ITO (E), New Delhi V. M/s. The Indian Golf Union, New Delhi

ITA 4219/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7117 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 28-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 01-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: A K KHANNA
• Keywords: Business income; Charitable institution
• Section: 12A; 10B; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-II, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 4219 /DEL/201 6 A.Y. : 20 1 2 - 1 3 INCOME TAX OFFICER (E), WARD 2(3), ROOM NO. 2407, E-2 BLOCK, DR. SP MUKHERJEE MARG, CIVIC CENTRE, NEW DELHI -02 VS. THE INDIAN GOLF UNION, C-1/52, 3 RD FLOOR, SDA HAUZ KHAS, VILLAGE ROAD, NEW DELHI 1100 16 (PAN: AAATT3232B) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. S.K. JAIN, SR. DR ASSESSEE BY : SH. A.K. KHANNA, CA ORDER ORDER ORDER ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-36, NEW DELHI DATED 12.5.2016 PERTAINING TO ASSESSMENT YEAR 2012-13 ON THE FOLLOW ING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW IGNORING THAT ASSES SEES ACTIVITY FALLS UNDER THE CATEGORY OF ADVANCEMENT OF ANY OTH ER OBJECT OF GENERAL PUBLIC UTILITY AND LAST PROVISO TO SECTION 2(15) IS CLEARLY APPLICABLE TO IT AS INCOME FROM SPONSORSHIP/ ROYAL TY IS EXPLICITLY BUSINESS RECEIPT IN NATURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW IN IGNORING THE ADD ITION ON 2 ACCOUNT OF LIFE MEMBERS SUBSCRIPTION WITHOUT DISCU SSING ANY FACTS IN THE ORDER. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN SHOWING NIL INCOME ACCOMPANIED WITH AUDIT REPORT IN FORM NO. 10B WAS F ILED ON 13.12.2012. THE ASSESSEE SOCIETY IS ENGAGED IN ORGANIZING GOLF TOU RNAMENTS IN INDIA AND ABROAD FOR PROMOTION OF THE GAME OF GOLD IN INDIA. THE MAI N OBJECTIVES OF THE ASSESSEE SOCIETY, INTER-ALIA INCLUDE: A) TO PROMOTE THE GAME OF GOLF IN INDIA. B) TO FOSTER AND MAINTAIN A HIGH STANDARD OF AMATEU R GOLD IN INDIA. C) TO ARRANGE FOR THE CONDUCT OF THE AMATEUR GOLD C HAMPIONSHIP IN INDIA AND OTHER GOLD CHAMPIONSHIP IN INDIA. D) TO PROMOTE AND ARRANGE GOLF MATCHES AND COMPETIT IONS IN INDIA AND ELSEWHERE THE ASSESSEE SOCIETY IS REGISTERED U/S. 12A OF TH E I.T. ACT, 1961 VIDE REGISTRATION DATED 31.8.1999. A PERUSAL OF INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE REVEALED THAT THE ASSESSEE APART FROM OTHER RECEIPTS, HAVE ALSO RECEIVED THE FOLLOWING INCOMES : IGU SPONSORSHIP FE ES, RENTAL INCOME AND ROLEX 3 CONTRIBUTION (SPONSORSHIP). AO OBSERVED THAT SINCE THE ABOVE RECEIPTS ARE IN NATURE OF COMMERCIAL RECEIPTS, THE ASSESSEE WAS AS KED TO FURNISH ITS EXPLANATION AS TO WHY NOT THE ACTIVITIES OF THE ASSESSEE BE COV ERED UNDER NEWLY AMENDED PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT, 19 61. IN RESPONSE TO THE NOTICE, ASSESSEE FILED ITS REPLY. AFTER CONSIDERING THE SA ME, THE AO OBSERVED THAT THE SURPLUS AMOUNTING TO RS. 27,15,855/- GENERATED FROM THE ACTIVITIES OF THE ASSESSEE AS PER INCOME AND EXPENDITURE ACCOUNT WAS TAXED. NO BENEFIT OF SECTION 11 & 12 OF THE I.T. ACT WAS ALLOWED TO THE ASSESSEE IN VIEW OF APPLICABILITY OF SECTION 13(8) OF THE I.T. ACT, 196 1. THE ASSESSEE HAD SHOWN LIFE MEMBERSHIP SUBSCRIPTION OF RS. 19,05,000/- WHICH WA S SHOWN DIRECTLY IN BALANCE SHEET AND NOT OFFERED TO TAX. SINCE THE BE NEFIT OF SECTION 11 & 12 OF THE I.T. ACT, 1961 WAS DENIED TO THE ASSESSEE IN VIEW OF SECTION 13(8), LIFE MEMBERSHIP SUBSCRIPTION OF RS. 19,05,000/- WAS ALSO ADDED TO THE TOTAL INCOME OF THE ASSESSEE AND AO ASSESSED THE INCOME OF THE ASSESSEE AT RS. 46,20,855/- VIDE HIS ORDER DATED 10.3.2015 U/S. 14 3(3) OF THE I.T. ACT, 1961. 