS SHO WN IN NEXT YEAR, I HOLD THAT THERE IS NO WARRANT IN TREATING THE INCOME AS CURRENT YEAR'S INCOME AND HENCE THE ADDITION OF RS.1,78,05,654/- IS DELETED. THE A.O. HAS NOT CONTROVERTED THE FACT THAT ASSESSEE HAS SHOWN THE A MOUNT OF RS. 1,78,05,654/- AS INCOME IN I.T.A.Y. 2009-10. HENCE THERE IS NO DI SPUTE SO FAR AS SHOWING OF INCOME IN I.T.A.Y. 2009-10 IS CONCERNED. HOWEVER CR EDIT OF THE CERTIFICATES PERTAINING TO THE SAID INCOME SHALL BE GRANTED IN T HE NEXT YEAR AND NOT IN CURRENT YEAR AS PER SECTION 199. 9. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 10. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE SEE NO REASONS TO INTERFERE IN THE MATTER, AS WE HAVE NOTED THAT THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO GRANT THE RELATED TDS CREDIT IN THE SUBSEQUENT ASSESSMENT YEAR AND THE INCOME IS DULY SHOWN IN THA T ASSESSMENT YEAR FOR THE REASON THAT THE AMOUNT WAS ACTUALLY RECEIVED LATER. IN ANY EVENT, THE ISSUE IS COMPLETELY TAX NEUTRAL, THE AMOUNT IS SHOWN IN THE YEAR IN WHICH I T IS RECEIVED AND THE CREDIT IS ALSO ITA NO 2680/AHD/2011 DIT VS. GUJARAT CRICKET ASSOCIATION AY : 2008-09 PAGE 5 OF 6 GIVEN IN THE YEAR IN WHICH INCOME IS OFFERED TO TAX . WE SEE NO INFIRMITY IN THE CONCLUSIONS ARRIVED AT BY THE CIT(A). NO INTERFEREN CE IS CALLED FOR. 11. GROUND NO. 2 IS THUS DISMISSED 12. IN GROUND NO. 3, THE ASSESSING OFFICER HAS RAIS ED THE FOLLOWING GRIEVANCE: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT IN ALLO WING THE CLAIM OF SET OFF OF BROUGHT FORWARD DEFICIT AND UNABSORBED DEPRECIAT ION. 13. AS FAR AS THIS GRIEVANCE OF THE ASSESSING OFFIC ER IS CONCERNED, IT IS SUFFICIENT TO TAKE NOTE OF THE FACT THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM ONLY BECAUSE THE REGISTRATION UNDER SECTION 12AA WAS CANCELLED. IN APPEAL, CIT(A) HELD THAT THE REGISTRATION, IN THE LIGHT OF LAW LAID DOWN BY THIS TRIBUNAL, COULD NOT BE CANCELLED WITH RETROSPECTIVE EFFECT. ACCORDINGLY, THE CLAIM W AS ALLOWED. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 14. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE CONFIRM THE CONCLUSION ARRIVED AT BY THE CIT(A) FOR THE SIMPLE REASON THAT THE CANCELLATION OF REGISTRATION UNDER SECTION 12AA, WH ICH WAS RAISON D'ETRE OF THE IMPUGNED DISALLOWANCE OF CLAIM, HAS BEEN REVOKED BY THE TRIBUNAL. THE REGISTRATION UNDER SECTION 12AA THUS STANDS RESTORED AND ALL NAT URAL COROLLARIES FOLLOW. THERE IS NO JUSTIFICATION FOR DISALLOWANCE OF THE CLAIM OF S ET OFF. WE CONFIRM THE CONCLUSION ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE I N THE MATTER. 15. GROUND NO. 3 IS THUS DISMISSED. 16. IN GROUND NO. 4, THE ASSESSING OFFICER HAS RAIS ED THE FOLLOWING GRIEVANCE: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALL OWING CAPITAL EXPENDITURE AS DEDUCTION. 17. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE POINTED OUT TO THE CT(A) AS THAT AS PER NOTE NO. 11 ATTACHED TO THE ST ATEMENT OF INCOME, THE ASSESSEE HAD INCURRED CAPITAL EXPENDITURE OF RS 8,76,56,542 WHICH SHOULD BE ALLOWED AS DEDUCTION. THE JUDICIAL PRECEDENTS IN SUPPORT WERE ALSO CITED. HOWEVER, THE CIT(A) OBSERVED THAT THE TOTAL INCOME WILL BE IN NEGATIVE, AFTER TAKING INTO ACCOUNT RELIEF GRANTED BY HIM, THERE IS NO NEED TO DEAL WITH THIS PLEA. THE ASSESSING OFFICER IS ON APPEAL ON THIS OBSERVATION AS WELL. 18. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE SEE NO NEED TO REVISIT THE CONCLUSIONS AT THE IN STANCE OF THE ASSESSING OFFICER. THERE IS NO ADJUDICATION OR DIRECTION IN FAVOUR OF THE ASSESSEE, AND THERE IS THUS NO REASON FOR ANY GRIEVANCE ON THE ISSUE. NO INTERFERE NCE IS CALLED FOR. 19. GROUND NO. 4 IS DISMISSED. ITA NO 2680/AHD/2011 DIT VS. GUJARAT CRICKET ASSOCIATION AY : 2008-09 PAGE 6 OF 6 20. THE ONLY OTHER GRIEVANCE, AS RAISED IN GROUND O F APPEAL NO. 5, IS AGAINST ALLOWING APPLICABILITY OF SECTION 11 BUT WHAT IT OV ERLOOKS IS THAT THE ONLY REASON FOR DENYING THE BENEFIT OF SECTION 11 WAS CANCELLATION OF REGISTRATION UNDER SECTION 12AA WHICH STANDS VACATED, AND THE REGISTRATION AT SUCH STANDS RESTORED. IN THE LIGHT OF THIS FACTUAL POSITION, THIS GRIEVANCE OF THE ASS ESSING OFFICER IS CLEARLY DEVOID OF LEGALLY SUSTAINABLE MERITS. WE, THEREFORE, REJECT G ROUND NO. 5 AS WELL. 21. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON THE 4 TH DAY OF MARCH, 2019. SD/- SD/- PRAMOD KUMAR JUSTICE P P BHATT (VICE PRESIDENT) (PRE SIDENT) AHMEDABAD, DATED THE 4 TH DAY OF MARCH, 2019 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD