Tamilnadu Cricket Association, CHENNAI V. DIT, CHENNAI

ITA 396/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0865 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-01-2013
• Assessment Year: misc
• Appeal Filed On: 24-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURU BASHYAM IRS
• Assessee Lawyers: S SRIDHAR
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NO.396(MDS)/2012 THE TAMIL NADU CRICKET ASSOCIATION, NO.5, M.A. CHIDAMBARAM STADIUM, VICTORIA HOSTEL ROAD, CHEPAUK, CHENNAI-600 005. PAN AAAAT0398M. VS. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR, ADVOCATE RESPONDENT BY : SHRI GURU BASHYAM, IRS, JCIT DATE OF HEARING : 23 RD JANUARY, 2013 DATE OF PRONOUNCEMENT : 22 ND FEBRUARY, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE DIRECTOR O F INCOME-TAX (EXEMPTIONS) AT CHENNAI, DATED 29-12-2011, WHEREIN THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) HAS CANCELLED S ECTION 12AA - - ITA 396 OF 2012 2 REGISTRATION GRANTED TO THE TAMIL NADU CRICKET ASSO CIATION, EXERCISING THE POWERS CONFERRED ON HIM UNDER SUB-SE CTION(3) OF SECTION 12AA OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE, THE TAMIL NADU CRICKET ASSOCIATIO N, IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTR ATION ACT, 1860, ON 1 ST OF MAY, 1953. THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE HAS PROVIDED A SET OF MAIN OBJECTS IN PART IV OF ITS MEMORANDUM OF ASSOCIATION AND ALSO A SET OF INCIDEN TAL OBJECTS FOR THE PURPOSE OF ACHIEVING THE MAIN OBJECTS. 3. THE MAIN OBJECT OF THE ASSESSEE IS TO MAINTAIN A GENERAL CONTROL OF THE GAME OF CRICKET IN THE STATE OF TAMIL NADU AND IN THE UNION TERRITORY OF PUDUCHERRY AND GIVE I TS DECISION ON ALL MATTERS CONCERNING THE GAME EITHER WHEN REFERRE D TO OR SUO MOTU. THE ASSOCIATION PROPOSES TO SPREAD THE GAME THROUGHOUT THE STATE OF TAMIL NADU BY ORGANISING TOURNAMENTS, INCLUDING INTER-UNIVERSITY, INTER-SCHOOL AND INTER-ASSOCIATIO N MATCHES, TO EDUCATE YOUNG SPORTSMEN IN THE GAME GENERALLY AND A LSO IN THE FIELD OF PHYSICAL CULTURE AND THE SPIRIT OF SPORTSM ANSHIP. IT IS DECLARED THAT THE BENEFITS WOULD BE AVAILABLE TO TH E GENERAL PUBLIC IRRESPECTIVE OF CASTE, CREED, RELIGION OR SE X. THE OBJECTS OF - - ITA 396 OF 2012 3 THE ASSOCIATION CONTINUE TO STATE AS TO MAINTAIN A LIBRARY, TO COMMUNICATE WITH PUBLIC AUTHORITIES IN INDIA AND AB ROAD, TO PROVIDE, ACQUIRE AND MAINTAIN PLAY-GROUNDS AND OTHE R FACILITIES, TO ACT IN TANDEM WITH SIMILAR ASSOCIATIONS FOR THE DEVELOPMENT OF CRICKET, ETC. IT ALSO PROVIDES FOR CONDUCTING COAC HING FOR THE BENEFIT OF CRICKETERS AND ALSO TO DO ALL OTHER LAWF UL AND POSSIBLE NEEDS TO PROMOTE THE OVERALL DEVELOPMENT OF THE SPO RTS OF CRICKET WITHIN ITS JURISDICTION. 4. THE INCIDENTAL OBJECTS PROVIDED IN THE MEMORAND UM ENABLE THE ASSOCIATION TO ARRANGE, SUPERVISE, REGUL ATE AND FINANCE VISITS OF STATE TEAMS OR FOREIGN TEAMS UNDE R THE AUSPICES OF BODIES LIKE THE BOARD OF CONTROL FOR CR ICKET IN INDIA, TO ARRANGE AND MANAGE TOURNAMENTS, TO START AND PUB LISH JOURNALS IN SPORTS IN GENERAL AND THE GAME OF CRICK ET IN PARTICULAR, TO ENGAGE COACHES, OTHER EXPERTS TO TRAIN THE ASPIR ANTS OF THE GAME OF CRICKET, ETC. 5. IN INDIA THE GAME OF CRICKET IS PROMOTED AND REGULATED UNDER THE GENERAL CONTROL OF THE NATIONAL BODY BY NAME BOARD OF CONTROL FOR CRICKET IN INDIA (BCCI). THE ASSESSEE IS BESTOWED WITH THE RESPONSIBILITY OF PROMOTING AND D EVELOPING THE - - ITA 396 OF 2012 4 GAME OF CRICKET IN THE STATE OF TAMIL NADU AND IN T HE UNION TERRITORY OF PUDUCHERRY UNDER THE OVERALL SUPERVISI ON AND CONTROL OF BCCI. EVERY STATE IS HAVING STATE-WISE ASSOCIAT IONS, LIKE THE ASSESSEE, TO LOOK AFTER THE MATTERS OF THE GAME OF CRICKET IN THEIR RESPECTIVE STATES. UNDER THE STATE ASSOCIATIONS LI KE THE ASSESSEE, THERE ARE DISTRICT ASSOCIATIONS TOO. THE DISTRICT ASSOCIATIONS CARRY ON SIMILAR ACTIVITIES WITHIN THE IR DISTRICTS UNDER THE OVERALL GUIDANCE AND SUPERVISION OF STATE ASSOC IATIONS LIKE THE ASSESSEE. THIS IS THE ORGANIZATIONAL STRUCTURE OF THE CRICKET BODIES FUNCTIONING IN INDIA. 6. AS THE ASSESSEE IS ESTABLISHED FOR THE PURPOSE OF PROMOTING AND DEVELOPING THE GAME OF CRICKET, IT WA S REGISTERED UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 ON 2 8-3-2003. THE REGISTRATION WAS GRANTED ON THE BASIS OF THE SU BMISSIONS MADE BY THE ASSESSEE THAT ITS ACTIVITIES ARE COVERE D BY CIRCULAR NO.395 OF THE CENTRAL BOARD OF DIRECT TAXES, DATED 24-9-1984. THE SAID CIRCULAR HAS CLARIFIED THAT PROMOTION OF S PORTS AND GAMES IS AN OBJECT OF GENERAL PUBLIC UTILITY AND, T HEREFORE, COVERED UNDER THE DEFINITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE INCOME-TAX ACT, 1961. - - ITA 396 OF 2012 5 7. WHEN THE ASSESSEE WAS GRANTED REGISTRATION UNDE R SECTION 12AA, SECTION 2(15) READ AS FOLLOWS: CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE ABOVE INCLUSIVE DEFINITION, AS AMENDED BY THE F INANCE ACT, 1983, STOOD EFFECTIVE FROM 1-4-1984. 