3. AGGRIEVED WITH THE IMPUGNED ORDER, THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 4 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE ORDER OF THE LD. CTI(A). I FIND TH AT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUE IN DISPUTE BY CONSI DERING THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AND ADJUDICATED THE I SSUES IN DISPUTE AS UNDER:-. 6. I HAVE CONSIDERED THE ORDER OF THE AO, SUBMISSI ONS OF THE ASSESSEE AND THE EARLIER ORDER OF MY PREDECESSOR CI T(A). IT IS SEEN THAT IN THE CASE OF HAMSADHWANI VS. DIT(E) (20 12) 19 TAXMANN.COM 10 ITAT CHENNAI, THE ASSESSEE WAS PROMO TING MUSIC IN TAMIL NADU FOR WHICH IT WAS RECEIVING SPON SORSHIP AND COACHING FEES AND THE HON'BLE TRIBUNAL DID NOT ACCEPT THE ARGUMENT OF DIT(E) THAT THE ASSESSEE WAS INVOL VED IN ANY BUSINESS ACTIVITY AND THE EXEMPTION WAS ALLOWED. RE CENTLY THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIA T RADE PROMOTION ORGANIZATION VS. DGIT(E), 53 TAXMANN.COM 404 (DELHI) 2015 (ORDER DATED 22.01.2015) HAS UPHELD TH E CONSTITUTION VALIDITY OF THE PROVISO OF SECTION 2(1 5) WHICH WAS UNDER CHALLENGE BEING DISCRIMINATORY IN VIEW OF THE ARTICLE 14 (EQUALITY BEFORE LAW) OF THE CONSTITUTION OF INDIA BUT THE HON'BLE HIGH COURT HAS READ DOWN THE STRICT AND LIT ERAL INTERPRETATION OF THE PROVISO OF SECTION 2(15) AND HAS HELD THAT MERE RECEIPT OF FEE OR CHARGE CANNOT BE SAID THAT T HE ASSESSEE INVOLVED IN ANY TRADE, COMMERCE OR BUSINES S AND HAS ACCORDINGLY ALLOWED THE RELIEF TO THE ITPO. 7. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCE S OF THE CASE AND FOLLOWING THE ORDER OF CIT(A) FOR AY 2010- 11 & 5 2011-12, I AM OF. THE VIEW THAT THE ASSESSEE IS A C HARITABLE INSTITUTION AND ACCORDINGLY THE AO IS DIRECTED TO A LLOW EXEMPTION U/S. 11 & 12 TO THE ASSESSEE ALONGWITH CONSEQUENTIAL BENEFITS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 5.1 ON GOING THROUGH THE AFORESAID FINDING OF THE L D. CIT(A), I FIND THAT LD. CIT(A) HAS NOTED THAT IT IS SEEN THAT IN THE CASE O F HAMSADHWANI VS. DIT(E) (2012) 19 TAXMANN.COM 10 ITAT CHENNAI, THE ASSESSEE WAS PR OMOTING MUSIC IN TAMIL NADU FOR WHICH IT WAS RECEIVING SPONSORSHIP AND COA CHING FEES AND THE HON'BLE TRIBUNAL DID NOT ACCEPT THE ARGUMENT OF DIT(E) THA T THE ASSESSEE WAS INVOLVED IN ANY BUSINESS ACTIVITY AND THE EXEMPTION WAS ALLOWED . IT WAS FURTHER OBSERVED BY THE LD. CIT(A) THAT RECENTLY THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DGIT(E), 53 TAXMAN N.COM 404 (DELHI) 2015 (ORDER DATED 22.01.2015) HAS UPHELD THE CONSTITUTIO N VALIDITY OF THE PROVISO OF SECTION 2(15) WHICH WAS UNDER CHALLENGE BEING DISCR IMINATORY IN VIEW OF THE ARTICLE 14 (EQUALITY BEFORE LAW) OF THE CONSTITUTIO N OF INDIA BUT THE HON'BLE HIGH COURT HAS READ DOWN THE STRICT AND LITERAL INTERPRE TATION OF THE PROVISO OF SECTION 2(15) AND HAS HELD THAT MERE RECEIPT OF FEE OR CHA RGE CANNOT BE SAID THAT THE ASSESSEE INVOLVED IN ANY TRADE, COMMERCE OR BUSINES S AND HAS ACCORDINGLY ALLOWED THE RELIEF TO THE ITPO. I FURTHER FIND THAT AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE ORD ER OF LD. CIT(A) FOR AY 2010- 11 & 2011-12, LD. CIT(A) HAS RIGHTLY HELD THAT THE ASSESSEE IS A CHARITABLE INSTITUTION AND ACCORDINGLY, THE AO WAS DIRECTED TO ALLOW THE EXEMPTION U/S. 11 & 12 OF THE I.T. ACT TO THE ASSESSEE ALONGWITH CON SEQUENTIAL BENEFITS. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW, THAT LD. CIT(A) HAS PASSED A WELL REASONED 6 ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON MY P ART, HENCE, I UPHOLD THE SAME. AS A RESULT, THE GROUNDS RAISED BY THE RE VENUE STAND DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/1/2017. SD/- ( (( (H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 03/1/2017 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 7