ACIT (Exemption), New Delhi V. Delhi & District Circket Association, New Delhi

ITA 361/DEL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0774 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RENU SAHGAL
• Keywords: Business income; Depreciation; Charitable institution; Source of fund; Benefit of exemption
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.361/DEL/2016 ASSESSMENT YEAR : 2010-11 ACIT (EXEMPTION), CIRCLE- 1(1), NEW DELHI. VS. DELHI & DISTRICT CRICKET ASSOCIATION, FEROZSHAH KOTLA GROUND, BAHADURSHAH ZAFAR MARG, NEW DELHI. PAN : AAATD0828P (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI RAGHUNATH, SR.DR ASSESSEE BY : MS. RENU SAHGAL, ADV. DATE OF HEARING : 18-09-2018 DATE OF PRONOUNCEMENT : 19-09-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 05.11.2015 OF THE CIT(A)- 40, NEW DELHI RELATING TO ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN ASSOCIATION OF PERSON (AOP) AND FILED ITS RETURN OF INCOME ON 30.0 9.2010 DECLARING NIL INCOME. THE MAIN OBJECTS FOR WHICH THE ASSOCIATION WAS ESTABLISHED ARE AS UNDER :- (I) TO ENCOURAGE AND PROMOTE THE GAME OF CRICKET IN THE PROVINCE OF DELHI AND DISTRICT OF KARNAL, MEERUT, ALIGARH, BULANDSHAHR, G URGAON AND FOR AMONGST THE OTHER PURPOSES ORGANIZE AND RUN CLUB AND TO TAKE OVER THE ASSETS AND LIABILITIES OF THE ASSOCIATION. (II) TO LAYOUT ANY GROUND FOR PLAYING THE GAME OF C RICKET AND FOR OTHER PURPOSES OF THE ASSOCIATION AND TO PROVIDE PAVILION, REFRESH MENT ROOMS AND OTHER CONVENIENCES 2 ITA NO.361/DEL/2016 IN CONNECTION THEREWITH AND WITH A VIEW PURCHASE, L EASE OR OTHERWISE ACQUIRE LAND AT SUCH PRICE OR RENT AND FOR SUCH PERIOD AND CONDITIO N AS MAY SEEM EXPEDIENT. (III) TO FINANCE AND ASSIST IN FINANCING OF TEAMS. (IV) TO ASSIST IN ORGANIZING OR PROMOTION OF PROVIN CIAL CRICKET ASSOCIATIONS AND INTER PROVINCIAL TOURNAMENTS. 3. THE ASSESSEE ASSOCIATION WAS REGISTERED U/S 12A OF THE I.T. ACT, 1961 VIDE ORDER NO.633/96 DATED 06.03.1997. HOWEVER, THE SAM E WAS WITHDRAWN W.E.F. 01.04.2009 FOR ASSESSMENT YEAR 2009-10 ONWARDS VIDE ORDER DATED 21.05.2012 OF THE DIT (EXEMPTIONS), DELHI. THE ASSESSING OFFI CER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT THE ASSESSEE ASSOCIATION IS RECEIVING INCOME FROM CORPORATE BOXES, CHAMPION LEAGUE T-20 M ATCHES, INCOME FROM IPL MATCHES, MEMBERSHIP SUBSCRIPTION FEE, TOURNAMEN T SUBSIDY AND SPONSORSHIP MONEY. IT IS ALSO RECEIVING INCOME FROM SALE IF LI QUOR ETC. THE ASSESSING OFFICER OBSERVED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2009-10 THE ACTIVITY OF THE ASSESSE E HAS BEEN HELD TO BE COMMERCIAL IN NATURE AND PROVISO TO SECTION 2(15) W AS ATTRACTED AND INCOME OF THE ASSESSEE WAS ASSESSED WITHOUT GIVING ANY BENEFI T OF SECTION 11 AND 12 OF THE I.T. ACT. HE, THEREFORE, COMPLETED THE ASSESSMENT ON 12.03.2013 DETERMINING THE TOTAL INCOME OF (-) RS.3,19,56,121/- AFTER MAKI NG ADDITION OF RS.4,00,00,000/- AS CORPUS FUND FROM BCCI, RS.14,14 ,000/- AS CORPUS ADMISSION FEES AND RS.52,88,235/- AS DEPRECIATION T O THE DEFICIT AS PER INCOME AND EXPENDITURE ACCOUNT OF RS.1,39,13,319/-. HE, H OWEVER, ALLOWED DEPRECIATION AS PER THE INCOME TAX ACT OF RS.6,47,4 5,037/-. 