ITO, Exemptions Ward-3, Chennai V. TamilNadu Golf Federation, Chennai

ITA 402/CHNY/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4569 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 18-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V RA VICHANDRAN
• Keywords: Charitable institution; Set aside
• Section: 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 402/CHNY/2019 ' (' / ASSESSMENT YEAR : 2014-15 THE INCOME TAX OFFICER (EXEMPTIONS), WARD 3, CHENNAI - 600 034. V. M/S TAMILNADU GOLF FEDERATION, NO.334, ANNA SALAI, NANDANAM, CHENNAI - 600 015. PAN : AAATT 2341 E (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI AR.V. SREENIVASAN, JCIT ,-*+ . / / RESPONDENT BY : SHRI V. RAVICHANDRAN, CA 0 . 1$ / DATE OF HEARING : 09.05.2019 2!( . 1$ / DATE OF PRONOUNCEMENT : 24.05.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -17, CHENN AI, DATED 28.11.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE-FEDERAT ION WAS FORMED 2 I.T.A. NO.402/CHNY/19 TO PROMOTE THE GAME OF GOLF IN THE STATE OF TAMIL N ADU. ACCORDING TO THE LD. D.R., THE ASSESSEE-FEDERATION RECEIVED A DMISSION FEE AND ALSO SUBSCRIPTION FEE, LEASE RENTAL CHARGES, TOURNA MENT FEE, COURSE RESERVATION FEE AND GREEN FEE. RECEIPT OF THESE FE E IS IN THE NATURE OF SERVICE TO THE TRADE, THEREFORE, PROVISO TO SECT ION 2(15) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') CLEARLY A TTRACTS. HOWEVER, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) BY PLAC ING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CA SE FOR ASSESSMENT YEAR 2009-10 IN I.T.A. NO.712/MDS/2014, ALLOWED THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD. D.R., THE DEPARTMENT HAS ALREADY FILED AN APPEAL AGAINST THE ORDER OF TH IS TRIBUNAL BEFORE THE HIGH COURT. THEREFORE, ACCORDING TO THE LD. D. R., THE CIT(APPEALS) OUGHT NOT TO HAVE FOLLOWED THE ORDER O F THIS TRIBUNAL. 3. WE HEARD SHRI V. RAVICHANDRAN, THE LD. REPRESENT ATIVE FOR THE ASSESSEE ALSO. ACCORDING TO THE LD. REPRESENTA TIVE, THIS TRIBUNAL EXAMINED THE ISSUE ELABORATELY FOR THE ASS ESSMENT YEAR 2009-10 IN I.T.A. NO.712/MDS/2014. AFTER CONSIDERI NG THE INCOME FROM SAME KIND OF RECEIPTS, ACCORDING TO THE LD. RE PRESENTATIVE, THIS TRIBUNAL FOUND THAT THE ACTIVITY OF THE ASSESSEE IS NOT SIMILAR TO COMMERCE OR TRADE OR SERVICE TO TRADE. ACCORDING T O THE LD. 3 I.T.A. NO.402/CHNY/19 REPRESENTATIVE, THIS ORDER OF THE TRIBUNAL IN THE A SSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2009-10 WAS SUBSEQUENTLY FOLLOW ED BY ANOTHER CO-ORDINATE BENCH OF THIS TRIBUNAL IN I.T.A. NOS.25 10, 2511 & 2512/MDS/2916 FOR THE ASSESSMENT YEARS 2010-11, 201 1-12 AND 2012-13. FOR THE ASSESSMENT YEAR 2013-14 ALSO ANOT HER CO- ORDINATE BENCH OF THIS TRIBUNAL FOLLOWED THE ORDER OF THE TRIBUNAL IN I.T.A. NO. 712/MDS/2014. IN