8. SECTION 2(15) WAS AGAIN SUBSTITUTED BY THE FINA NCE ACT, 2008, WITH EFFECT FROM 1-4-2009, WHEREBY A PRO VISO HAS BEEN ADDED TO THE MAIN BODY OF DEFINITION PROVIDED UNDER SECTION 2(15). THE SAID PROVISO READS AS BELOW: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTI VITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR AN Y ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y 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 FRO M SUCH ACTIVITY. - - ITA 396 OF 2012 6 9. THE RESULT OF THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2008 WITH EFFECT FROM 1-4-2009 BY INSE RTING THE ABOVE PROVISO TO SECTION 2(15) IS TO EXPLAIN THE SC OPE OF THE EXPRESSION ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY . THE GENERAL EXPRESSION EARLIER STOOD IN THE PROVISION OF LAW STATED UNDER SECTION 2(15) AS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY WAS VERY WIDE, SO THAT EVEN ACTIVITIES OF COMMERCIAL NATURE WERE COLO URED AS CHARITABLE ACTIVITIES BY APPLYING THE TOUCHSTONE TH AT THOSE COMMERCIAL ACTIVITIES ARE OF GENERAL PUBLIC UTILITY . IT IS IN ORDER TO BRIDLE THE UNCONTROLLED EXPLOITATION OF THE EXPRES SION OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY THAT FINANCE ACT, 2008 HAS BROUGHT THE PROVISO WITH EFFECT FROM 1-4-2009, STATING THAT CARRYING 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 BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, SHALL NOT B E CONSIDERED AS CHARITABLE EVEN IF CARRYING ON OF THOSE ACTIVITI ES DO HELP THE ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY . - - ITA 396 OF 2012 7 10. THE LAW HAS MADE A DIVIDING LINE BETWEEN ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY IN THE STRICT SENSE OF CHARITY AND OTHER ACTIVITIES OF ADV ANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY CARRIED ON I N THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY OTHER SIMILAR AC TIVITY OF MAKING PROFIT. 11. IN THE BACKGROUND OF LAW AS IT STOOD AMENDED B Y THE FINANCE ACT, 2008 WITH EFFECT FROM 1 ST APRIL, 2009, THE ASSESSING OFFICER CALLED FOR THE DETAILS OF THE ACT IVITIES OF THE ASSESSEE TO EXAMINE WHETHER THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE HIT BY THE RESTRAINT INSERTED IN THE P ROVISO TO SECTION 2(15) OF THE ACT. THE ASSESSING OFFICER, AFTER EXA MINING THE DETAILS AVAILABLE BEFORE HIM, CAME TO A CONCLUSION THAT THE ASSESSEE HAS DEVIATED FROM ITS DECLARED OBJECTS AND THAT AT PRESENT IT IS CARRYING ON ACTIVITIES OF COMMERCIAL NATURE AND AS SUCH THERE IS NO JUSTIFICATION IN CONTINUING THE RE GISTRATION GRANTED UNDER SECTION 12AA OF THE ACT. THE ASSESSING OFFIC ER, THEREFORE, SUBMITTED A PROPOSAL TO THE DIRECTOR OF INCOME-TAX( EXEMPTIONS) TO INITIATE PROCEEDINGS FOR CANCELLATION OF REGISTR ATION UNDER SECTION 12AA(3) OF THE ACT. - - ITA 396 OF 2012 8 12. IN VIEW OF THE ABOVE PROPOSAL, THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) CALLED FOR THE DETAILS OF TH E ASSOCIATION AND EXAMINED THEM IN DETAIL. THE DIRECTOR OF INCOM E- TAX(EXEMPTIONS), AFTER EXAMINING THE DETAILS AND EX PLANATIONS OFFERED BY THE ASSESSEE, CAME TO A CONCLUSION THAT THE ASSESSEE IS NOT PURSUING THE OBJECTS OF GENERAL PUBLIC UTILI TY, BUT WAS CARRYING ON ACTIVITIES IN THE NATURE OF BUSINESS, R ESULTING IN HUGE TURNOVER YEAR AFTER YEAR AND, THEREFORE, THE OBJECT OF THE ASSESSEE IS NO LONGER COMING WITHIN THE DEFINITION OF CHARITABLE PURPOSE EXPLAINED IN SECTION 2(15) WITH EFFECT FRO M 1-4-2009 IN VIEW OF THE PROVISO INSERTED UNDER SECTION 2(15) BY FINANCE ACT, 2008. HE ACCORDINGLY CANCELLED THE REGISTRATION EX ERCISING THE POWERS CONFERRED ON HIM UNDER SECTION 12AA(3) OF TH E INCOME- TAX ACT, 1961. 13. THE ASSESSEE IS AGGRIEVED AND, THEREFORE, THIS APPEAL BEFORE US. 14. IT IS USEFUL TO REPRODUCE THE RELEVANT PORTION S OF THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL AS UNDER:- - - ITA 396 OF 2012 9 1. THE DIT(E) ERRED IN INVOKING HIS JURISDICTION UNDER SECTION 12AA(3) OF THE INCOME-TAX ACT (THE ACT) CANCELLING THE REGISTRATION GRANTED TO THE APPELLANT U/S 12AA WITH EFFECT FROM 1-4-2009. 2. THE DIT(E) FAILED TO APPRECIATE THAT HE COULD NO T HAVE PASSED THE IMPUGNED ORDER U/S 12AA(3) OF THE ACT AS THE PRE-CONDITIONS NECESSARY FOR INVOKING TH E PROVISIONS OF THE SAID SECTION VIZ., THE APPELLANT S ACTIVITIES (A) ARE NOT GENUINE OR (B) ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS, HAD NOT BEEN FULFILLED IN THE PRESENT CASE. 3. THE DIT(E) ERRED IN HOLDING THAT THE ACTIVITIES OF THE APPELLANT WERE NOT CHARITABLE AND IN SUCH A CAS E ITS ACTIVITIES WILL BE HIT BY THE GENUINENESS CLAUS E AND THEREFORE COVERED BY SECTION 12AA(3) OF THE ACT. 4. THE DIT(E) ERRED IN HOLDING THAT THE APPELLANT WAS NOT CARRYING A CHARITABLE ACTIVITY AS THE CONDITIONS SPECIFIED IN PROVISO TO SEC.2(15) OF THE ACT HAD BEEN FULFILLED IN ITS CASE. - - ITA 396 OF 2012 10 5. THE DIT(E) ERRED IN COMING TO THE CONCLUSION THA T THE VARIOUS AMOUNTS RECEIVED BY THE APPELLANT ARE COMMERCIAL IN NATURE. 6. THE DIT(E) ERRED IN HOLDING THAT CONDUCT OF TEST MATCHES AND ODIS BY THE APPELLANT IS IN THE NATURE OF COMMERCE AND BUSINESS. 7. THE DIT(E) ERRED IN OBSERVING THAT THE TV SUBSID Y OF ` 16,82,38,072 RECEIVED BY THE APPELLANT FROM BCCI IS A SHARE OF ADVERTISEMENT INCOME WHICH CANNOT BE TREATED IN ISOLATION FROM CONDUCT OF MATCHES. HE OVERLOOKED THAT THIS RECEIPT WAS IN TH E NATURE OF A SUBSIDY/GRANT FROM BCCI WHICH HAD BEEN CONFIRMED BY THEM AND THE APPELLANT. 