3 ITA NO.361/DEL/2016 4. BEFORE THE LD. CIT(A), THE ASSESSEE MADE ELABORA TE ARGUMENT. IT WAS SUBMITTED THAT THE REGISTRATION U/S 12AA(1) WAS RES TORED BY THE ORDER OF THE TRIBUNAL VIDE ITA NO.3095/DEL/2012 ORDER DATED 13.0 1.2015. IT WAS FURTHER SUBMITTED THAT IN THE IMMEDIATELY PRECEDING ASSESSM ENT YEAR, THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE VIDE APPEAL ORDE R DATED 26.08.2014 AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF EXEMPTI ON U/S 11(1) TO THE ASSESSEE WITH ALL CONSEQUENTIAL BENEFITS AND THEREBY DIRECTI NG HIM TO DELETE ALL THE ADDITIONS AND DISALLOWANCES. THE RELEVANT OBSERVAT ION OF THE LD. CIT(A) FROM PARA 4.7 TO 4.10 OF THE ORDER READS AS UNDER :- 4.7 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSEE IS INVOLVED IN THE PROMOTION OF CRICKET GAMES AND SPORTS AND AS SUCH IT IS A CHARITABLE WORK AND THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11(1). T HE CASE OF THE SPORTS AND ITS PROMOTION COMES UNDER THE DEFINITION OF CHARITABLE PURPOSES WITHIN THE MEANING OF SECTION 11(1) AND IT IS APPARENT THAT THE PROVISION S OF THE PROVISO OF SECTION 2(15) IS NOT ATTRACTED. THE MERE FACT THAT THE ASSESSEE RECE IVES SPONSORSHIP FEES AND THE TELECASTING RIGHTS FEES DOES NOT MEAN THAT THE ASSE SSEE IS INVOLVED IN ANY TRADE, COMMERCE OR BUSINESS ACTIVITY. 4.8 THE CASE LAWS OF THE ASSESSEE RELIED ON BY THE ASSESSEE IS ALSO APPLICABLE. IT IS SEEN THAT IN THE CASE OF HAMSADHWANI VS. DIT (E) (2 012) 19 TAXMANN.COM 10 ITAT CHENNAI, THE ASSESSEE WAS PROMOTING MUSIC IN TAMIL NADU FOR WHICH IT WAS RECEIVING SPONSORSHIP AND COACHING FEES AND THE HON'BLE TRIBU NAL DID NOT ACCEPT THE ARGUMENT AND THE EXEMPTION WAS ALLOWED. 4.9 IT MAY NOT BE OUT OF PLACE TO MENTION THAT THE WORD CHARITABLE PURPOSES IS NOT DEFINED IN THE I.T. ACT, 1961 AND ONLY AN INCLUSIVE DEFINITION HAS BEEN PROVIDED IN SECTION 2(15) AND AS PER THE PRESENT STATUTE, IT IS APPARENT THAT ANY ACTIVITY FOR PUBLIC GOOD WILL COME WITHIN THE DEFINITION OF CHARITABLE PURPOSES U/S 11(1). 4.10 AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTA NCES OF THE CASE, I AM OF THE VIEW THAT THE ASSESSEE IS A CHARITABLE INSTITUTION AND I S INVOLVED IN CHARITABLE ACTIVITY AND THE INCOME IS APPLIED FOR CHARITABLE PURPOSES WITHI N THE MEANING OF SECTION 11(1) OF THE I.T. ACT, 1961 AND AS SUCH THE ASSESSEE IS ELIG IBLE FOR EXEMPTION U/S 11(1) AND THE 4 ITA NO.361/DEL/2016 AO IS NOT JUSTIFIED TO MAKE ANY ADDITION OR DISALLO WANCE AS THE SAME IS NOT CONSISTENT WITHIN THE PROVISION OF SECTION 11(1) AND ACCORDING LY THE AO IS DIRECTED TO ALLOW EXEMPTION U/S 11(1) TO THE ASSESSEE WITH ALL THE CO NSEQUENTIAL BENEFITS AND ALL THE ADDITIONS AND DISALLOWANCES MADE BY THE AO ARE CONS EQUENTLY DELETED AND AS SUCH THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW EXEMPTION U/ S 11(1) OF THE ACT PARTICULARLY WHEN THE ASSESSEE HAS SHOWN RECEIPTS FROM SPONSORSH IP INCOME. SALE OF LIQUOR, INCOME FROM CORPORATE BOXES, SALE OF TICKETS AND AD VERTISING/CONTRACTUAL RECEIPTS WHICH ARE PURELY COMMERCIAL IN NATURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ACTIVITIES OF THE ASS ESSEE ARE CHARITABLE WITHIN THE MEANING OF SECTION 11(1) OF THE ACT WHEN THE REGIST RATION U/S 12A GROUND BY DIT(E) HAS ALREADY BEEN WITHDRAWN BY LD. DIT(E) BY OBSERVI NG THE ACTIVITY OF THE ASSESSEE ARE NO LONGER COMING WITHIN THE DEFINITION OF CHARI TABLE PURPOSE AFTER AMENDMENT OF SECTION 2(15) OF THE ACT W.E.F. 01.04.2009. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 7. THE LD. DR HEAVILY RELIED ON THE ORDER OF THE AS SESSING OFFICER. 8. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND FILED A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2009-10 AND SU BMITTED THAT THE TRIBUNAL IN ITA NO.5809/DEL/2014 ORDER DATED 23.06.2017 HAS DEC IDED THE ISSUE AND APPEAL FILED BY THE REVENUE HAS BEEN DISMISSED. THEREFORE , THIS BEING A COVERED MATTER THE APPEAL FILED BY THE REVENUE SHOULD BE DISMISSED . 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THE ASSESSING OFFICER 5 ITA NO.361/DEL/2016 FOLLOWING HIS ORDER FOR ASSESSMENT YEAR 2009-10 DEN IED THE BENEFIT OF EXEMPTION U/S 11 AND 12 ON THE GROUND THAT THE ACTI VITIES OF THE ASSESSEE ARE COMMERCIAL IN NATURE AND PROVISO TO SECTION 2(15) A RE ATTRACTED. FURTHER, THE REGISTRATION U/S 12A HAS BEEN WITHDRAWN BY THE DIT (EXEMPTIONS), DELHI. WE FIND THE LD. CIT(A) ALLOWED THE CLAIM OF EXEMPTION U/S 11 AND 12, THE REASONS OF WHICH ARE ALREADY REPRODUCED IN THE PRECEDING PARAG RAPH. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. WE FIND THE TRIBUNAL IN ITA NO.5809/DEL/2014 ORDER DATED 23.06.2017 FOR ASSESSM ENT YEAR 2009-10 HAS PASSED AN ELABORATE ORDER AND THE APPEAL FILED BY T HE REVENUE WAS DISMISSED. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL FROM PARA 6 ONWARDS READ AS UNDER :- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS ORDER OF THE TRIBUNAL AS RELIED UPON BY THE LEARNED COUNSEL. FROM THE PERUSAL OF THE ASSESSMEN T ORDER, IT IS SEEN THAT THE LD. ASSESSING OFFICER HAS DENIED THE EXEMPTION U/S 11(1 ) ON THE GROUND THAT NOW IN WAKE OF NEWLY INSERTED PROVISO TO SECTION 2(15) WITH EFF ECT FROM 1.4.2009, THE ASSESSEES ACTIVITIES COULD NO LONGER BE HELD TO BE CHARITABLE IN NATURE. HE HAS ANALYZED THE VARIOUS SOURCES OF INCOME AND ALSO VARIOUS AGREEMEN TS THROUGH WHICH THE ASSESSEE WAS EARNING ITS INCOME LIKE SPONSORSHIP INCOME, SAL E OF LIQUOR, INCOME FROM CORPORATE BOXES, SALE OF TICKETS, ADVERTISING/CONTR ACTUAL RECEIPTS, INCOME FROM IPL MATCHES AND TELEVISION SUBSIDY RECEIPT FROM BCCI. WHILE ANALYZING THESE NATURE OF INCOMES/RECEIPTS EARNED BY THE ASSESSEE, HE ALSO EX AMINED THE VARIOUS AGREEMENTS ENTERED BY THE ASSESSEE. AFTER ANALYZING THESE AGR EEMENTS AND NATURE OF INCOME HE CAME TO THE CONCLUSION THAT THE ASSESSEES ACTIVITI ES FALLS WITHIN THE AMBIT OF TRADE, COMMERCE OR BUSINESS. AFTER COMING TO SUCH CONCLUS ION, IT APPEARS THAT HE HAS MADE A PROPOSAL TO DIT (EXEMPTION) FOR WITHDRAWAL OF REG ISTRATION U/S 12AA ON THE SAME VERY POINTS. IN PURSUANCE THEREOF, LD. DIT (E) VID E ITS ORDER DATED 23.5.2012 HAS WITHDRAWN THE REGISTRATION U/S 12AA(3), PRECISELY O N THE SAME ISSUES WHICH HAS BEEN RAISED BY THE ASSESSING OFFICER IN THE IMPUGNED ORD ER. THIS IS PRIMA FACIE EVIDENT FROM THE FACTS AND ISSUE DISCUSSED IN DETAIL BY THE TRIBUNAL IN ITS ORDER DATED 13.1.2015. ON A PLAIN READING OF THE DECISION OF T HE TRIBUNAL, WE FIND THAT ON EXACTLY SAME POINTS AS RAISED BY THE DIT(E) AND ALSO ARGUED FROM THE SIDE OF THE DEPARTMENT, THIS TRIBUNAL HAS TAKEN NOTE OF ALL THESE OBJECTION S RAISED BY THE REVENUE AS WELL AS 6 ITA NO.361/DEL/2016 THE SUBMISSIONS MADE BY THE ASSESSEE AND AFTER RELY ING UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION VS. DIT(E) REPORTED IN 360 ITR 633 AND THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GSI VS. DIT (SUPRA), THE TRIBUNAL HELD THAT ASSESSE ES ACTIVITIES REVOLVES AROUND CRICKET ONLY WHICH FALLS WITHIN THE AMBIT OF CHARI TABLE PURPOSE; AND NOTE OF ITS ACTIVITIES FALL IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE RELEVANT OBSERVATION AND FINDING OF THE TRIBUNAL IN THIS REGARD READS AS :- 10.6. THUS APPLYING THE PRINCIPLES LAID DOWN IN THE JUDGEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF TAMILNADU CRICKET ASSOCIATION (SUPRA), THE IMPUGNED ORDER CANCELLING THE REGISTRATION U/S 12A QUASHED. 10.7. EVEN OTHERWISE THE MAIN AND PREDOMINANT OBJE CT AND ACTIVITY OF THE ASSESSEE IS TO PROMOTE, REGULATE AND CONTROL THE GA ME OF CRICKET IN AND AROUND DELHI. THE UNDISPUTED FACT IS THAT OVER THE YEARS T HIS ACTIVITY HAS BEEN RECOGNIZED BY THE INCOME TAX DEPT. AS A CHARITABLE ACTIVITY AND REGISTRATION U/S 12A WAS GRANTED TO THE ASSESSEE. A NUMBER OF AS SESSMENT ORDERS U/S 143(3) WERE PASSED, WHEREIN THE ASSESSEE WAS HELD A S ELIGIBLE FOR EXEMPTION U/S 11/12 OF THE ACT. HENCE THIS FACT OF THE ASSESS EE BEING A CHARITABLE INSTITUTION IS NOT IN DISPUTE. 10.8. THE CORE ACTIVITY OF THE ASSESSEE IS UNDISPU TEDLY, CHARITABLE IN NATURE. HENCE IT IS NOT THE CASE OF THE REVENUE THAT THE AS SESSEE IS CARRYING ON TRADE, COMMERCE OR BUSINESS UNDER THE GARB OF THE ACTIVIT Y BEING GENERAL PUBLIC UTILITY. AS REGARDS THE VARIOUS RECEIPTS OF THE ASS ESSEE, WE FIND THAT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION, THE RECEIPTS WER E FROM: 1. SUBSCRIPTION 2. RENTING FOR HIRING CRICKET GROUND ROOMS AND PREM ISES 3. FEE FOR PROVIDING SERVICES FOR IPL 4. INCOME FROM ADVERTISEMENT 5. SUBSIDY FROM BCCI 6. SALE OF TICKETS FOR CONDUCT ING THE MATCHES AND 7. RESTAURANT AND CATERING INCOME. SUCH RECEIPTS OF MONEY BY THE TAMIL NADU CRICKET AS SOCIATION WERE NOT CONSIDERED BY THE HONBLE MADRAS HIGH COURT, AS ACT IVITIES IN THE 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. 10.9. THUS RESPECTFULLY FOLLOWING THE DECISION OF HONBLE 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) G ROUND BOOKING CHARGES, B) HEALTH CLUB CHARGES, C) INCOME FROM CORPORATE BOXES , D) LAWN BOOKING INCOME, E) SPONSORSHIP MONEY AND SALE OF TICKETS, ADVERTISE MENT, SOUVENIRS AND OTHER SUCH RECEIPTS DO NOT RESULT IN THE ASSESSEE BEING H ELD AS UNDERTAKING ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE SE RECEIPTS ARE INTRINSICALLY RELATED, INTERCONNECTED AND INTERWOVE N WITH THE CHARITABLE ACTIVITY AND CANNOT BE VIEWED SEPARATELY. THE ACTIV ITIES RESULTING IN THE SAID RECEIPTS ARE ALSO CHARITABLE ACTIVITIES AND NOT TR ADE, COMMERCE OR BUSINESS ACTIVITIES. 11. WE NOW TAKE UP EACH OF THE ISSUES RAISED BY TH E LD.DIT(E) IN HIS ORDER. 7 ITA NO.361/DEL/2016 11.1. ON THE ISSUE OF SPONSORSHIP INCOME FROM M/S. TWENTY FIRST CENTURY MEDIA (P) LTD. (TFCM), IT WAS EXPLAINED THAT, DESPI TE THE RECEIPT OF SPONSORSHIP MONEY DURING THE YEAR OF RS.31,01,038/- AND RECEIVING A SUM OF RS.14,20,000/- FROM BCCI AS SUBSIDY, THERE WAS A SH ORT FALL OF RS.29,84,835/-, WHICH WAS MET BY THE ASSESSEE. IT WAS SPECIFICALLY ARGUED BY THE LD.D.R. THAT THE AGREEMENT WITH M/S TWENTY FIRST CENTURY MEDIA PVT.LTD. IS COMMERCIAL IN NATURE. THE REPLY OF THE ASSESSEE IS THAT IT SHO ULD BE APPRECIATED THAT, FOR ANY ORGANIZATION TO RUN AND SURVIVE IT IS ESSENTIAL THAT IT SHOULD AUGMENT SOME FUNDS TO MEET THE COST/EXPENDITURE, AS REQUIRED TO BE INCURRED, TO CARRY OUT THE ACTIVITIES MEANT TO ACHIEVE ITS OBJECT. WE AGREE WI TH THE SUBMISSIONS OF THE ASSESSEE. 