VIEW OF THE ABOVE, ACC ORDING TO THE LD. REPRESENTATIVE, THIS TRIBUNAL IS CONSISTENTLY HOLDI NG THAT THE ASSESSEE IS NOT ENGAGED IN ANY BUSINESS OR PROVIDIN G ANY SERVICE TO TRADE OR COMMERCE, THEREFORE, ENTITLED FOR EXEMPTIO N UNDER SECTION 11 OF THE ACT. 4. HAVING HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND THE LD. REPRESENTATIVE FOR THE ASSESSEE, THIS TRIBUNAL FINDS THAT FOR ASSESSMENT YEAR 2009-10 IN I.T.A. NO.712/MDS/2014, THE SAME ISSUE WAS EXAMINED BY THIS TRIBUNAL AND FOUND THAT THE ACTIVITY OF THE ASSESSEE IS NOT SIMILAR TO COMMERCE OR TRADE. IN FACT, THIS TRIBUNAL HAS OBSERVED AS FOLLOWS AT PARAGRAPHS 7 TO 10 OF ITS ORDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE-SOCIETY IS REGISTERED U/S 12AA OF THE ACT AS CHARITABLE INSTITUTION. THE MAIN OBJECT OF THE SOCIETY IS TO PROMOTE THE SPORT OF GOLF IN THE STAT E OF 4 I.T.A. NO.402/CHNY/19 TAMILANDU. THE ASSESSEE IS ALSO ORGANIZING COACHING CAMPS FOR THE BENEFIT OF GOLFERS IN OTHER PARTS OF THE ST ATE. IN FACT, THE ASSESSING OFFICER HAS REPRODUCED THE OBJE CT OF THE ASSESSEESOCIETY AT PAGES 2 & 3 OF HIS ORDER. THI S OBJECT CLEARLY SHOWS THAT THE ASSESSEE IS ENGAGED I N THE PROMOTION OF SPORT OF GOLF. IN THE COURSE OF CARRYI NG ON ITS ACTIVITY, THE ASSESSEE COLLECTED SUBSCRIPTION FROM ITS MEMBERS TOWARDS TOURNAMENT FEES ETC. IN FACT, THE ASSESSEE HAS COLLECTED FOLLOWING FEES: FEES COLLECTED TYPE / RECEIPT ANNUAL SUBSCRIPTION 2,01,90,350 TOURNAMENT FEE 1,30,704 SPONSORSHIP - TOURNAMENT 7,30,981 SPONSORSHIP - OTHERS 2,00,000 GREEN FEE 98,87,764 CATERING INCOME 2,41,131 ROUND CHARGES 42,11,130 TOTAL 3,55,92,060 8. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER COLLECTION OF SPONSORSHIP FEE FOR CONDUCTING TOURNA MENT, GREEN FEE FOR ALLOWING NON-MEMBERS TO USE THE GOLF GROUND WOULD BE AN ACTIVITY IN THE NATURE OF TRADE OR COMM ERCE? THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT SPO NSORSHIP FEE COLLECTED FOR CONDUCTING TOURNAMENT AND GREEN F EE FOR USE OF GOLD GROUND CANNOT BE CONSIDERED TO BE A COM MERCIAL ACTIVITY AND THEREFORE, IT IS NOT IN THE NATURE OF TRADE OR COMMERCE. IT MAY BE A COMMERCIAL ADVERTISEMENT FOR THE INDIVIDUAL OR INSTITUTION WHO IS PAYING THE SPONSOR SHIP FEE BUT AS FAR AS THE ASSESSEE IS CONCERNED, THE SPONSO RSHIP FEE RECEIVED IS AN INCOME INCIDENTAL TO THE MAIN ACTIVI TY OF PROMOTING GOLF IN THE STATE OF TAMILNADU, THEREFORE , AT ANY STRETCH OF IMAGINATION, THE COLLECTION OF SPONSORSH IP FEE CANNOT BE CONSIDERED AS COMMERCIAL ACTIVITY BY THE ASSESSEE. SIMILARLY, THE TOURNAMENT FEE, ANNUAL SUB SCRIPTION FEE, GREEN FEE, CATERING INCOME, ROUND CHARGES ETC. ARE 5 I.T.A. NO.402/CHNY/19 INCIDENTAL TO THE MAIN ACTIVITY OF PROMOTING THE SP ORT OF GOLF. AS RIGHTLY SUBMITTED BY THE LD. REPRESENTATIV E FOR THE ASSESSEE, THE NON-REFUNDABLE MEMBERSHIP FEE COLLECT ED AT THE TIME OF ADMISSION IS IN THE NATURE OF CAPITAL R ECEIPT, THEREFORE, IT CANNOT BE TREATED AS INCOME OF THE AS SESSEE. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN SAYING TH AT THE ASSESSEE IS ENGAGED IN ACTIVITY WHICH IS SIMILAR TO COMMERCE OR TRADE. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE ASSESSEE IS ENGAGED ONLY IN PROMOTING THE SPORT OF GOLF AND RECEIVING SUBSCRIPTION, TOURNAMENT FEE, SPONSORSHIP FEES ETC. ARE IN THE COURSE OF ITS CARRYING ON THE CHARI TABLE ACTIVITY. THEREFORE, THE ACTIVITY OF THE ASSESSEE I S NOT SIMILAR TO COMMERCE OR TRADE. 9. NOW COMING TO THE CLAIM ON THE PRINCIPLES OF MUTU ALITY, AS RIGHTLY SUBMITTED BY THE ID. DR, THE INDIVIDUAL BEN EFICIARIES SHALL BE IDENTIFIED FOR THE PURPOSE OF CLAIMING PRI NCIPLES OF MUTUALITY. IN THIS CASE, THE OBJECT OF THE ASSESSEE IS TO PROMOTE THE GAME OF GOLF IN THE STATE OF TAMILNADU. THE BENEFITS CAN BE AVAILABLE NOT ONLY FOR THE MEMBERS OF THE ASSESSEE-SOCIETY BUT ALSO NON-MEMBERS. THEREFORE, T HE BENEFICIARIES CANNOT BE IDENTIFIED. IN FACT, THE OB JECT OF THE SOCIETY ENABLES TO PROVIDE TRAINING AND FINANCI AL ASSISTANCE TO ALL INDIVIDUALS. IN THOSE CIRCUMSTANC ES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PRIN CIPLES OF MUTUALITY IS NOT APPLICABLE TO THE FACTS OF THIS CA SE. 10. IN VIEW OF THE ABOVE DISCUSSION, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ELIGIBLE FO R EXEMPTION U/S 11 OF THE ACT AS CHARITABLE INSTITUTIO N IN RESPECT OF THE INCOME GENERATED IN THE COURSE OF IT S ACTIVITIES IN FURTHERANCE OF ITS OBJECTS. ACCORDING LY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ASSESSING OFFICER IS DIRECTED TO GRANT EXEMPTION U/ S 11 OF THE ACT IN RESPECT OF THE INCOME OF THE ASSESSEE WH ICH IS UTILIZED FOR THE OBJECT OF THE SOCIETY. 6 I.T.A. NO.402/CHNY/19 5. THE ORDER OF THIS TRIBUNAL WAS SUBSEQUENTLY FOLL OWED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL FOR THE ASSESSME NT YEARS 2010- 11, 2011-12 AND 2012-13. A MERE PENDENCY OF APPEAL FILED BY THE DEPARTMENT BEFORE THE HIGH COURT AGAINST THE ORDER OF THIS TRIBUNAL CANNOT BE A GROUND TO TAKE A DIFFERENT VIEW. THIS TRIBUNAL IS CONSISTENTLY HOLDING THAT THE ASSESSEE IS NOT DOING ANY BUSINESS OR SERVICE TO TRADE OR COMMERCE. THEREFORE, THE CIT(A PPEALS) HAS RIGHTLY FOLLOWED THE ORDER OF THIS TRIBUNAL AND ALL OWED THE CLAIM OF THE ASSESSEE UNDER SECTION 11 OF THE ACT. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 24 TH MAY, 2019 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESA N) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 24 TH MAY, 2019. KRI. 7 I.T.A. NO.402/CHNY/19 . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-17, CHENNAI 4. CIT (EXEMPTIONS), CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.