8. THE DIT(E) ERRED IN HOLDING THAT THE APPELLANT WAS RECEIVING COMMERCIAL RECEIPTS FOR CONDUCTING O F IPL MATCHES. FOR REACHING THIS CONCLUSION HE ERRONEOUSLY OBSERVED THAT THOUGH THE IPL SUBSIDY IS STATED TO BE A GRANT, THE SAME IS COMPENSATION FOR FORGOING OF ADVERTISEMENT RIGHT BY THE APPELLANT. - - ITA 396 OF 2012 11 9. THE DIT(E) ERRED IN HOLDING THAT MISCELLANEOUS RECEIPTS ARE COMMERCIAL IN NATURE. HE FURTHER ERRE D IN OBSERVING THAT SHARING OF ` 2,50,000 FROM MCC FOR THE ADVERTISEMENT RECEIVED BY THE APPELLANT IS A COMMERCIAL RECEIPT. 15. SHRI S.SRIDHAR, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE, ARGUED THE CASE AT LENGTH. THE LEARN ED COUNSEL EXPLAINED THAT PROMOTING AND DEVELOPING OF SPORTS A ND GAMES ARE ESSENTIALLY IN THE NATURE OF GENERAL PUBLIC UTI LITY AND, THEREFORE, CHARITABLE IN NATURE WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME-TAX ACT, 1961. IT WAS ON THE BA SIS OF THE ABOVE FOUNDATION THAT THE ASSESSEE WAS GRANTED REGI STRATION UNDER SECTION 12AA ON 28-3-2003. THROUGHOUT ITS EX ISTENCE AND EVEN NOW THE ASSESSEE IS CARRYING ON THE SAME ACTIV ITIES IN THE NATURE OF GENERAL PUBLIC UTILITY BY PROMOTING AND D EVELOPING THE GAME OF CRICKET IN TAMIL NADU AND PUDUCHERRY. IT I S NOT CARRYING ON ANY OTHER ACTIVITY. THE ASSESSEE IS CARRYING ON THE VERY SAME ACTIVITIES, FOR WHICH IT IS ESTABLISHED AND, THEREF ORE, THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) HAS NO REASON TO SATISFY THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT GENUI NE. FOR THE - - ITA 396 OF 2012 12 SAME REASON, IT IS NOT POSSIBLE FOR THE DIRECTOR OF INCOME- TAX(EXEMPTIONS) TO HOLD THAT THE ASSESSEE IS NOT CA RRYING ON ITS ACTIVITIES IN ACCORDANCE WITH THE OBJECTS DECLARED IN ITS MEMORANDUM OF ASSOCIATION. 16. THE LEARNED COUNSEL FURTHER EXPLAINED THAT THE REGISTRATION UNDER SECTION 12AA HAS BEEN GRANTED TO THE ASSESSEE AFTER SATISFYING THAT THE ASSESSEE IS ESTA BLISHED FOR CARRYING ON ACTIVITIES OF PROMOTING AND DEVELOPING THE GAME OF CRICKET. THE ASSESSEE IS ACTUALLY CARRYING ON ITS A CTIVITIES IN PURSUANCE OF THOSE OBJECTS. THE MATTER BEING SO, T HE REGISTRATION ALREADY GRANTED UNDER SECTION 12AA CAN BE CANCELLED ONLY UNDER TWO SPECIFIC CIRCUMSTANCES, NA MELY: (I) THE AUTHORITY IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE, AND (II) THE AUTHORITY IS SATISFIE D THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARRIED OU T IN ACCORDANCE WITH ITS DECLARED OBJECTS. 17. IN SUPPORT OF THE ABOVE LEGAL PROPOSITION, THE LEARNED COUNSEL HAS RELIED ON THE DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF C IT VS. SARVODAYA ILAKKIYA PANNAI, 343 ITR 300. IN THE ABO VE JUDGMENT - - ITA 396 OF 2012 13 THEIR LORDSHIPS HAVE HELD THAT UNDER SECTION 12AA(3 ), THE COMMISSIONER IS EMPOWERED TO CANCEL THE REGISTRATIO N ONLY ON TWO CONDITIONS LAID DOWN IN THAT SECTION. THOSE TW O CONDITIONS ARE THAT AFTER OBTAINING THE REGISTRATION, THE ACTI VITIES OF THE TRUST OR INSTITUTION ARE FOUND NOT GENUINE OR THAT AFTER OBTAINING THE REGISTRATION THE TRUST OR INSTITUTION IS FOUND NOT CARRYING ON THE ACTIVITIES IN ACCORDANCE WITH ITS OBJECTS. 18. FOR THE SAME PROPOSITION THAT THE SCOPE OF THE POWERS CONFERRED ON THE DIRECTOR OF INCOME-TAX(EXEM PTIONS) UNDER SECTION 12AA(3) IS VERY CONFINED, THE LEARNED COUNSEL HAS FURTHER RELIED ON THE ORDER OF THE INCOME-TAX APPEL LATE TRIBUNAL, AHMEDABAD BENCH-A, RENDERED IN THE CASE OF GUJARAT CRICKET ASSOCIATION VS. DIT(EXEMPTION), PASSED IN ITA NO.93 /AHD/2011 ON 31-1-2012. IN THE SAID ORDER, THE TRIBUNAL HAS HELD THAT A REGISTRATION ALREADY GRANTED TO AN ASSESSEE COULD N OT BE REVISITED BY THE COMMISSIONER OF INCOME-TAX ON THE BASIS OF REASONS OTHER THAN SPECIFIED UNDER SECTION 12AA(3). SECTION 12AA(3) IS CONFINED AS TO WHETHER THE ACTIVITIES OF THE ASSESSEE ARE GENUINE OR THAT THE SAME ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE STATED OBJECTS. EXCEPT ON THE ABOVE TWO - - ITA 396 OF 2012 14 GROUNDS, IT IS NOT PERMISSIBLE FOR THE AUTHORITY TO CANCEL THE REGISTRATION UNDER SECTION 12AA(3). 19. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIE D ON ANOTHER DECISION RENDERED BY THE INCOME-TAX APPELLA TE TRIBUNAL, NAGPUR BENCH, IN THE CASE OF M/S.VIDARBHA CRICKET A SSOCIATION VS. CIT, PASSED IN ITA NO.3/NAG/10 ON 30-5-2011. I N THE SAID DECISION THE TRIBUNAL HAS OBSERVED THAT THE COMMISS IONER OF INCOME-TAX CANNOT CANCEL THE REGISTRATION UNDER SEC TION 12AA(3) ON THE GROUND THAT THE ASSESSEE IS NOT CARRYING ON CHARITABLE ACTIVITIES. AS PER THE PROVISIONS OF SECTION 12AA( 3) REGISTRATION CAN BE CANCELLED ONLY ON TWO GROUNDS. THE FIRST GR OUND IS THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT G ENUINE. THE SECOND GROUND IS THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT IN ACCORDANCE WITH ITS OBJECTS. BUT FOR TH E ABOVE TWO REASONS, NO OTHER REASON CAN BE RELIED ON TO INVOKE THE PROVISIONS OF SECTION 12AA(3) FOR THE PURPOSE OF CA NCELLING THE REGISTRATION. 