11.2. THE ASSESSEE HAS TO PERFORM MANY ACTIVITIES AND FOR THIS PURPOSE IT HAS TO ENTER INTO TRANSACTIONS WITH VARIOUS TYPES OF PE RSONS. THESE PERSONS CAN BE COMMERCIAL OR NON-COMMERCIAL ORGANIZATIONS, PROFESS IONALS, VENDORS OF GOODS, VENDOR OF SERVICES AND SO FORTH AND SO ON. M ERELY ENTERING INTO SUCH AGREEMENT DOES NOT TANTAMOUNT TO THE ASSESSEE BEING A BUSINESS ENTITY. THE QUESTION IS WHETHER THE ACTIVITY DONE BY ASSESSEE, WOULD TANTAMOUNT TO BUSINESS ACTIVITY OR NOT. THIS HAS TO BE VIEWED, FR OM VIEW POINT OF THE ASSESSEE. THE OTHER PERSON WITH WHOM THE ASSESSEE HAS AN AGRE EMENT, MAY HAVE ITS OWN OBJECT AND REASON FOR DOING TRANSACTION AND ACCORDI NGLY, THE NATURE OF TRANSACTION AND THE RESULTANT ACTIVITY WOULD BE DET ERMINED IN THE OTHER PERSONS HANDS. HOWEVER, THAT BY ITSELF, SHOULD NOT HAVE ANY BEARING AT ALL ON THE NATURE OF THE TRANSACTION, AS WELL AS RESULTANT ACTIVITY IN THE HANDS OF ASSESSEE. TO CARRY OUT A TRANSACTION IN AN ORGANIZE D MANNER AND TO ENSURE THAT THE TRANSACTION WOULD HELP THE ASSESSEE IN ACH IEVING ITS CHARITABLE OBJECT, IT IS IMPERATIVE THAT THE TERMS AND CONDITIONS OF T HE TRANSACTIONS ARE CLEARLY DEFINED, TO AVOID ANY CONFUSION OR CHAOS. IT WILL B E FURTHER GOOD, IF THESE TERMS AND CONDITIONS ARE REPRODUCED IN WRITING, IN THE FO RM OF AN AGREEMENT. MERELY BECAUSE AN ACTIVITY IS PERFORMED IN AN ORGANIZED MA NNER, THAT ALONE WILL NOT MAKE THESE ACTIVITIES AS BUSINESS/COMMERCIAL ACTIVI TY. PROFIT MOTIVE IS ONE ESSENTIAL INGREDIENT, WHICH IS APPARENTLY MISSING I N THIS CASE. IN CARRYING OUT AN ACTIVITY, ONE MAY EARN PROFIT, OR ONE MAY INCUR LOSS. BUT FOR MAKING IT AS BUSINESS ACTIVITY, THE PRESENCE OF PROFIT MOTIVE IS A SIN QUA NON I.E. CONDITION PRECEDENT AT THE TIME OF ENTERING INTO TRANSACTION. IN THIS CASE THE FACTS DEMONSTRATE THAT DESPITE THE RECEIPT OF AMOUNT FROM SPONSORSHIP AND SUBSIDY FROM BCCI, THERE WAS DEFICIT, WHICH WAS MET BY THE ASSESSEE. THUS THIS ADJUSTMENT RESULTED IN SUBSIDIZING THE COST OF THE ASSESSEE AND HENCE THERE IS NO PROFIT MOTTO. THIS CANNOT BE TERMED AS BUSINESS ACTIVITY. SIMILAR IS THE VIEW OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF TAM IL NADU CRICKET ASSOCIATION (SUPRA). 11. 3. ON THE ISSUE OF SALE OF LIQUOR, IT WAS SUBM ITTED THAT INITIALLY DDCA WAS FORMED AS A CLUB TO TAKE OVER THE ASSETS AND LIABIL ITIES OF THE ASSOCIATION CALLED, DELHI CRICKET ASSOCIATION. HE REFERRED TO THE OBJECTS AND SUBMITTED AS FOLLOWS. ONE OF THE OBJECTS AS GIVEN IN THE MOA OF DDCA IS TO LAY GROUND FOR PLAYING GAME OF CRICKET AND TO PROVIDE PAVILION, REFRESHMEN T ROOMS AND OTHER FACILITIES IN CONNECTION THEREWITH. THEREFORE, AN EATERY WAS E STABLISHED WHICH WAS EVENTUALLY SHAPED AS A CANTEEN FOR THE BENEFIT OF T HE MEMBERS AS WELL AS FEW 8 ITA NO.361/DEL/2016 OTHER PERSONS ASSOCIATED WITH DDA E.G. PLAYERS, COA CHES, STAFF, OTHER GUESTS ETC. 11.4. IN OUR VIEW, FOR THE PURPOSE OF MAKING THIS CANTEEN SELF SUSTAINABLE, IT HAS TO FOLLOW GLOBAL STANDARDS AND INTERNATIONAL PR OTOCOLS, SINCE CRICKET IS