ADIT(E), New Delhi V. M/s. Amateur Athletics Federation of India, New Delhi

ITA 6222/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7294 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Keywords: Charitable institution
• Section: 12; 11

Judgement Text

1 ITA NO. 6222/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A FRIDAY NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 6222/DEL/2013 (ASSESSMENT YEA R-2009-10) AND I.T.A .NO.- 6240/DEL/2013 (ASSESSMENT YEAR-2010-11) ADIT(E) INV. CIR-I NEW DELHI (APPELLANT) VS AMATEUR ATHLETICS FEDERATION OF INDIA ROOM NO. 44, 2 ND FLOR, PALIKA PLACE, NDMC BLDG. PANCHKUIAN ROAD NEW DELHI AAATT4183B (RESPONDENT) APPELLANT BY SH. K. K. JAISWAL, DR RESPONDENT BY NONE ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDERS DATED 02/09/2013, PASSED BY THE LD. CIT(A)-XXI, NEW DELHI, RELATING TO A.Y. 2009-10 AND A.Y. 2010-11. 2. THE GROUNDS OF APPEAL FOR A.Y. 2009-10 ARE AS FO LLOWS:- DATE OF HEARING 08.01.2016 DATE OF PRONOUNCEMENT 02.02.2016 2 ITA NO. 6222/DEL/2012 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.50,76,003/- MADE BY THE A.O BY INVOKING THE PROV ISIONS OF SECTION 2(15) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.2,21,555/- ON ACCOUNT OF DISALLOWANCE OF DEPRECI ATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FA CT THAT THE A.O DENIED THE CLAIM OF EXEMPTION TO THE ASSESSEE U/S 1 1 & 12 OF THE ACT. THE GROUNDS OF APPEAL FOR A.Y. 2010-11 ARE AS FOLLO WS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.67,36,020/- (97,57,240 30,21,220 ALREADY SHOWN IN THE INCOME) MADE BY THE A.O BY INVOKING THE PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.1,88,394/- ON ACCOUNT OF DISALLOWANCE OF DEPRECI ATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FA CT THAT THE A.O DENIED THE CLAIM OF EXEMPTION TO THE ASSESSEE U/S 1 1 & 12 OF THE ACT. 3. THE ASSESSEE IS A SPORTS FEDERATION PROMOTING AT HLETICS IN INDIA AND THE FEDERATION IS RECOGNIZED BY MINISTRY OF YOUTH AFFAIRS & SPORTS. THE ASSESSEE RECEIVES RECOGNITION FEES FOR RECOGNIZING VARIOUS SPORTS EVENTS IN INDIA. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE A.O DENIED THE BENEFIT U/S 11 OF THE INCOME TAX ACT, 1961 MAINLY ON THE GROUND THAT THE ASSESSEE RECEIVES REO RGANIZATION FEES 3 ITA NO. 6222/DEL/2012 OR CAPITATION FEES IN VIOLATION OF PROVISO TO SECTI ON 2(15) OF THE ACT VIDE THE ORDER OF THE A.O. 4. THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF T HE A.O AND SUBMITTED THAT THE A.O WAS NOT JUSTIFIED TO DENY TH E EXEMPTION U/S11 OF THE ACT. THE ASSESSEE SUBMITTED BEFORE CI T (A) THAT THE ASSESSEE IS INVOLVED IN PROMOTING ATHLETICS SPORTS IN INDIA AND IT IS A CHARITABLE ORGANIZATION. THE ASSESSEE WAS NOT IN VOLVED IN ANY BUSINESS ACTIVITY AND IT MERELY RECEIVES SOME AMOUN TS AS RECOGNITION FEES WHICH IS NOT A BUSINESS ACTIVITY. THERE IS NO PROFIT MOTIVE IN THE ACTIVITIES OF THE ASSESSEE AND AS SUC H THERE IS NO PROPER JUSTIFICATION FOR DENYING THE EXEMPTION U/S 11 OF THE ACT. THE CIT(A) HELD THAT THE PRIME OBJECTIVE OF THE FED ERATION WAS TO PROMOTE ATHLETICS AND SPORTS IN INDIA AND FOR THIS THE ASSESSEE CHARGES SOME AMOUNT FOR RECOGNIZING THE SPORTS EVEN TS AND AS SUCH PROFIT MAKING IS NOT THE PRIME OBJECT OF THE ASSESS EE. THE CIT(A) ALSO TAKEN INTO CONSIDERATION THE CASE LAWS SUBMITT ED BY THE ASSESSEE AND HELD THAT THE CASE LAWS SUPPORT THE CA SE OF THE ASSESSEE TO THE EXTENT THAT MERELY BECAUSE THE ASSE SSEE RECEIVES SOME RECOGNITION FEES WILL NOT DEVIATE FROM THE FAC T THAT THE MAIN OBJECT OF THE ASSESSEE IS THE PROMOTION OF SPORTS W HICH IS APPARENTLY FOR THE ADVANCEMENT OF GENERAL PUBLIC UTILITY AS PR OVIDED IN THE SIXTH LIMB OF SECTION 2 (15) OF THE ACT WHICH DEFIN ES CHARITABLE PURPOSES. THUS THE CIT(A) HELD THAT THE ASSESSEE C OMES UNDER THE CATEGORY OF CHARITABLE ORGANIZATION AND EVEN THE CA SE LAWS RELIED ON BY THE ASSESSEE SUPPORTS THE CASE OF THE ASSESSEE. ACCORDINGLY THE 4 ITA NO. 6222/DEL/2012 CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11 WAS ALLO WED BY THE CIT(A). 