20. WE HEARD SHRI GURU BASHYAM, THE LEARNED JOINT COMMISSIONER OF INCOME-TAX, WHO APPEARED FOR THE RE VENUE. - - ITA 396 OF 2012 15 21. THE LEARNED OFFICER EXPLAINED THAT THE TAMIL N ADU CRICKET ASSOCIATION WAS REGISTERED AS A CHARITABLE SOCIETY WITH THE MAIN OBJECT OF PROMOTING AND DEVELOPING THE GAM E OF CRICKET IN TAMIL NADU AND PUDUCHERRY AND ALSO TO DEVELOP TH E OVERALL SCENARIO OF SPORTS AND PHYSICAL ACTIVITIES IN THESE TWO STATES. BUT, ON EXAMINING THE DETAILS OF THE ACTIVITIES CAR RIED ON BY THE ASSESSEE, THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) HA S COME TO A CONCLUSION THAT THE ASSESSEE IS NOT CARRYING ON THE ACTIVITIES FOR WHICH IT WAS REGISTERED, BUT IT IS CARRYING ON ACTI VITIES OF COMMERCIAL NATURE, EVEN THOUGH THE ACTIVITIES ARE C ENTRED AROUND THE GAME OF CRICKET. THE ASSESSEE IS COLLECTING SU BSTANTIAL AMOUNTS BY WAY OF SALE OF TICKETS WHILE CONDUCTING NATIONAL AND INTERNATIONAL MATCHES, INCLUDING ONE DAY INTERNATIO NALS AND INDIAN PREMIER LEAGUE (IPL) MATCHES. IN ADDITION T O THE INCOME DERIVED OUT OF SALE OF TICKETS, THE ASSESSEE IS GEN ERATING HUGE AMOUNT OF INCOME OUT OF ADVERTISEMENT REVENUE ARISI NG OUT OF THE TELECAST RIGHTS AUCTIONED TO DIFFERENT VISUAL M EDIA. THIS ADVERTISEMENT REVENUE IS OBTAINED THROUGH THE BOARD OF CONTROL FOR CRICKET IN INDIA (BCCI), WHO DISTRIBUTES SUCH I NCOME AMONG DIFFERENT STATE CRICKET ASSOCIATIONS IN INDIA. - - ITA 396 OF 2012 16 22. THE LEARNED OFFICER EXPLAINED THAT A MAJOR SHA RE OF THE INCOME OF THE ASSESSEE IS FROM SELLING TELEVISI ON BROADCASTING RIGHTS THROUGH BCCI. GENERATING INCOME THROUGH VISUAL MEDIA AND ADVERTISEMENT IS NOTHING BUT COMME RCIAL ACTIVITY. IT IS AN ACTIVITY FOR MAKING PROFIT. TH E ASSESSEE IS NOT EARNING INCOME ONLY BY SELLING TICKETS. MAJOR PORT ION OF THE INCOME IS GENERATED OUT OF OPERATIONS OTHER THAN PL AYING CRICKET MATCHES. HUGE REVENUE IS GENERATED OUT OF SALE OF TELEVISION RIGHTS. AGAIN, HUGE AMOUNTS ARE COLLECTED FROM OTH ER MODES OF ADVERTISEMENTS. 23. IN ADDITION TO THE REGULAR CRICKET MATCHES, TH E ASSESSEE IS CONDUCTING COMMERCIALLY ORIENTED MATCHE S LIKE INDIAN PREMIER LEAGUE (IPL). PLAYERS OF IPL TEAMS ARE SELECTED BY SPONSORS TO PLAY UNDER THEIR BRAND NAMES. PLAYE RS ARE SELECTED THROUGH AUCTIONS. PLAYERS CHOOSE THAT SPO NSOR WHICH OFFERS THE HIGHEST AMOUNT OF MONEY. IPL MATCHES AR E PLAYED WITH HYPE AND CELEBRATION SO AS TO CREATE MORE AND MORE REVENUE OUT OF SALE OF TELECAST RIGHTS. ALL THESE ACTIVITIES WHEN READ TOGETHER, ONE HAS TO COME TO A FINDING THAT TH E ENTIRE - - ITA 396 OF 2012 17 ACTIVITIES OF THE ASSOCIATION IS POISED TOWARDS GEN ERATING HUGE AMOUNT OF INCOME THROUGH THE GAME OF CRICKET. 24. INSTEAD OF PROMOTING AND DEVELOPING THE GAME O F CRICKET IN TAMIL NADU AND PUDUCHERRY, THE ASSESSEE IS IN FACT CARRYING ON THE ACTIVITIES OF PROMOTING AND DEVELOP ING CRICKET AS AN ENTERTAINMENT. THE PRICE OF TICKETS SOLD TO THE PUBLIC IS SO HIGH THAT TICKETS ARE AS GOOD AS HIGHLY PRICED MARK ET PRODUCTS. 25. IN THESE CIRCUMSTANCES, THE LEARNED OFFICER EXPLAINED THAT THE ASSESSEE HAS SHIFTED FROM ITS EA RLIER ACTIVITIES OF GENERAL PUBLIC UTILITY TO COMMERCIAL ACTIVITIES OF GENERATING INCOME AND REVENUE. 26. THIS CHANGE OF CHARACTER PROVES THAT THE ACTIV ITIES OF THE ASSESSEE CARRIED ON AT PRESENT ARE NOT IN ACCOR DANCE WITH THE OBJECTS PROCLAIMED IN ITS MEMORANDUM OF ASSOCIA TION. THE EARLIER OBJECTS FOR WHICH THE ASSESSEE WAS FORMED I NTO A SOCIETY WERE CHARITABLE IN NATURE INASMUCH AS IT FOCUSED ON THE PROMOTION AND DEVELOPMENT OF THE GAME OF CRICKET AS AN OBJECT OF PUBLIC UTILITY IN THE STATE OF TAMIL NADU AND IN THE UNION TERRITORY OF PUDUCHERRY. THERE WAS THE INTENTION O F PARTICIPATING THE PUBLIC IN THE DEVELOPMENT OF THE GAME OF CRICKE T, BUT NOW IT IS - - ITA 396 OF 2012 18 NOT SO. THE PUBLIC ARE NOT PARTICIPATING IN THE DE VELOPMENT OF THE GAME. THEY ARE ONLY SPECTATORS TO VIEW THE COSTLY M ATCHES PLAYED IN THE STADIUM. THEREFORE, THE SECOND CONDI TION PROVIDED IN SECTION 12AA(3) IS SATISFIED IN THE PRESENT CASE . THE FIRST CONDITION IS ALSO SATISFIED INASMUCH AS THE PRESENT ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT GENUINELY FOR TH E BENEFIT OF PUBLIC. 27. THEREFORE, THE LEARNED OFFICER SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DIRECTOR O F INCOME- TAX(EXEMPTIONS) IS JUSTIFIED IN CANCELLING THE REGI STRATION TO THE ASSESSEE UNDER SECTION 12AA(3) OF THE INCOME-TAX AC T, 1961. HE SUBMITTED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 28. WE HAVE HEARD BOTH SIDES IN DETAIL, CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND ALSO CONSIDERED THE CASE LAWS AND THE DECISIONS CIT ED BEFORE US. 29. BEFORE INSERTION OF THE FIRST PROVISO TO SECTI ON 2(15) WITH EFFECT FROM 1 ST APRIL, 2009, THE INCLUSIVE DEFINITION OF CHARITABLE PURPOSE HAS MADE REFERENCE TO RELIEF O F THE POOR, EDUCATION, MEDICAL RELIEF AND ADVANCEMENT OF ANY OT HER OBJECT OF - - ITA 396 OF 2012 19 GENERAL PUBLIC UTILITY. IN THE SAID DEFINITION, AS IT ALWAYS STOOD UNDER THE INDIAN INCOME-TAX LAWS, EVERY ACTIVITY OF CHARITABLE PURPOSE NEEDS TO BE QUALIFIED AS CHARITABLE ACTIVI TY WITHIN THE MEANING OF THE INHERENT MEANING OF THE EXPRESSION CHARITABLE PURPOSE. THE ACTIVITIES OF RELIEF OF THE POOR, ED UCATION, MEDICAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENER AL PUBLIC UTILITY; ALL MUST COME UNDER THE OVERALL NUANCE OF CHARITABLE PURPOSE. NONE OF THE ACTIVITIES CARRIED ON BY AN ASSESSEE CAN BE CONSIDERED AS FOR A CHARITABLE PURPOSE, IF IT IS DEVOID OF THE SOUL AND SUBSTANCE OF CHARITY. 