PLAYED AT INTERNATIONAL LEVEL. CANTEEN KEEPS VARIOU S ITEMS AS PER MENU. LIQUOR IS JUST PART OF THIS MENU. IT IS NOT SOLD INDEPENDE NTLY AS TRADING ITEM. THE EATERY IS AVAILABLE FOR THE USE ONLY OF MEMBERS, PL AYERS, STAFF, OTHER GUESTS OF DDCA. IT IS NOT OPEN FOR PUBLIC. A WALK IN CUSTOMER /GUEST, CANNOT ENJOY THE FACILITY OF THIS EATERY. THE BASIC FACT IS THAT THI S CANTEEN HAS DIRECT AND INEXTRICABLE LINK WITH ONE OF THE CORE ACTIVITIES O F DDCA I.E. MAINTAINING SUCH A HUGE CRICKET STADIUM AND PROMOTING THE GAME OF CR ICKET. THE REVENUE, IN THIS CASE IS TRYING TO PROJECT THAT THE ASSESSEE AS A LIQUOR DEALER. THIS IS NOT CORRECT. INTERNATIONALLY, WHEN FACILITIES ARE PROVI DED TO PLAYERS, LIQUOR IS PART OF THE MENU. THIS IS JUST INCIDENTAL TO PROVIDING F OOD AND BEVERAGES. WHEN THE LD.DIT(E) DOES NOT FIND ANYTHING WRONG IN THE ASSES SEE SUPPLYING FOOD AND BEVERAGES IN THE CANTEEN TO THE MEMBERS, WE CANNOT FIND FAULT WITH LIQUOR BEING PART OF THE MENU CARD AND BEING SERVED AS PER INTERNATIONAL CUSTOMS AND REQUIREMENTS. 11.5. HENCE TO MEET GLOBAL STANDARDS THESE FACILIT IES ARE REQUIRED AND THESE ARE NOT INDEPENDENT OF THE ACTIVITY OF PROVIDING FO OD AND REFRESHMENTS TO MEMBERS AND ASSOCIATED PERSONS. RUNNING OF A CANTEE N IS AN INCIDENTAL AND NECESSARY ACTIVITY AS IS IN EVERY ORGANIZATION. THI S CANNOT BE TERMED AS BUSINESS ACTIVITY. IT IS PART AND PARCEL OF THE CHA RITABLE ACTIVITY AND THE RECEIPT IN QUESTION CANNOT BE TERMED AS EXEMPT FROM ACTIVIT Y WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. 11.6. ON ADVERTISING AND CONTRACTUAL RECEIPTS THE SAME EXPLANATION AS WAS GIVEN BY THE ASSESSEE, AS IN THE CASE OF SPONSORSHI P MONEY. CONSISTENT WITH THE VIEW EXPRESSED BY US, WHEN WE WERE DEALING WITH SPO NSORSHIP MONEY, WE HOLD THAT THESE CONTRACTUAL RECEIPTS GO TO REDUCE PART O F THE COST INCURRED BY THE ASSESSEE FOR ITS CHARITABLE ACTIVITY AND HENCE CANN OT BE TERMED AS BUSINESS OR THAT THE ASSESSEE HAS UNDERTAKEN ACTIVITY IN THE NA TURE OF TRADE, COMMERCE OR BUSINESS. 11.7. ON RECEIPTS FROM IPCL AN ELABORATE EXPLANATIO N WAS GIVEN, THE PITH AND SUBSTANCE IS THAT EXPENDITURE HAS TO BE INCURRE D BY THE DDCA ON VARIOUS ITEMS, AS COORDINATION HAS TO BE DONE AND THE AGGRE GATE OF EXPENDITURE INCURRED FOR THE SAME IS RS.238 LAKHS. IT WAS SUBMI TTED THAT THE DDCA, INITIALLY MEETS THIS EXPENDITURE OUT OF ITS OWN SOU RCES AND THERE AFTER THE BCCI AND LEGAL FRANCHISEE, CONTRIBUTE AND COMPENSATE PAR T OF THIS EXPENSES. THE SAME ARGUMENTS AS WERE ADVANCED BY THE ASSESSEE IN THE CASES WHERE SPONSORSHIP MONEY RECEIVED, WERE MADE HERE ALSO. TH E SUMMARY OF THE SUBMISSIONS ARE AS FOLLOWS. OUR RESPECTFUL SUBMISSION IS THAT, AS WE HAVE GIVE N DETAILED SUBMISSION IN EARLIER PART OF OUR SUBMISSIONS WHEREIN WE HAVE MAD E ANALYSES OF RECEIPTS AS WELL AS OF THE EXPENSES INCURRED BY THE ASSESSEE. THE ANALYSIS OF EXPENSES HAVE REVEALED THAT THE EXP ENSES HAVE BEEN INCURRED ON THE PROMOTION OF THE GAME OF CRICKET. THESE EXPE NSES HAVE BEEN INCURRED EITHER FOR THE DEVELOPMENT OF GAME OF CRICKET OR TH E DEVELOPMENT OF PLAYERS. 