Hyderabad Cricket Association, Hyd, Secunderabad V. CIT (Exemptions), Hyderabad, Hyderabad

ITA 649/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6157 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2016
• Assessment Year: misc
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: C SURESH
• Keywords: Charitable institution; Earning of tax free income; Benefit of exemption; Cancellation of registration
• Section: 2(14); 133A; 12A; 12AA; 12; 11

Judgement Text

ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 1 OF 32 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.649/HYD/2015 (ASSESSMENT YEAR: NA ) M/S. HYDERABAD CRICKET ASSOCIATION HYDERABAD PAN: AAATT 6229 Q VS COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD FOR ASSESSEE: SHRI C. SURESH FOR REVENUE: SMT. NIVEDITA BISWAS, CIT (DR) O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL AGAINST THE WITHDRAWAL OF REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE ACT BY AN ORDER U/S 12AA(3) OF THE ACT DATED 13.03.2015. ASSE SSEE HAS FILED THE REVISED GROUNDS OF APPEAL WHICH ARE AS UNDER: L. THE LEARNED DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) ERRED ON FACTS AND IN LAW IN FAILING TO NOTE THAT THE SPONSORSHIP AMOUNTS COLLECTED FOR THE DEVELOPMENT OF THE CRICKET STADIUM IN HYDERABAD IS AS PER OBJECT NO. 2(XXIV) CONTAINED IN THE MEMORANDUM OF RULES, THAT THE ACTIVITY IS INEXTRICABLY LINKED TO THE PROMOTION AND DEVELOPMENT OF THE GAME OF CRICKET, IS NOT OF COMMERCIAL NATURE AND THE COMMISSION PAYMENTS, IN THIS REGARD REPRESENT FUND RISING INITIATIVES TO OBTAIN THE SAID SPONSORSHIPS. DATE OF HEARING : 14.07.2016 DATE OF PRONOUNCEMENT : 13.10.2016 ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 2 OF 32 2. THE LEARNED DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS), HYDERABAD ERRED ON FACTS AND IN LAW IN FAILING TO NOTE THAT THE LEASING OF CORPORATE BOXES FOR A FIXED TERM HAS BEEN DONE TO MEET THE HUGE CAPITAL OUTLAYS IN THE DEVELOPMENT OF THE CRICKET STADIUM AND THAT RECEIPTS OF IN-STADIA ADVERTISING RIGHTS AND SPONSORSHIPS RELATING TO HOSTING OF CRICKET MATCHES BEAR A DIRECT BEARING TO THE DEVELOPMENT AND PROMOTION OF THE GAME, AND THUS REPRESENTS INTRINSIC, INCIDENTAL ACTIVITIES FOR THE PROMOTION AND DEVELOPMENT OF THE GAME OF CRICKET. 3. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) ERRED ON FACTS AND IN LAW IN FAILING TO NOTE THAT THE CLUB FACILITIES SOUGHT TO BE PROVIDED AT THE CRICKET STADIUM IS PRIMARILY FOR THE PHYSICAL DEVELOPMENT AND WELL BEING OF THE CRICKETERS AND THE CRICKETING FRATERNITY AND REPRESENTS A FACILITY TO FURTHER ITS OBJECT OF DEVELOPING AND PROMOTING THE GAME OF CRICKET. 4. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) ERRED ON FACTS AND IN LAW IN CONCLUDING THAT THE ABSENCE OF CERTAIN BILLS AND VOUCHERS CANNOT LEAD ONE TO THE CONCLUSION THAT EXPENDITURE HAS NOT BEEN INCURRED ON THE OBJECTS OF THE ASSOCIATION AND AT ANY RATE CANNOT BE A GROUND FOR CANCELLATION OF REGISTRATION. 