30. NOW, WHAT IS CHARITY? THE EXPRESSION IS UNDER STOOD BY EVERYBODY WITHOUT ANY WIDE RANGE OF INTERPRETATI ON. OXFORD ADVANCED LEARNERS DICTIONARY, SIXTH EDITION-2000, HAS GIVEN THE MEANING OF CHARITY AS UNDER: AN ORGANIZATION FOR HELPING PEOPLE IN NEED; KIND NESS AND SYMPATHY TOWARDS OTHER PEOPLE, ESPECIALLY WHE N YOU ARE JUDGING THEM. 31. IT MEANS THAT CHARITY IS THE ACTIVITY CARRIED ON BY KIND AND SYMPATHETIC PEOPLE FOR THE HELP OF PEOPLE IN NEED. IT IS WITHIN THE AMBIT OF THE ABOVE MEANING THAT SECTION 2(15) HAS - - ITA 396 OF 2012 20 HELD THAT ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY ALSO WOULD BE CONSIDERED AS CHARITABLE PURPOSE . IN OTHER WORDS, ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY CANNOT BE UNDERSTOOD AS DIVORCED FROM THE INHERENT CONCEPT AND UNDERSTANDING OF THE EXPRESSION CHARITABLE PURPOSE . 32. THE ABOVE SPIRIT IN THE EXPRESSION CHARITABLE PURPOSE PROVIDED IN THE INCOME-TAX LEGISLATION WAS EXAMINED BY THE PRIVY COUNCIL IN THE CASE OF ALL INDIA SPINNERS ASSOCIATION VS. COMMISSIONER OF INCOME-TAX, BOMBAY, 12 ITR 482. THE PRIVY COUNCIL HELD THAT THE EXPRESSION OBJECT OF G ENERAL PUBLIC UTILITY IS VERY WIDE. THE EXACT SCOPE OF THIS EXP RESSION HAS NOT BEEN AND, PERHAPS, CANNOT BE DEFINED. HOWEVER, THI S EXPRESSION WOULD EXCLUDE THE OBJECT OF PRIVATE GAIN SUCH AS AN UNDERTAKING FOR COMMERCIAL PROFIT ALTHOUGH IT WOULD SUBSERVE GENERAL PUBLIC UTILITY . 33. THE PROVISO INSERTED UNDER SECTION 2(15) WITH EFFECT FROM 1-4-2009 SUBSCRIBES THE VIEW EXPRESSED BY THE PRIVY COUNCIL IN THE ABOVE JUDGMENT. THAT IS WHY THE PRO VISO HAS PROVIDED THAT ADVANCEMENT OF ANY OTHER OBJECT OF GE NERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING - - ITA 396 OF 2012 21 ON OF ANY ACTIVITY IN 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 OTHE R CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. 34. THE PRESENT CASE NOW PLACED BEFORE US IS TO BE EXAMINED IN THE ABOVE BACKGROUND OF GENEALOGY OF TH E CONCEPT OF CHARITABLE PURPOSE. 35. IN HIS ORDER PASSED UNDER SECTION 12AA(3) OF T HE ACT, THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTIONS ) HAS EXAMINED THE COMPONENTS OF THE TOTAL RECEIPTS ACCOU NTED BY THE ASSESSEE FOR THE FINANCIAL YEAR 2008-09, RELEVANT T O THE ASSESSMENT YEAR 2009-10. THE TOTAL RECEIPTS ACCOUN TED BY THE ASSESSEE COMES TO ` 34,25,86,309/-. OUT OF THE ABOVE TOTAL AMOUNT OF RECEIPTS, A SUM OF ` 26,82,38,072/- WAS RECEIVED FROM BCCI. THE ASSESSEE HAS STATED THAT THE SAID SUM OF ` 26,82,38,072/- IS A SUBSIDY GIVEN BY THE BCCI. O UT OF THE SAID AMOUNT OF ` 26,82,38,072/- , THE AMOUNT GIVEN BY BCCI TOWARDS IPL MATCHES IS ` 10 CRORES. THE BALANCE OF ` 16,82,38,072/- WAS GIVEN BY BCCI TOWARDS TEST MATCHES AND IN PARTICULA R RELATING TO - - ITA 396 OF 2012 22 TELEVISION SUBSIDY. ANOTHER MAJOR INCOME OF ` 2,90,17,293/- IS THE SURPLUS EARNED BY THE ASSESSEE FROM IPL SEASON- I. ANOTHER BIG AMOUNT EARNED BY THE ASSESSEE IS BY WAY OF INTE REST OF ` 3,47,39,430/-. 36. THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) HAS EXAMINED THE NATURE OF THE ABOVE MENTIONED RECEIPTS IN A VERY METICULOUS MANNER. THE ASSESSEE ALWAYS ARGUED BEFO RE HIM THAT THE SUBSIDY GIVEN BY THE BCCI ARE GRANTS TOWAR DS COMPENSATION FOR ADVERTISEMENT RIGHT FOR THE TELECA ST OF INTERNATIONAL MATCHES, IPL, ODIS, ETC. THE ASSESSE E ARGUED THAT ALL THESE RECEIPTS WERE IN THE NATURE OF GRANTS GIV EN BY THE APEX BODY BCCI. BUT, ON THE BASIS OF THE DETAILED EXAMI NATION OF THE CASE, THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) HAS CO ME TO A CONCLUSION THAT THE RECEIPT TOTALING TO ` 26,82,38,072/- WAS NOT IN FACT IN THE FORM OF ANY SUBSIDY OR GRANT, BUT WAS T HE SHARE OF THE ASSESSEE IN THE ADVERTISEMENT REVENUE COLLECTED BY THE BCCI WHILE CONDUCTING DIFFERENT CRICKET MATCHES. 37. THE IPL MATCHES WERE ALSO EXAMINED BY THE DIRECTOR OF INCOME-TAX(EXEMPTIONS). HE HELD THAT TH E ENTIRE ACTIVITIES CARRIED ON BY THE ASSESSEE IN CONDUCTING THE IPL - - ITA 396 OF 2012 23 MATCHES ARE COMMERCIAL IN NATURE. IN SHORT, THE DIR ECTOR OF INCOME-TAX(EXEMPTIONS) FOUND THAT EVEN THOUGH THE A SSESSEE IS ENTRUSTED WITH THE DEVELOPMENT OF THE SPORT OF CRIC KET IN THE STATE OF TAMIL NADU AND IN THE UNION TERRITORY OF PUDUCHE RRY, THE ASSESSEE HAS GONE VERY MUCH BEYOND THOSE OBJECTIVES AND THAT THE ASSESSEE IS MORE ENGAGED IN PLAYING DIFFERENT T YPES OF MATCHES WITH WIDE PUBLICITY AND THEREBY EARNING HUG E REVENUE FROM ADVERTISEMENTS. ALL THE ACTIVITIES OF THE ASS ESSEE ARE TUNED IN SUCH A WAY THAT MAXIMUM ADVERTISEMENT REVENUE IS DERIVED FROM ANY TYPE OF MATCH CONDUCTED BY THE ASSESSEE. 38. THE ABOVE PARADIGM SHIFT IN THE ACTIVITIES CAR RIED ON BY THE ASSESSEE HAS BEEN TREATED BY THE DIRECTOR OF INCOME- TAX(EXEMPTIONS) AS A DEVIATION FROM THE OBJECTS FOR WHICH THE ASSESSEE WAS FORMED EARLIER. THE ASSESSEE WAS FORM ED AND REGISTRATION UNDER SECTION 12AA WAS GRANTED ON THE PROCLAIMED OBJECT OF DEVELOPING THE SPORTS OF CRICKET, WHEREAS AT PRESENT THE ASSESSEE IS CARRYING ON REVENUE EARNING EXERCISE BY ARRANGING INTERNATIONAL MATCHES, IPL MATCHES, ETC. AND FOCUSI NG ITS EFFORTS ON MAXIMIZING THE REVENUE. THEREFORE, HE HELD THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT GENUINE, INASMUC H AS THE - - ITA 396 OF 2012 24 ACTIVITIES ARE NOT IN ACCORDANCE WITH THE REAL OBJE CTS FOR WHICH THE ASSESSEE WAS FORMED AND REGISTRATION UNDER SECTION 12AA WAS GRANTED. IN THAT WAY, THE DIRECTOR OF INCOME-TAX(E XEMPTIONS) HELD THAT THE CASE OF THE ASSESSEE HAS SATISFIED TH E REQUIREMENT OF FIRST LIMB OF SECTION 12AA(3) SO AS TO JUSTIFY T HE CANCELLATION OF 12AA REGISTRATION. THE DIRECTOR OF INCOME-TAX(EXEM PTIONS) ALSO HELD THAT AS A CONSEQUENCE, THE SECOND LIMB IS ALSO SATISFIED. 39. REGARDING THE COMPOSITION OF THE RECEIPTS OF T HE ASSESSEE FOR THE FINANCIAL YEAR 2008-09, THERE IS N O SCOPE FOR ANY DISPUTE. THE HEADS, UNDER WHICH DIFFERENT RECE IPTS WERE ACCOUNTED BY THE ASSESSEE, HAVE BEEN EXTRACTED IN T HE ORDER OF THE DIRECTOR OF INCOME-TAX(EXEMPTIONS). ON AN EXAM INATION OF THE NATURE OF RECEIPTS MADE BY THE ASSESSEE, IT IS OBVIOUS THAT THE MAIN SOURCE OF REVENUE OF THE ASSESSEE IS WHAT IS CALLED SUBSIDY FROM BCCI. IT IS EXPLAINED BY THE ASSESS EE AS IN THE NATURE OF GRANT. THIS SUBSIDY AMOUNTED TO ` 26,82,38,072/-. WE AGREE WITH THE FINDING OF THE DIRECTOR OF INCOME-TA X(EXEMPTIONS) THAT THE EXPRESSION OF SUBSIDY/GRANT FROM BCCI IS A MISLEADING NOMENCLATURE. IN FACT, IT IS NOT A SUBSIDY/GRANT G IVEN BY THE BCCI. IT REPRESENTED THE SHARE DUE TO THE ASSESSEE IN THE TOTAL - - ITA 396 OF 2012 25 REVENUE COLLECTED BY BCCI FROM SALE OF TELECAST RIG HTS AND ADVERTISEMENTS. TEST MATCHES HAVE BROUGHT TO THE A SSESSEE AS ITS SHARE OF REVENUE FROM TV ADVERTISEMENTS, AN AMO UNT OF ` 16,82,38,072/-. LIKEWISE, THE ADVERTISEMENT REVEN UE FROM IPL MATCHES IS ` 10 CRORES. THESE RECEIPTS, TOTALING TO ` 26,82,38,072/-, WORK OUT TO 78% OF THE TOTAL RECEI PTS ACCOUNTED BY THE ASSESSEE. THE SURPLUS FROM IPL SEASON-I IS ` 2,90,17,293/-. THIS WORKS OUT TO 8.5% OF THE TOTA L RECEIPTS. THUS, IT IS SEEN THAT THE ADVERTISEMENT REVENUE ALO NGWITH SURPLUS FROM IPL SEASON-I ALONE CONSTITUTED 86.5% OF THE TO TAL RECEIPTS ACCOUNTED BY THE ASSESSEE FOR THE FINANCIAL YEAR 20 08-09. 40. THERE CANNOT BE A DISPUTE THAT THE IPL MATCHES CONDUCTED BY CRICKET ASSOCIATIONS ARE NOTHING BUT C OMMERCIAL VENTURES. IPL TEAMS ARE OWNED BY DIFFERENT SPONSOR S INCLUDING INDUSTRIAL HOUSES AND FILM STARS. THEY ARE SELECTI NG THE PLAYERS ON AUCTION. THEY QUOTE THE HIGHEST PRICE FOR THE B EST PLAYER ACCORDING TO THEM. EVERY TEAM IS TRYING TO BRING I N MAXIMUM NUMBER OF PROMINENT CRICKETERS SO THAT THEY HAVE A BETTER CHANCE OF WINNING THE IPL MATCHES. THE CAPITAL INV ESTED BY THE OWNERS OF THE TEAMS IS REDEEMED BY ADVERTISEMENT RE VENUE. - - ITA 396 OF 2012 26 THE OWNERS OF THE IPL TEAMS ARE CONDUCTING THESE MA TCHES FOR THE PURPOSE OF HARVESTING PROFITS OUT OF THEIR INVE STMENTS. BY ANY STRETCH OF IMAGINATION, IT IS NOT POSSIBLE TO CALL IPL MATCHES AS ACTIVITIES OF PUBLIC UTILITY CARRIED ON BY THE ASSE SSEE. IPL MATCH IS A BIG GAME OF BIG MONEY. IN FACT IT IS AN ENTER TAINMENT INDUSTRY BY ITSELF. 41. NOW, IN ADDITION TO IPL MATCHES, CELEBRITY CRI CKET MATCHES ARE ALSO BEING HELD ALL OVER INDIA. ALL TH E PLAYERS IN CELEBRITY CRICKET TESTS ARE FILM STARS. THE ASSOCI ATIONS LIKE THE ASSESSEE ARE CONDUCTING ALL THESE CELEBRITY CRICKET MATCHES. IN CELEBRITY CRICKET MATCHES, THERE IS NO ELEMENT OF P UBLIC UTILITY. ALL THESE ACTIVITIES ARE EITHER FOR MONEY OR FOR FA ME OR FOR MARKET IMAGE. 42. AS ALREADY STATED, 78% OF THE TOTAL RECEIPTS C AME OUT OF ADVERTISEMENT REVENUE. ADVERTISEMENT REVENU E IS COLLECTED TO SUCH AN EXTENT ONLY BECAUSE OF THE EXT ENSIVE MARKETING MADE BY THE ASSESSEE AND THE BCCI. 43. DE FACTO SPEAKING, EXCEPT FOR A SMALL AMOUNT O F INTEREST, SUBSCRIPTION AND RENT, THE ENTIRE INCOME OF THE ASSESSEE IS MADE OUT OF ADVERTISEMENT REVENUE GENERATED IN T HE COURSE OF - - ITA 396 OF 2012 27 CONDUCTING DIFFERENT CRICKET MATCHES. THE COSTS OF TICKETS ARE VERY HIGH. IT IS NOT POSSIBLE FOR A LAYMAN TO BUY A TICKET AND WITNESS A CRICKET MATCH. THE ADVANCEMENT OF AN OBJE CT OF GENERAL PUBLIC UTILITY CANNOT BE DISASSOCIATED FROM GENERAL PUBLIC WHICH INCLUDES POOR AND LAYMEN. 44. IN THE COURSE OF HEARING OF THE CASE, WE HAVE ASKED THE LEARNED COUNSEL AS TO WHETHER THE ASSESSEE IS I SSUING FREE/CONCESSIONAL TICKETS TO WITNESS THE CRICKET MA TCHES TO THE SO CALLED SLUM-DOGS AND OTHER POOR PEOPLE? THE LEARN ED COUNSEL FAIRLY AND HONESTLY REPLIED THAT THEY DO NOT GIVE S UCH FREE/CONCESSIONAL TICKETS TO THE POOR PEOPLE TO COM E AND WITNESS THE HIGHLY CELEBRATED CRICKET MATCHES. ON THE OTHE R HAND, THE ASSESSEE IS ISSUING FREE TICKETS TO VIPS AND HIGH D IGNITARIES OF THE SOCIETY, THAT TOO AFTER PAYING ENTERTAINMENT TA X ON THOSE FREE TICKETS. WHOSE INTEREST IS BEING LOOKED AFTER BY T HE ASSESSEE BY SHOWING THIS DIFFERENTIAL ATTITUDE?; OF COURSE, NOT OF GENERAL PUBLIC. 45. THEREFORE, IT IS TO BE SEEN THAT ALMOST THE EN TIRE INCOME OF THE ASSESSEE IS GENERATED OUT OF ACTIVE T IES OF COMMERCIAL NATURE ORIENTED TOWARDS EARNING HYPER PR OFITS. - - ITA 396 OF 2012 28 THESE ACTIVITIES CONTRIBUTED 86.5% OF THE RECEIPTS OF THE ASSESSEE IN THE FINANCIAL YEAR 2008-09. 46. IN A LIGHTER VEIN, WE SEE THAT IPL MATCHES ARE FURTHER GARNISHED BY CHEER GIRLS AND OTHER FANFARE. THESE ARE, IN FACT, MARKETING STRATEGIES BY WHICH ASSOCIATIONS LI KE THE ASSESSEE ARE TRYING TO SELL THE GAME OF CRICKET FOR THE HIGHEST AMOUNT OF REVENUE THAT COULD BE COLLECTED. THIS IS THE POINT THAT HAS BEEN BROUGHT OUT BY THE DIRECTOR OF INCOME-TAX( EXEMPTIONS) IN HIS ORDER PASSED UNDER SECTION 12AA(3) OF THE AC T. THE EFFORTS AND THRUST OF THE ASSESSEE ARE TOWARDS MAXIMIZING T HE REVENUE. THERE CANNOT BE A CONCEPT OF GENERAL PUBLIC UTILITY IN THESE ACTIVITIES. 47. IN THIS CONTEXT, IT IS USEFUL TO REFER TO THE JUDGMENT OF THE HONBLE MYSORE HIGH COURT IN THE CASE OF BANGAL ORE RACE CLUB VS. COMMISSIONER OF INCOME-TAX, 77 ITR 435. I N THAT CASE OF A RACING CLUB, THE HONBLE COURT HELD THAT BETTI NG ON HORSE CANNOT BE SAID TO BE BENEFICIAL TO PUBLIC AND THAT OBJECTS OF A RACING CLUB CANNOT BE SAID TO BE FOR PUBLIC INTERES T. 48. THE ABOVE RATIO IS APPLICABLE TO THE PRESENT C ASE. EVEN THOUGH THE CIRCULAR ISSUED BY THE CBDT HAS CLA RIFIED THAT - - ITA 396 OF 2012 29 ACTIVITIES TO PROMOTE SPORTS AND GAMES ARE OBJECTS OF GENERAL PUBLIC UTILITY AND THEREFORE TO BE TREATED AS CHARI TABLE PURPOSE, THE SAME IS NOT APPLICABLE TO THE PRESENT CASE, AS THE ASSESSEE IS NOT CARRYING ON ANY OBJECT OF GENERAL PUBLIC UTI LITY, BUT AN OBJECT OF GENERAL PUBLIC ENTERTAINMENT . THE GAME OF CRICKET HAS GROWN INTO AN INDUSTRY BY ITSELF. DIFFERENT PEOPLE ARE INVESTING MONEY IN DIFFERENT TEAMS TO EARN SUPER PROFIT. MAX IMUM REVENUE IS GENERATED THROUGH DIFFERENT MARKETING STRATEGIES . TICKETS ARE SOLD FOR HIGH PRICES, WHICH ARE NOT NORMALLY ACCESS IBLE TO THE GENERAL PUBLIC. WHEN ALL THESE FEATURES ARE TAKEN TOGETHER, IT IS SEEN THAT ASSESSEE HAS BECOME A PROFIT CENTRE. 49. THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE HAS RELIED ON THE JUDGMENT OF THE HONBLE MADRAS HI GH COURT RENDERED IN THE CASE OF CIT VS. SARVODAYA ILAKKIYA PANNAI, 343 ITR 300. IN THE SAID JUDGMENT THEIR LORDSHIPS HAVE HELD THAT UNDER SECTION 12AA(3) A COMMISSIONER OF INCOME-TAX IS EMPOWERED TO CANCEL 12AA REGISTRATION ONLY ON TWO C ONDITIONS LAID DOWN IN THAT SECTION. THOSE TWO CONDITIONS AR E THAT AFTER OBTAINING THE REGISTRATION, THE ACTIVITIES OF THE A SSESSEE OR INSTITUTION ARE FOUND TO BE NOT GENUINE OR THAT AFT ER OBTAINING THE - - ITA 396 OF 2012 30 REGISTRATION THE TRUST OR INSTITUTION IS FOUND NOT CARRYING ON ITS ACTIVITIES IN ACCORDANCE WITH ITS OBJECTS. TO SUPP ORT THE SAME, THE LEARNED COUNSEL HAS ALSO RELIED ON TWO DECISION S OF THE INCOME-TAX APPELLATE TRIBUNAL. THE FIRST DECISION IS THAT OF THE AHMEDABAD BENCH-A RENDERED IN THE CASE OF GUJARAT C RICKET ASSOCIATION VS. DIT(EXEMPTION) IN ITA NO.93(AHD)/20 11 DATED 31-1-2012 AND THE OTHER ONE IS THAT OF THE NAGPUR B ENCH RENDERED IN THE CASE OF M/S.VIDARBHA CRICKET ASSOCI ATION VS. COMMISSIONER OF INCOME-TAX-I, NAGPUR IN ITA NO.3/NA G/10 DATED 30-5-2011. 50. WE RESPECTFULLY SUBSCRIBE TO THE LEGAL PROPOSI TION LAID DOWN IN THE ABOVE JUDGMENT OF THE HONBLE MADR AS HIGH COURT AND IN THE ORDERS OF THE TRIBUNAL. REGISTRAT ION GRANTED UNDER SECTION 12AA CAN BE CANCELLED ONLY IF ANY OF THE TWO CONDITIONS STATED IN SECTION 12AA(3) ARE SATISFIED, I.E. THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR THE INST ITUTION IS NOT CARRYING ON THE ACTIVITIES IN ACCORDANCE WITH ITS O BJECTS. WE HAVE ABSOLUTELY NO QUARREL WITH THE ABOVE LEGAL PROPOSIT ION. 51. BUT, WHILE PRESENTING THOSE CASES UNDER THEIR RESPECTIVE JURISDICTIONS, CERTAIN IMPORTANT FACTS O F THE CASES - - ITA 396 OF 2012 31 SEEM TO HAVE NOT BEEN HIGHLIGHTED BEFORE THE HONBL E HIGH COURT AND THE CO-ORDINATE BENCHES OF THE TRIBUNAL. THE A RGUMENT OF THE ASSESSEE IS THAT THE OBJECT OF THE ASSESSEE IS TO PROMOTE AND DEVELOP THE GAME OF CRICKET AND THE ASSESSEE IS STI LL CARRYING ON THE SAME ACTIVITIES OF PROMOTING THE GAME OF CRICKE T AND IT IS NOT CARRYING ON ANYTHING ELSE. WHAT WAS EXACTLY EXAMIN ED IN THE ABOVE CASES WAS ONLY THE PHYSICAL ASPECT OF THE CRICKET GAME PROMOTED BY THE ASSESSEES. IN THE PRESENT CASE ALS O THE ASSESSEE IS NOT CONDUCTING FOOTBALL MATCHES. IT IS PLAYING ONLY CRICKET MATCHES. ALL ITS ACTIVITIES ARE CENTRED AR OUND THE CELEBRATED GAME OF CRICKET. BUT THAT IS ONLY THE P HYSICAL ASPECT OF THE OBJECT. 52. THE QUESTION IS WHETHER THEY ARE PROMOTING AND DEVELOPING THE CRICKET GAME AS AN ACTIVITY OF GENER AL PUBLIC UTILITY. THIS IS THE CRUCIAL QUESTION TO BE ASKED. THE P HYSICAL PLAY OF CRICKET GAME IS NOT THE SOLE POINT WHICH WI LL DECIDE AS TO WHETHER THE ASSESSEE IS CARRYING ON ITS ACTIVITIES AS STATED IN ITS MEMORANDUM OF ASSOCIATION OR ASSESSEES ACTIVITIES ARE GENUINE OR NOT. IT IS ALSO NECESSARY TO EXAMINE W HETHER THE - - ITA 396 OF 2012 32 ASSESSEE HAS SATISFIED THE CONCEPTUAL REQUIREMENTS OF ITS OBJECTIVES. 53. REGARDING THE PHYSICAL ASPECT OF THE GAME, THE ASSESSEE IS CARRYING ON WHAT IS STATED IN ITS OBJEC TS. THESE ACTIVITIES ARE GENUINE. THE GENUINENESS OF THE ACT IVITIES CARRIED ON BY THE ASSESSEE STOPS WITH THE PHYSICAL ASPECTS OF THE GAME. THE MATCHES CONDUCTED BY THE ASSESSEE DO NOT GO TO THE EXTENT OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY. THE ACTIVITIES OF THE ASSESSEE DO NOT COME WITHIN THE C ONCEPTUAL FRAMEWORK OF CHARITY VIS-A-VIS ACTIVITY OF GENERAL PUBLIC UTILITY ENVISAGED IN THE INCOME-TAX ACT AS LAID DOWN IN SEC TION 2(15). AS ALREADY STATED, IT HAS BECOME AN INDUSTRY BY ITS ELF. THE PATTERN OF THE RECEIPTS ACCOUNTED BY THE ASSESSEE S HOWS THAT THE REVENUE IS GENERATED FROM ADVERTISEMENT AND SPECIAL EVENTS LIKE IPL MATCHES, CELEBRITY MATCHES, ETC. THESE ARE ALL COMMERCIAL ACTIVITIES. THEREFORE, IT IS CRYSTAL CLEAR THAT EV EN THOUGH CRICKET MATCHES ARE CONDUCTED BY THE ASSESSEE, THEY ARE NOT CONDUCTED IN ACCORDANCE WITH THE OBJECTS AS STATED IN ITS MEM ORANDUM OF ASSOCIATION AND THOSE ACTIVITIES ARE NOT FOR ADVAN CEMENT OF ANY - - ITA 396 OF 2012 33 OTHER OBJECT OF GENERAL PUBLIC UTILITY, AS EXPLAIN ED IN THE PROVISO TO SECTION 2(15) OF THE ACT. 54. THEREFORE, WE HAVE TO STATE THAT THE ABOVE JUDGMENT AND THE DECISIONS CITED BY THE LEARNED COU NSEL ARE NOT DIRECTLY APPLICABLE TO THE PRESENT CASE FOR THE REA SON THAT ONLY ONE ASPECT OF THE ISSUE WAS PRESENTED BEFORE THE HO NBLE COURT AND CO-ORDINATE BENCHES OF THE TRIBUNAL. THE NECES SARY LINK BETWEEN CHARITY AND THE ACTIVITIES HAS NOT BEEN HIG HLIGHTED BEFORE THEIR LORDSHIPS AND BEFORE THE CO-ORDINATE B ENCHES OF THE TRIBUNAL. IT IS NECESSARY FOR THE PURPOSE OF SECTI ON 2(15) THAT THE OBJECTS ARE CARRIED OUT NOT ONLY IN THEIR PHYSICAL ASPECT BUT ALSO IN THEIR CONCEPTUAL FRAMEWORK, SO AS TO CLAIM THE B ENEFIT OF REGISTRATION UNDER SECTION 12AA. IN THE PRESENT CA SE, THE CONCEPTUAL FRAMEWORK HAS NOT BEEN FOLLOWED. 55. THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) HAS CL EARLY STATED THAT THE ACTIVITIES OF THE ASSOCIATION ARE N OT IN THE NATURE OF ACTIVITIES FOR ADVANCEMENT OF ANY OBJECT OF GENE RAL PUBLIC UTILITY. BUT THE ACTIVITIES INVOLVE CARRYING ON AC TIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY OTHER ACTIVIT Y OF RENDERING ANY SERVICE FOR A CESS OR FEE. THEREFORE, IT IS CL EAR THAT THE FIRST - - ITA 396 OF 2012 34 PROVISO INSERTED UNDER SECTION 2(15) HITS THE CASE OF THE ASSESSEE. 56. THERE CANNOT BE A CONFLICT BETWEEN THE FIRST P ROVISO INSERTED UNDER SECTION 2(15) AND THE CONDITIONS LAI D DOWN IN SECTION12AA(3) FOR CANCELLING THE REGISTRATION. IF THERE IS A CONFLICT BETWEEN THE TWO, THE LAW STATED IN THE PRO VISO WILL BE DEFEATED. SO ALSO, THE LAW STATED IN SECTION 12AA( 3) WILL BE DEFEATED. THEREFORE, WHEN THE ASSESSEE IS HIT BY T HE PROVISO TO SECTION 2(15), ITS CONSEQUENTIAL REFLECTION IS AUTO MATIC ON SECTION 12AA(3), WHICH PRIMA FACIE ESTABLISHES THAT THE ACT IVITIES CARRIED ON BY THE ASSESSEE ARE NOT GENUINE, INASMUCH AS IT IS NOT FOR ADVANCEMENT OF ANY OBJECT OF PUBLIC UTILITY. THE T WO CONDITIONS LAID DOWN IN SECTION 12AA(3) CANNOT BE READ AND UND ERSTOOD IN DISREGARD OF THE PROVISO TO SECTION 2(15). 57. THEREFORE, THE TWO CONDITIONS STATED IN SECTIO N 12AA(3) HAVE REFERENCE TO THE DE FACTO NATURE OF TH E ACTIVITIES CARRIED ON BY THE ASSESSEE. THE ASSESSEE WAS GIVEN REGISTRATION UNDER SECTION 12AA ON THE GROUND THAT IT IS A CHARITABLE INSTITUTION INASMUCH AS IT IS ENGAGED IN THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY IN THE FORM OF - - ITA 396 OF 2012 35 DEVELOPING AND PROMOTING THE GAME OF CRICKET IN TAM IL NADU AND PUDUCHERRY. BUT, NOW IT IS SEEN THAT ITS ACTIVITIE S ARE ORIENTED TOWARDS GENERATING INCOME AND REVENUE BY CONVERTING THE SPORT OF CRICKET INTO A CELEBRATED INDUSTRY. IT MEANS, T HE PRESENT ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT GENUI NE, WHEN COMPARED TO THE OBJECTS STATED AT THE TIME OF GETTI NG REGISTRATION UNDER SECTION 12AA OF THE ACT. IT IS NOT THE PHYSI CAL FACTOR AS TO WHETHER THE ASSESSEE IS CONDUCTING CRICKET MATCHES OR NOT, WHICH IS THE ISSUE TO BE LOOKED INTO. IT IS THE PU RPOSE FOR WHICH THOSE PHYSICAL ACTIVITIES ARE CARRIED OUT. THERE I S NO CASE, AS FAR AS PHYSICAL ACTIVITIES ARE CONCERNED, THAT THE GAME CONDUCTED BY THE ASSESSEE IS NOT GENUINE. IT BECOMES NOT GENUIN E WHEN WE LOOK INTO THE OBJECTS FOR WHICH THE ASSOCIATION IS FORMED AND REGISTERED UNDER SECTION 12AA OF THE ACT. 58. LIKEWISE, IT IS FURTHER SEEN THAT THE OBJECT O F THE ASSESSEE WAS TO CARRY ON AN ACTIVITY FOR ADVANCEMEN T OF AN OBJECT OF GENERAL PUBLIC UTILITY BY PROMOTING THE C RICKET GAME. BUT, IT HAS DEVIATED FROM THE STATED OBJECTIVE BY C ARRYING OUT THE GAME OF CRICKET AS AN ENTERTAINMENT INDUSTRY, GENER ATING HUGE REVENUE. - - ITA 396 OF 2012 36 59. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF T HE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE CAS E OF THE ASSESSEE IS COVERED BY BOTH THE LIMBS STATED IN SEC TION 12AA(3) OF THE ACT. WE UPHOLD THE ORDER OF THE DIRECTOR OF INCOME- TAX(EXEMPTIONS) PASSED UNDER SECTION 12AA(3) OF THE INCOME- TAX ACT, 1961. THE REGISTRATION OF THE ASSESSEE GR ANTED UNDER SECTION 12AA HAS BEEN RIGHTLY CANCELLED. 60. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 22 ND OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 22 ND FEBRUARY, 2013. V.A.P. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.