9 ITA NO.361/DEL/2016 THERE IS NO OTHER CAUSE OR ITEM FOR WHICH ANY AMOUN T HAS BEEN SPENT BY THE ASSESSEE. SIMILARLY, WHEN WE ANALYSE THE RECEIPT SIDE, WE WOU LD FIND THAT THE RECEIPTS ARE DIRECTLY OR INEXTRICABLY LINKED WITH THE ORGANI ZING OF MATCHES AND TOURNAMENTS OR FOR PROMOTION OF GAME OF CRICKET IN ANY OTHER MANNER OR FOR MAINTENANCE OR BUILDING UP THE INFRASTRUCTURE MEANT FOR THE PROMOTION OF THE GAME OF CRICKET. THUS, IT CAN BE SAFELY SAID THAT T HE DDA EXISTS FOR CRICKET AND CRICKET ONLY. THE CBDT HAS ALREADY CLARIFIED THAT SPORTS IS A MAT TER OF GENERAL PUBLIC UTILITY. THEREFORE DDCA SATISFIES THE CONDITION OF HAVING A CHARITABLE OBJECT AS MENTIONED IN S.2(15) OF THE INCOME TAX ACT, 1961 . IT DOES NOT VIOLATE ANY CONDITION AS MENTIONED IN PROVISO TO S.2(15). THE APPREHENSION THAT CERTAIN INCOME RECEIVED BY TH E ASSESSEE, DURING THE YEAR, PARTAKE THE CHARACTER OF BUSINESS INCOME, IS ILL FOUNDED. IN THIS REGARD WE HAVE SUBMITTED IN DETAIL THAT THIS APPREHENSION IS MISPLACED ON ACCOUNT OF VARIOUS SUBMISSIONS AS PER DETAILS GIVEN BELOW. 1. THE ENTIRE RECEIPTS HAVE BEEN RECEIVED FOR THE P ROMOTION OF GAME OF CRICKET. 2. THE ASSESSEE IS NOT FREE TO USE IT AS PER ITS CO NVENIENCE FOR ANY PURPOSE OTHER THAN FOR PROMOTION OF CRICKET. THUS, THE AMOUNTS RECEIVED IN THIS MANNER CANNOT BE CHARACTERIZED AS BUSINESS RECEIPTS. 3. THE AMOUNT HAS BEEN RECEIVED AS THE VOLUNTARY CO NTRIBUTION ON DISCRETION OF THE CONTRIBUTOR (FOR E.G. BCCI). THES E HAVE BEEN RECEIVED FOR RAISING THE FUNDS FOR MEETING ITS COSTS AND EXP ENSES. 4. IN NONE OF THE CASES THERE IS ANY QUID PRO QUO. THE ULTIMATE BENEFICIARY IS EITHER THE CRICKETER OR THE GAME OF THE CRICKET. 5. THE ASSESSEE IS NOT CHARGING ANY FEES OR REVENUE FROM THE CRICKETER WHO IS ULTIMATE BENEFICIARY. THUS, THERE IS NO QUID PRO QUO RELATIONSHIP WITH THE CRICKETER. THE ASSESSEE IS PROMOTING CRICK ET ON CHARITABLE BASIS AS FAR AS REAL BENEFICIARY IS CONCERNED. 6. WHENEVER THE REVENUE IS EARNED THESE ARE NOT EAR NED ON COMMERCIAL LINES AND THESE ARE EARNED WITHOUT ANY COMMERCIAL A TTRIBUTES. THE REVENUE IS GENERATED FOR RECOVERING THE COST, AT LE AST PARTLY IF NOT FULLY. 7. THE ASSESSEE HAS NOT ENTERED ANY TRANSACTION WI TH ANY PERSON ON PROFIT MOTIVE. THE OTHER PERSON MAY BE AN ENTREPREN EUR OR MAY BE DOING BUSINESS BUT THE ASSESSEE HAS ENTERED THE TRA NSACTION ONLY FOR THE SOLE AND DEDICATED PURPOSE I.E. FOR THE PROMOTION O F CRICKET. 8. THESE FACTS ARE WORTH NOTING THAT (A) THE ASSESS EE HAS NOT DIVERTED ITS FUNDS FOR ANY PURPOSE OTHER THAN PROMOTION OF C RICKET; (B) THE ASSESSEE HAS NOT DONE ANY ACTIVITY OR TRANSACTION W ITH PROFIT MOTIVE, (C) THE ASSESS HAS NOT DONE ANY ACTIVITY BEYOND AND OUT SIDE ITS OBJECTS AND (D) THERE IS NO CHANGE IN FACTS SO AS TO DEVIATE FR OM THE STAND TAKEN BY LD.A.O. IN ALL THE PAST YEARS ACCEPTING THE CLAIM O F THE ASSESSEE ALL ALONG ON FACTS AS WELL AS ON LAW. 11.8. IN VIEW OF OUR DECISION OF SPONSORSHIP AND SU CH OTHER RECEIPTS, WE AGREE WITH THE ARGUMENTS MADE BY THE ASSESSEE. REGA RDING SALE OF TICKETS THE ASSESSEE EXPLAINED THAT NO TICKETS ARE SOLD FOR RAN JI TROPHY AND ONLY IN CASE OF INTERNATIONAL MATCHES, RS.200/- PER TICKET ARE L EVIED, WITH A SOLE INTENTION TO 10 ITA NO.361/DEL/2016 CONTROL THE CROWDS AND THAT THE COST INCURRED PER T ICKET IS MUCH MORE THAN THE AMOUNT WHICH IS CHARGED FOR TICKET. UNDER THESE CIR CUMSTANCES, THE SALE OF TICKETS CANNOT BE CONSIDERED AS AN ACTIVITY OF TRA DE, COMMERCE OR BUSINESS. WE AGREE WITH THE SUBMISSIONS OF THE ASSESSEE. 