5 .THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) ERRED ON FACTS AND IN LAW IN CONCLUDING THAT THE CONDUCTING OF WOMEN'S CRICKET TOURNAMENT BY YOUR APPELLANT IS NOT IN VIOLATION OF ITS OBJECTS FAILING TO NOTE THAT IN SUCH MATTERS A LIBERAL INTERPRETATION NEEDS TO BE IMPARTED, IN KEEPING WITH JUDICIAL PRONOUNCEMENTS. 6. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) ERRED IN LAW AND IN FACT IN FAILING TO NOTE THAT REGISTRATION HAD BEEN GRANTED TO YOUR APPELLANT WITH EFFECT FROM 20.01.1997 U/S 12A OF THE I T.ACT, AND THUS IN SUCH CASES CANCELLATION AS PER SECTION 12AA(3) OF THE ACT CAN ONLY TAKE EFFECT FROM ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 3 OF 32 01.06.2010, I.E PROSPECTIVELY, AND HENCE RETROSPECTIVE CANCELLATION OF REGISTRATION IS NOT A S PER LAW. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO CIETY WAS GRANTED REGISTRATION U/S 12A(A) OF THE I.T. ACT, 19 61 BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD VIDE HIS LETTER DATED 16.01.2013 W.E.F. 01.04.2002 AND LATER IT WAS MODIFIED TO BE GRANTED W.E.F. 20.01.1997 PURSUANT TO THE DIRECT IONS OF THE ITAT DATED 26.12.2008 IN MA NO.177/HYD/08. 3. FOLLOWING A SURVEY CONDUCTED U/S 133A OF THE ACT, IN THE PREMISES OF THE ASSESSEE ON 21.10.2011, IT WAS FOUND THAT THE ASSESSEE WAS CARRYING ON ACTIVITIES WHICH ARE NOT C HARITABLE IN NATURE. IT WAS OBSERVED THAT THE ASSESSEE WAS DERIV ING INCOME FROM VARIOUS COMMERCIAL SOURCES INCLUDING RECEIPTS FROM LEAGUE FEES, SALE OF TICKETS OF ODI & IPL MATCHES, ADVERTI SEMENT CHARGES, FRANCHISE FEE, SUBSIDY AND SPONSORSHIP MONEY FROM V ARIOUS COMPANIES. IN VIEW OF THE ABOVE, AO WAS OF THE OPIN ION THAT THE ASSESSEE HAS LOST ITS CHARACTER AS A CHARITABLE SOC IETY IN VIEW OF THE FIRST PROVISO TO SECTION 2(15) OF THE ACT. THE ASSESSEE WAS THEREFORE, ISSUED A SHOW CAUSE LETTER DATED 17.11.2 011 FOR WITHDRAWAL OF REGISTRATION GRANTED EARLIER U/S 12A OF THE ACT. THE ASSESSEE OBJECTED TO THE PROPOSAL VIDE ITS LETTER 1 2.03.2012. HOWEVER, THE DIT (E) WAS NOT CONVINCED WITH THE ASS ESSEES OBJECTIONS AND CANCELLED THE REGISTRATION U/S 12AA( 3) OF THE ACT W.E.F. 1.4.2004 DATED 31.05.2012. ASSESSEE FILED AN APPEAL BEFORE THE ITAT AND THE ITAT HAS REMITTED THE SAME BACK TO THE FILE OF THE DIT (E) DIRECTING HIM TO COMMUNICATE TO THE ASS ESSEE ALL THE ISSUES RAISED IN HIS ORDER AND TO GIVE A REASONABLE OPPORTUNITY TO ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 4 OF 32 THE ASSESSEE TO EXPLAIN ON THOSE ISSUES AND AFTER C ONSIDERING THE ASSESSEES SUBMISSIONS TO DECIDE THE ISSUE IN ACCOR DANCE WITH LAW. PURSUANT TO THE SAME, THE DIT (E) RECONSIDERED THE ISSUE. HE WAS OF THE OPINION THAT THE ASSESSEE HAS BEEN CARRY ING ON THE ACTIVITIES OF THE COMMERCIAL NATURE SUCH AS (I) RUN NING OF CLUB (II) ISSUE IN CORPORATE SPONSORSHIP (II) SALE OF CORPORA TE BOXES (IV) AWARDING IN-STADIA ADVERTISING RIGHTS (V)RECEIPTS T OWARDS TV SUBSIDY (VI) INCOME FROM IPL MATCHES (VII) RECEIPTS FROM SALE PROCEEDS OF WORLD CUP 2007 (VIII) RECEIPTS FROM SPO NSORSHIP FOR OTHER MATCHES ETC. IT WAS OBSERVED THAT THE ASSESSE E HAS ALSO HELD A CRICKET MATCH FOR WOMEN, THOUGH IT IS AGAINST THE OBJECTS OF THE TRUST AND SOME OF THE EXPENSES INCURRED BY THE ASSE SSEE ARE NOT SUPPORTED BY VOUCHERS. 4. THE DIT (E) THEREFORE, HELD THAT THE ASSESSEE IS CARRYING ON ACTIVITIES NOT ACCORDING TO ITS OBJECTS AND FURTHER THAT IT IS CARRYING ON COMMERCIAL ACTIVITIES AND THEREFO RE, IS NOT ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT. HE ACCORDINGL Y U/S 12AA(3) OF THE ACT WITHDREW THE REGISTRATION GRANTED U/S 12 A(A) OF THE ACT AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE OBJECT OF THE ASSESSEE SOCIETY WAS TO PROMOTE T HE GAME OF CRICKET IN INDIA. IN SUPPORT OF THIS CONTENTION, HE HAS PLACED A COPY OF THE MEMORANDUM, RULES AND REGULATIONS 2005 OF THE ASSESSEE SOCIETY WHICH CLEARLY SHOWS THAT THE MAIN OBJECT OF THE ASSESSEE SOCIETY IS TO PROMOTE, ORGANIZE, MANAGE AN D CONDUCT THE GAME OF CRICKET IN THE AREA COVERED BY THE ASSESSEE BY WAY OF ORGANIZING OF VARIOUS TOURNAMENTS, ACQUISITION AND MAINTENANCE ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 5 OF 32 OF PLAY GROUNDS. HE HAS ALSO DRAWN OUR ATTENTION TO THE CLAUSE OF ARTICLE NO.24 WHICH IS AS UNDER: (XXIV). TO PURCHASE, TAKE ON LEASE OR OTHERWISE ACQUIRE ANY GROUND AND TO LAYOUT SUCH GROUND OR ANY OTHER GROUND FOR PLAYING THE GAME OF CRICKET AND FOR OTHER PURPOSES OF THE ASSOCIATION AND TO PROVIDE PAVILIONS, STADIUM, DRESSING AND REFRESHMENT ROOMS AND AMENITIES IN CONNECTION THEREWITH AS MAY BE NECESSARY. TO CONSTRUCT ON THE LAND BELONGING TO THE ASSOCIATION BUILDINGS OF ANY KIND FOR RESIDENTIAL, COMMERCIAL, SPORTING OR OTHER USES TO REPAIR, ALTER, PULL DOWN OR DEMOLISH THE SAME. 6. HE HAS ALSO DRAWN OUR ATTENTION TO CLAUSE 8 OF A RTICLE 3 OF THE MEMORANDUM OF THE ASSESSEES SOCIETY TO DE MONSTRATE THAT NO PART OF THE INCOME THE ASSESSEE IS PAYABLE ORN TRANSFERRABLE DIRECTLY OR INDIRECTLY BY WAY OF DIVI DENDS, BONUS, PROFITS OR OTHERWISE TO THE MEMBER OF ASSOCIATION S AVE AS PROVIDED FOR IN CLAUSE 1(2)(XXIII), 1(2)(XXIV), 1(2)(XXV), 2 (XXIX) AND 1(3)(VI). THE RELEVANT CLAUSES ARE ALSO REPRODUCED HEREUNDER FOR READY REFERENCE: 1(2(XXIII) TO ARRANGE, STAGE, PARTICIPATE IN ANY MATCH FOR THE BENEFIT OF ANY CAUSE ON SUCH TERMS AS THE ASSOCIATION MAY DEEM FIT. 1(2)(XXIV) TO PURCHASE, TAKE ON LEASE OR OTHERWISE ACQUIRE ANY GROUND AND TO LAYOUT SUCH GROUND OR ANY OTHER GROUND FOR PLAYING THE GAME OF CRICKET AND FOR OTHER PURPOSES OF THE ASSOCIATION AND TO PROVIDE PAVILIONS, STADIUM, DRESSING AND REFRESHMENT ROOMS AND AMENITIES IN CONNECTION THEREWITH AS MAY BE NECESSARY. TO CONSTRUCT ON THE LAND BELONGING TO THE ASSOCIATION BUILDINGS OF ANY KIND FOR RESIDENTIAL, COMMERCIAL, SPORTING OR OTHER USES TO REPAIR, ALTER , PULL DOWN OR DEMOLISH THE SAME 1(2)(XXV) TO START OR SPONSOR AND/OR TO SUBSCRIBE T O FUNDS OR STAGE MATCHES FOR THE BENEFIT OF INSTITUTIONS, CRICKETERS OR PERSONS WHO MAY HAVE ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 6 OF 32 RENDERED SERVICE TO THE GAME OF CRICKET OR FOR THEIR HEIRS, FAMILIES OR TO DONATE TO A SPORTING CAUSE OR INSTITUTIONS OR TO ANY FUND SPONSORED BY THE ASSOCIATION OR BY THE BOARD OF CONTROL FOR CRICKET I N INDIA OR BY STATE GOVT. OR BY CENTRAL GOVT. 1(2)(XXIX) TO PROVIDE THE FACILITY OF A CLUB WITH S UCH AMENITIES IN CONNECTION THEREWITH AS MAY BE NECESSARY WITHIN THE STADIUM COMPLEX, FOR RECREATION AND ENTERTAINMENT TO ITS MEMBERS AND FOR SUCH OTHER CATEGORY OR CATEGORIES OF MEMBERS, ON SUCH TERMS AND CONDITIONS OF ADMISSION, AS MAY BE DECIDED, FRAMED AND PROVIDED FOR IN THE BYE-LAWS OF THE CLUB BY THE COMMITTEE. 