6. THE DR RELIED UPON THE ORDER OF THE ASSESSING OF FICER. 7. WE HAVE PERUSED ALL THE RECORDS AND HEARD THE LD . DR. THE CIT(A) WAS RIGHT IN HOLDING THAT THE PRIME OBJECT O F THE FEDERATION IS TO PROMOTE ATHLETICS AND SPORTS IN INDIA. THE MAI N OBJECT OF THE ASSESSEE COMES UNDER THE PURVIEW OF SECTION 2 (15) OF THE ACT WHICH DEFINES CHARITABLE PURPOSE. THE DOMINANT OR PRIMARY PURPOSE OF THE ASSESSEE IS TO PROMOTE ATHLETICS IN INDIA WHICH IS CHARITABLE AND THE OTHER OBJECTS ARE IN THE NATURE OF POWERS CONFERRED UPON THE ASSESSEE FOR THE PURPOSE OF SECURING FULFILLMENT OF THE DOMINANT OR PRIMARY PURPOSE. THEY WOULD NO DOUBT BENEFIT THE ME MBERS OF THE ASSESSEE BUT THIS BENEFIT WOULD BE INCIDENTAL IN CA RRYING OUT THE MAIN OR PRIMARY PURPOSE OF THE ASSESSEE. IF THEREFO RE, THE DOMINANT OR PRIMARY PURPOSE OF THE ASSESSEE WAS CHARITABLE T HE SUBSIDIARY OBJECTS WOULD NOT MILITATE AGAINST ITS CHARITABLE C HARACTER AND THE PURPOSE OF THE ASSESSEE WOULD NOT BE ANY THE LESS C HARITABLE. MERELY BECAUSE THE ASSESSEE RECEIVES SOME RECOGNITI ON FEES WILL NOT DEVIATE THE FACT THAT THE MAIN OBJECT OF THE ASSESS EE IS TO PROMOTE SPORTS WHICH IS APPARENTLY FOR THE ADVANCEMENT OF G ENERAL PUBLIC UTILITY AS PROVIDED IN SECTION 2 (15) OF THE ACT WH ICH DEFINES CHARITABLE PURPOSES. THE WORDS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY WOULD EXCLUDE OBJECTS OF PR IVATE GAIN; BUT THIS REQUIREMENT IS ALSO STRATIFIED IN THE PRESENT CASE BECAUSE THE OBJECT OF PRIVATE PROFIT IS ELIMINATED BY THE ASSESSEE UND ER THE OBJECTS AS 5 ITA NO. 6222/DEL/2012 PER MEMORANDUM OF ASSOCIATION OF SOCIETY WHICH WAS QUOTED IN ASSESSMENT ORDER. THE TEST TO BE APPLIED IS WHETHER THE PREDOMINANT OBJECT OF THE ACTIVITY INVOLVED IN CARR YING OUT THE OBJECT OF GENERAL PUBLIC UTILITY IS TO SUBSERVE THE CHARIT ABLE PURPOSE OR TO EARN PROFIT. WHERE THE PREDOMINANT OBJECT OF THE AC TIVITY IS TO CARRY OUT THE CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT WOULD NOT LOSE ITS CHARACTER OF A CHARITABLE PURPOSE MERELY BECAUS E SOME PROFIT ARISES FROM THE ACTIVITY. THE EXCLUSIONARY CLAUSE D OES NOT REQUIRE THAT THE ACTIVITY MUST BE CARRIED ON IN SUCH A MANN ER THAT IT DOES NOT RESULT IN ANY PROFIT. THE RESTRICTIVE CONDITION THAT THE PURPOSE SHOULD NOT INVOLVE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT WOULD BE SATISFIED IF PROFIT MAKING IS NOT THE REAL OBJECT. THEREFORE THE ASSESSEE IS ENTITLED FOR THE DEDUCTION UNDER SECTIO N 11 OF THE ACT. HENCE, THE REVENUES CASE DOES NOT SUSTAIN. 8. IN RESULT, BOTH THE APPEALS ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 ND OF FEBRUARY, 2016. SD/- SD/- (J. SUDHAKAR REDDY) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02/02/2016 R. NAHEED * 6 ITA NO. 6222/DEL/2012 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON .08.01.2016 PS 2. DRAFT PLACED BEFORE AUTHOR .08.01.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 02.01.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 03.01.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 7 ITA NO. 6222/DEL/2012