11.9. REGARDING PLAYING CARDS, IT IS AN INCIDENTAL RECREATION ACTIVITY UNDERTAKEN IN MOST CLUBS AND WHAT IS CHARGED BY THE ASSESSEE, GOES TO RECOVER THE COSTS FOR PROVIDING SUCH RECREATIONAL FACILITY TO ITS MEMBER. THE RECEIPTS ARE MINISCULE AND HENCE NEGLIGIBLE. 11.10. SIMILARLY AS FAR AS RECEIPTS FROM HEALTH CL UB IS CONCERNED, WE FIND THAT, ONLY A PART OF THE EXPENDITURE INCURRED ON HEALTH C LUB IS RECOVERED BY WAY OF CHARGES FROM MEMBERS, WHO ARE USING THE HEALTH CLUB FACILITY. THESE ARE ALL, AT BEST BE CALLED USER CHARGES. IN OUR VIEW THESE R ECEIPTS CANNOT BE TERMED AS AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS. IN FACT HEALTH CLUB FACILITY IS RECOGNIZED TO PROMOTE THE GAME OF CRICKET. 11.11. ALL THE RECEIPTS OF THE ASSESSEE ARE INTRIN SICALLY LINKED WITH THE ACTIVITY OF ORGANIZING MATCHES AND TOURNAMENTS FOR THE PROMO TION OF CRICKET. USER CHARGES ARE REQUIRED FOR MAINTAINING THE FACILITIES THAT ARE PROVIDED AS PART OF THE INFRASTRUCTURE, FOR CONDUCTING THE ACTIVITIES O F THE ASSESSEE. 11.12. ON CONSIDERATION OF ALL THE FACTS AND CIRCU MSTANCES OF THE CASE AND WHEN VIEWED IN TOTALITY, WE HAVE TO COME TO A CONCL USION THAT THE ASSESSEE IS NOT CARRYING OF THE ACTIVITIES WITH ANY PROFIT MOTI VE OR WITH ANY SELF INTEREST. THE CONTRIBUTION RECEIVED BY WAY OF SPONSORSHIP, AD VERTISEMENT, SALE OF TICKETS ETC. AND USER CHARGES ON THE FACTS OF THIS CASE, DO NOT CONVERT THE CHARITABLE ACTIVITY INTO TRADE, COMMERCE OR BUSINESS ACTIVIT Y. 11.13. IN VIEW OF THE ABOVE DISCUSSION AND IN VIEW OF THE BINDING JUDGEMENTS CITED ABOVE, WE HAVE TO NECESSARILY QUASH THE IMPUG NED ORDER PASSED BY THE DIT(E) U/S 12AA(3) R.W.S. 12 OF THE ACT, AS IT IS B AD IN LAW. 7. ON A PLAIN READING OF THE AFORESAID DECISION AND CONCLUSION OF THE TRIBUNAL, WE FIND THAT THE TRIBUNAL HAS ADDRESSED EXACTLY SIM ILAR KINDS OF OBJECTIONS RAISED BY THE REVENUE BEFORE US AND AFTER DEALING WITH EACH A ND EVERY ISSUE TRIBUNAL HAS COME TO CONCLUSION THAT THE ASSESSEE IS NOT CARRYING OUT ANY BUSINESS ACTIVITIES AND NONE OF ITS RECEIPTS CAN BE TERMED AS AN ACTIVITY IN THE NA TURE OF TRADE, COMMERCE AND BUSINESS. ONCE SUCH FINDING OF FACT HAS BEEN GIVE N ON SIMILAR SET OF FACTS, THEN WE DO NOT FIND ANY REASON TO DEVIATE FROM SUCH A FINDING IN ASSESSEES OWN CASE, THEREFORE, FOLLOWING THE AFORESAID DECISION WE REJECT THE GROU NDS RAISED BY THE REVENUE AND UPHOLD THE ORDER OF THE LEARNED CIT (APPEALS) FOR R ESTORING THE EXEMPTION U/S 11(1) TO THE ASSESSEE FOR THE A.Y. 2009-10. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 10. SINCE THE ASSESSING OFFICER FOLLOWING HIS ORDER FOR ASSESSMENT YEAR 2009-10 HAS DENIED THE BENEFIT OF SECTION 11 AND 12 OF THE ASSESSEE AND SINCE THE ORDER FOR ASSESSMENT YEAR 2009-10 HAS ALREADY B EEN DECIDED IN FAVOUR OF THE 11 ITA NO.361/DEL/2016 ASSESSEE BY THE TRIBUNAL, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE BY THE LD. DR AGAINST THE ORDER OF TH E TRIBUNAL, THE ORDER OF THE LD. CIT(A) ALLOWING THE BENEFIT OF SECTION 11 AND 12 TO THE ASSESSEE IS UPHELD. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMI SSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF SEPTEMBER, 2018. SD/- SD/- (SUDHANSHU SRIVASTAVA) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19-09-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI