MUMBAI CRICKET ASSOICATION, MUMBAI V. ADIT (E), MUMBAI

ITA 4639/MUM/2013

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9846 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR SHARMA
• Assessee Lawyers: ARVIND SONDE; JAYANT GOKHALE
• Keywords: Charitable institution; Retrospective amendment; Tangible material; Difference of opinion; Benefit of exemption; Cancellation of registration; Change of opinion
• Section: 143(3); 12A; 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 4639 / MUM/20 13 & 4640/MUM/2013 ( ASSESSMENT YEAR : 2006 - 07 & 2007 - 08 ) M/S. MUMBAI CRICKET ASSOCIATION, 3 RD FLOOR, CRICKET CENTRE WANK HADE STADIUM D - ROAD, CHURCHGATE MUMBAI 400 021 V S. ASST. DIRECTOR OF INCOME TAX (EXEMPTION) - 1(1) 5 TH FLOOR, PIRAMAL CHAMBERS LALBAUG, MUMBAI PAN/GIR NO. AAAAM0223A APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI ARVIND SONDE & SHRI JAYANT GOKHALE REVENUE BY SHRI RAJESH KUMAR SHARMA DATE OF HEARING 07/09 /201 8 DATE OF PRONOUNCEMENT 24 / 09 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1 , MUMBAI DATED 28/03/2013 FOR A.Y.2006 - 07 & 2007 - 08 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.SECTION 147 OF THE IT ACT. 2. COMMON GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN BOTH THE YEARS. GROUNDS TAKEN IN THE A.Y.2006 - 07 READS AS UNDER: - 1. ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE RE - OPENING OF ASSESSMENT, WHICH WAS ORIGINALLY COMPLETED U/S 143(3), AND MADE MERELY ON A CHANGE OF OPINION. HE FAILED TO APPRECIATE THAT ALL MATERIAL INFORMATION WAS FULLY DISCLOSED IN THE ORIGINAL ASSESSMENT, AND ITA NO. 4639/MUM/2013 & 4640/MUM/2013 M/S. MUMBAI CRICKET ASSOCIATION 2 THERE WAS NO FRESH, TANGIBLE MATERIAL TO JUSTIFY REOPENING OF THE ASSESSMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT AS THE H ON'BLE ITAT IN ASSESSEE'S OWN CASE HAS UPHELD ASSESSEE'S REGISTRATION U/S 12A FOR THIS ASST. YEAR, THE WHOLE BASIS FOR THE REOPENING HAD CEASED TO EXIST, AND THE REOPENING WAS EX FACIE UNSUSTAINABLE IN LAW. 3. THE LEARNED CIT(A) COMMITTED A GRAVE ERROR O F LAW IN REFUSING TO FOLLOW THE DECISION OF THE ITAT IN THE ASSESSEE'S OWN CASE, WHERE THE ITAT HAS SPECIFICALLY UPHELD ASSESSEE'S REGISTRATION U/S 12A FOR THE CURRENT ASST. YEAR. IT WAS NOT AT ALL OPEN TO THE QT(A) TO DISREGARD - AND REFUSE TO FOLLOW THE JU DGMENT OF THE HON'BLE ITAT, WHICH IS BINDING ON HIM. 4. WITHOUT PREJUDICE TO THE ABOVE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIONS OF . THE AO FN TREATING THE ASSESSEE'S ACTIVITIES AS 'BUSINESS ACTIVITIES'. 5. ON THE FACTS AND IN THE CIRCUMSTAN CES OF - THE CASE AND IN LAW, THE LEARNED CIT(A) FAILED TO PROPERLY APPRECIATE THE PROVISIONS OF ASSESSEE'S AGREEMENT WITH M/S SHIRKE INFRASTRUCTURE, WHICH CLEARLY SHOWED THAT THE ASSESSEE WAS NOT AT ALL ENGAGED IN. RUNNING OR CARRYING ON ANY COMMERCIAL - ACTI VITY. IN ANY EVENT AND WITHOUT PREJUDICE, THE LEARNED CIT(A) TOTALLY FAILED TO APPRECIATE THAT THE ALLEGED COMMERCIAL ACTIVITY HAD NOT AT ALL EVEN STARTED IN THE PREVIOUS YEAR RELEVANT TO THIS ASST. YEAR. 6. THE ASSESSEE CRAVES L EAVE TO ADD/ALTER/MODIFY T HE ABOVE GROUNDS OF APPEAL . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT T HE ASSESSEE, MUMBAI CRICKET ASSOCIATION, HEREINAFTER REFERRED TO AS THE ASSOCIATION IS A PUBLIC CHARITABLE TRUST AND WAS FORMERLY REGISTERED A S CHARITABLE INSTITUTION U/S 12A OF THE INCOME TAX ACT, 1961 VIDE REGISTRATION NO. INS 1224 DTD.14 - 03 - 1973 THE ASSOCIATION HAS BEEN CONSISTENTLY CLAIMING EXEMPTION U/S 11 OF THE INCOME TAX ACT FOR PAST VARIOUS YEARS. THIS EXEMPTION HAS BEEN GRANTED ITA NO. 4639/MUM/2013 & 4640/MUM/2013 M/S. MUMBAI CRICKET ASSOCIATION 3 IN EARL IER YEARS IN COURSE OF ASSESSMENT OR BY VIRTUE OF DECISIONS OF THE CIT (A) AND / OR HON ITAT MUMBAI IN THE ASSESSEE'S OWN CASE. 5 . FOR THE A.Y. 2006 - 07 UNDER CONSIDER ATION, THE RETURN OF INCOME U/S. 39 WAS FILED I.E., ON 30 - 10 - 2006 AND WAS PROCESSED U/S 1 43(1) AND WAS ALSO ASSESSED U/S 143(3) VIDE ORDER DTD. 17 - 12 - 2008 BY ACKNOWLEDGING ASSOCIATION'S REGISTRATION U/S 12A AND GRANTING IT BENEFIT OF EXEMPTION U/S 11. IN THE SAID ASSESSMENT ORDER U/S 143(3), LD.AO HAS FOLLOWED ORDERS OF HON ITAT MUMBAI IN ASSO CIATION'S OWN CASE FOR AY 1996 - 97 AND 1997 - 98 AND HAS RECORDED A FINDING THAT, THE NATURE OF ACT IVITIES & THE NATURE OF INCOME OF THE ASSOCIATION HAS REMAINED THE SAME AS IN AY 1996 - 97 AND AY 1997 - 98 IN WHICH THE ITAT HAS GRANTED EXEMPTION. 6 . SUBSEQUENTL Y, IN THE COURSE OF ASSESSMENT FOR AY 2008 - 09, LD. AO OBSERVED THAT, ASSOCIATION HAS ENTERED INTO A CONCESSION AGREEMENT. THIS AGREEMENT WAS WITH THE INTENTION TO PROMOTE / DEVELOP A WORLD - CLASS CRICKET TRAINING AND PRACTICE FACILITY WHERE TOP - LEVEL CRICKE TERS WOULD BE FACILITATED IN IMPROVING THE TECHNICAL ASPECTS OF THEIR GAME. SUCH FACILITIES WERE AVAILABLE INTERNATIONALLY, BUT NOWHERE IN INDIA TILL THAT DATE. CREATION OF SUCH FACILITIES HOWEVER REQUIRED SIGNIFICANT INVESTMENT OF FUNDS. THE PROPOSAL FOR PUTTING UP AN INDOOR CRICKET SCHOOL WAS FIRST MOOTED BY THE ASSOCIATION IN THE 90'S AND A SPACE EARMARKED FOR THE SAME AT THE ASSOCIATION'S PREMISES AT CHURCHGATE. HOWEVER, DUE TO NON - AVAILABILITY OF FINANCE, THE PROJECT WHICH WAS CONSTRUCTED UP TO PLINTH LEVEL HAD TO BE ITA NO. 4639/MUM/2013 & 4640/MUM/2013 M/S. MUMBAI CRICKET ASSOCIATION 4 ABANDONED. THE PAUCITY OF FUNDS CONTINUED FOR MORE THAN ONE DECADE. THEREFORE, DESPITE THE INTENTION FROM 1990, TO DEVELOP SUCH CRICKET ACADEMY, IT WAS ONLY MUCH LATER, THAT THE ASSOCIATION WAS ABLE TO PUT TOGETHER A SCHEME WHEREBY SUCH A C ENTRE WOULD BE FACILITATED. FOR THIS PURPOSE THE ASSOCIATION ENTERED INTO A SCHEME OF FUNDING ITS ACTIVITY BY WAY OF A CONCESSION AGREEMENT WITH AN INFRASTRUCTURE AND SERVICES COMPANY FOR DEVELOPMENT OF WORLD CLASS INDOOR CRICKET ACADEMY ON A PLOT SITUA TED AT BANDRA KURLA COMPLEX. ON THE BASIS OF AGREEMENT DTD.12 - 12 - 2005, THE ASSESSING OFFICER M ADE A PROPOSAL TO LD. DIT (E) FOR CANCELLATION OF ASSOCIATION'S REGISTRATION U/S 12A. ACCORDINGLY DIT (E) ISSUED A SHOW - C AUSE NOTICE FOR WITHDRAWAL OF RE GISTRATION GRANTED U/S 12A WHICH WAS SERVED ON THE ASSOCIATION'S REPRESENTATIVE ON 21 - 12 - 2010. THE LD DIT(E) VIDE ITS ORDER U/S 12AA(3}DTD.31 - 12 - 2010 CANCELLED THE ASSOCIATION'S REGISTRATION U/S 12A. THE ASSOCIATION HAS PREFERRED APPEAL AGAINST THE O RDER OF CANCELLATION OF REGISTRATION PASSED U/S 12AA(3) WHICH IS PENDING DISPOSAL BEFORE HON'BLE ITAT MUMBAI IN ITA 1700/MUM/2011. 7 . ON THE BASIS OF IMPUGNED ORDER U/S 12AA(3) WHICH CANCELLED THE ASSOCIATION'S REGISTRATION U/S 12A ALLEGEDLY WITH RETROSPE CTIVE EFFECT, THE ASSESSEES CASE FOR THE YEAR UNDER CONSIDERATION WAS REOPENED U/S 147 BY ISSUING NOTICE U/S 148 DTD 16 - 03 - 2011. SUBSEQUENTLY REASONS FOR RE - OPENING WERE ALSO FURNISHED VIDE LETTER DTD.20 - 10 - 2011. IN RE - ASSESSMENT ORDER, AO DECLI NED REGISTRATION U/S.12A AND TREATED THE ITA NO. 4639/MUM/2013 & 4640/MUM/2013 M/S. MUMBAI CRICKET ASSOCIATION 5 ACTIVITIES OF THE ASSESSEE AS BUSINESS ACTIVITY. ACCORDINGLY, TOTAL INCOME OF THE ASSESSEE WAS COMPUTED AT RS.20,74,71,256/ - IN THE A.Y.2006 - 07. 8. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 9. COMMON GRIEVANCE OF THE ASSESSEE IN BOTH THE YEARS PERTAINS TO DECLINING OF REGISTRATION UNDER SECTION 12A THEREBY DENYING EXEMPTION. 10 . AT THE OUTSET, IT WAS CONTENDED BY LEARNED AR THAT ISSUE UNDER CON SIDERATION IS COVERED BY THE ORDER OF THE ITAT FOR THE A.Y. 2008 - 09 DATED 06/02/2018. 11 . COMMON GRIEVANCE OF THE ASSESSEE IN BOTH THE YEARS PERTAINS TO DECLINING OF REGISTRATION UNDER SECTION 12A THEREBY DENYING EXEMPTION. 12 . WE HAVE HEARD THE RIVAL C ONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ASSESSEE IS A PUBLIC CHARITABLE TRUST ENGAGED IN THE ACTIVITIES OF PROMOTION AND REGULATION OF GAME OF CRICKET IN MUMBAI. REGISTRATION WAS GRANTED UNDER SECTION 12A OF THE ACT IN TH E YEAR 1975. VIDE ORDER DATED 31 ST DECEMBER, 2010 , DIT EXEMPTION WITHDREW THE EXEMPTION RETROSPECTIVELY . AGAINST THIS ORDER OF CANCELLATION ASSESSEE APPROACHED TRIBUNAL. W E FOUND THAT THE ITAT VIDE ITS ORDER DATED 8 TH AUGUST, 2012 HELD THAT CANCELLATION OF REGISTRATION CANNOT BE RETROSPECTIVE AND HELD THAT CANCELLATION WILL TAKE EFFECT ONLY FROM 1 ST JUNE , 2010. THE LEARNED A.R. PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ITA NO. 4639/MUM/2013 & 4640/MUM/2013 M/S. MUMBAI CRICKET ASSOCIATION 6 ASSESSEES OWN CASE FOR THE A.Y.2008 - 09 DATED 6 TH FEBRUARY, 2018 WHEREIN UNDER SIMILA R FACTS AND CIRCUMSTANCES THE MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR COMPUTING THE TOTAL INCOME OF THE ASSESSEE BY APPLYING THE PROVISIONS OF EXEMPTION GRANTED UNDER SECTION 11 OF THE ACT. THE PRECISE OBSERVATION OF THE TRIBUNAL IS AS UNDER: - 2. WE SHALL FIRST TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09. THE ASSESSEE IS A PUBLIC CHARITABLE TRUST AND IS ENGAGED IN THE ACTIVITIES OF PROMOTION AND REGULATION OF GAME OF CRICKET IN MUMBAI. THE ASSESSEE WAS GRANTED REGISTRAT ION U/S 12A OF THE ACT IN THE YEAR 1975. THE LD DIT (EXEMPTION), VIDE HIS ORDER DATED 31.12.2010, WITHDREW THE REGISTRATION RETROSPECTIVELY. THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008 - 09 ON 31.12.2010 AND BY THAT TIME, THE L D DIT(EXEMPTION) HAD CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE ACT WITH RETROSPECTIVE EFFECT. 3. THE ASSESSEE HAD COMPUTED INCOME BY AVAILING EXEMPTION U/S 11 OF THE ACT. ONE OF THE CONDITIONS FOR ALLOWING EXEMPTION U/S 11 WAS THAT THE CHARITABLE TRUST SHOULD HAVE BEEN REGISTERED BY THE LD DIT (EXEMPTION) U/S 12A OF THE ACT. SINCE THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A HAS BEEN WITHDRAWN BY LD DIT (EXEMPTION) IN THE PROCEEDINGS CARRIED U/S 12AA(3) OF THE ACT WITH RETROSPEC TIVE EFFECT, THE AO REJECTED THE CLAIM FOR EXEMPTION U/S 11 OF THE ACT AND ACCORDINGLY DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.1558.66 LAKHS. THE LD CIT(A) ALSO CONFIRMED THE SAME. 4. THE LD A.R SUBMITTED THAT THE ASSESSEE HAD CHALLENGED THE ORD ER PASSED BY LD DIT(EXEMPTION) CANCELLING THE REGISTRATION GRANTED TO THE ASSESSEE, BY FILING APPEAL BEFORE ITAT. HE SUBMITTED THAT THE ITAT HAS ALREADY PASSED ITS ORDER IN ITA NO.1700/MUM/2011 ON 08TH AUGUST, 2012 (138 ITD 0338), WHEREIN IT HAS BEEN HELD THAT THE CANCELLATION OF REGISTRATION CANNOT BE RETROSPECTIVE. ACCORDINGLY THE TRIBUNAL HELD THAT THE CANCELLATION OF ORDER SHALL TAKE EFFECT FROM 01.06.2010 ONLY. ACCORDINGLY THE LD A.R SUBMITTED THAT THE ASSESSEE SHALL BE HAVING REGISTRATION U/S 12A OF T HE ACT DURING ASSESSMENT YEAR 2008 - 09 AND ACCORDINGLY CONTENDED THAT THE ASSESSEE SHOULD BE GRANTED EXEMPTION U/S 11 OF THE ACT. 5. WE HEARD LD D.R AND PERUSED THE RECORD. HAVING REGARD TO THE FACTS NARRATED ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE SHO ULD BE GRANTED EXEMPTION U/S 11 OF THE ACT FOR ASSESSMENT YEAR 2008 - 09, SINCE THE TRIBUNAL HAS HELD THAT THE CANCELLATION OF REGISTRATION SHALL TAKE EFFECT FROM 01 - 06 - 2010 ONLY. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) FOR ASSESSMENT YEAR 200 8 - 09 AND RESTORE ALL THE MATTERS TO THE FILE ITA NO. 4639/MUM/2013 & 4640/MUM/2013 M/S. MUMBAI CRICKET ASSOCIATION 7 OF THE ASSESSING OFFICER WITH THE DIRECTION TO COMPUTE THE TOTAL INCOME OF THE ASSESSEE BY APPLYING THE PROVISIONS OF EXEMPTION GRANTED U/S 11 OF THE ACT. 1 3 . WE HAVE CAREFULLY GONE THROUGH THE ORDERS PASSED B Y THE TRIBUNAL IN ASSESSEES OWN CASE AND FOUND THAT THE MATTER WITH REGARD TO GRANTING EXEMPTION UNDER SECTION 11 WAS RESTORED BACK TO THE FILE OF THE AO BY OBSERVING THAT THE ORDER PASSED BY THE DIT (EXEMPTION) CANCELLING REGISTRATION WILL BE EFFECTIVE F ROM 01.06.2011 ONLY. THE RELEVANT ASSESSMENT YEARS UNDER CONSIDERATION ARE 2006 - 07 AND 2007 - 08, WHICH ARE PRIOR TO 1 ST JUNE, 2010, ACCORDINGLY THE WITHDRAWAL OF REGISTRATION UNDER SECTION 12A IS NOT EFFECTIVE DURING THE YEAR S UNDER CONSIDERATION IN TERMS O F THE DECISION OF THE TRIBUNAL DATED 8 TH AUGUST, 2012. AFTER CONSIDERING DECISION OF THE TRIBUNAL DATED 8 TH AUGUST, 2012, THE TRIBUNAL VIDE ITS ORDER DATED 06.02.2018 HAS RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR A.Y. 2008 - 09 TO COMPUTE THE TOTAL INCOME OF THE ASSESSEE BY APPLYING THE PROVISIONS OF EXEMPTION GRANTED UNDER SECTION 11 OF THE ACT. 1 4 . THE FACTS AND CIRCUMSTANCES IN BOTH THE ASSESSMENT YEARS ARE PARI - MATERIA, THEREFORE FOLLOWING THE REASONING GIVEN HEREINABOVE, THE MATTER IS RESTORED B ACK TO THE FILE OF THE AO WITH A DIRECTION TO RE COMPUTE THE TOTAL INCOME OF THE ASSESSEE BY APPLYING THE PROVISIONS OF EXEMPTION GRANTED UNDER SECTION 11 OF THE ACT. ITA NO. 4639/MUM/2013 & 4640/MUM/2013 M/S. MUMBAI CRICKET ASSOCIATION 8 1 5 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED IN PART FOR STATISTICAL PURPO SES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 / 09 /201 8 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 24 / 09 /201 8 KARUN A SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//