1(3)(VI) TO EMPLOY CLERKS, MANAGERS, COACHES, UMPIRES, SCORERS, GROUNDSMEN, PEONS, SERVANTS AND WORKMEN AND TO PAY THEM IN RETURN FOR SERVICES RENDERED TO THE ASSOCIATION SALARIES, WAGES, GRATUITIES, PENSIONS, HONORARIA, COMPENSATIONS, BONUSES AND/OR PROVIDENT FUND AND TO REMOVE SUCH EMPLOYEES. THUS, ACCORDING TO HIM, THE ASSESSEE IS ORGANIZING THE CRICKET MATCHES STRICTLY IN ACCORDANCE WITH ITS OBJECTIVES AND HAS ALSO APPLIED ITS INCOME ONLY FOR SUCH OBJECTS. THUS, AC CORDING TO HIM, THE CONSTRUCTION OF STADIUMS IS ALSO ONE OF THE OBJ ECTS OF THE ASSESSEE AND IN ORDER TO ACHIEVE THE SAID OBJECT, T HE ASSESSEE HAS RECEIVED DONATIONS AND SPONSORSHIPS AND THE INCOME THEREFROM IS UTILIZED FOR THE OBJECTS OF THE ASSESSEE ONLY. THER EFORE, ACCORDING TO HIM, SINCE THE ASSESSEE HAS STRICTLY APPLIED ITS INCOME FOR THE OBJECTS WHICH ARE CHARITABLE IN NATURE, THE REGISTR ATION GRANTED EARLIER U/S 12A(A) OF THE ACT CANNOT BE REVOKED/WIT HDRAWN U/S 12AA(3) OF THE ACT. 7. AS REGARDS SPONSORSHIP AMOUNT COLLECTED FOR THE MATCHES OF CRICKET IN STADIUMS IN HYDERABAD, THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACCEPTANCE OF S PONSORSHIP FOR ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 7 OF 32 DEVELOPING THE CRICKET STADIUM IS AN INTEGRAL PART OF THE MAIN OBJECT OF DEVELOPMENT OF CRICKET AND IS IN ACCORDAN CE WITH RULE 2(14) OF THE MEMORANDUM OF RULES & REGULATIONS. HE SUBMITTED THAT THESE CONTRIBUTIONS ARE PURELY VOLUNTARY AND T HE COMMISSION PAYMENT FOR GETTING THESE CONTRIBUTIONS CONSISTS OF FUND RAISING INITIATIVE AND ARE INCURRED TO RAISE THE FUNDS TO M EET THE OBJECTS OF THE ASSOCIATION. IN SUPPORT OF HIS CONTENTION THAT SUCH PAYMENT ARE ALLOWABLE AND ARE TO BE CONSIDERED AS FOR CHARI TABLE PURPOSES ONLY, HE PLACED RELIANCE UPON THE DECISION OF THE C OORDINATE BENCH OF THIS TRIBUNAL AT HYDERABAD IN THE CASE OF M/S. PROJECT MANAGEMENT INSTITUTE PEARL CITY VS. DIT IN ITA NO.2 17 OF 2012 AND ITA NO.1915/HYD/2011 AND ALSO THE DECISION OF T HE HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION VS. DIT REPORTED IN 360 ITR 633. 8. AS REGARDS THE LEASE OF THE CORPORATE BOXES BY T HE ASSESSEE FOR A FIXED TERM, THE CONTENTION OF THE AS SESSEE WAS THAT THE FACT THAT THE TERM HAS BEEN FIXED FOR 15 YEARS AND THERE IS NO TRANSFER OF OWNERSHIP CLEARLY REFLECTS THAT THERE I S NO REAL ESTATE DEVELOPMENT IN THIS ACTIVITY. IT WAS SUBMITTED THAT THESE RECEIPTS ARE USED FOR THE DEVELOPMENT OF CRICKET STADIUMS AS IS DONE WITH THE RECEIPTS IN RESPECT OF IN STADIA ADVERTISEMENT S, SALE OF TICKETS ETC. HE SUBMITTED THAT THESE RECEIPTS AND COMMISSIO N PAYMENTS HAVE A CLEAR AND DIRECT NEXUS WITH THE PROMOTION OF THE GAME. IN SUPPORT OF THESE CONTENTIONS, HE PLACED RELIANCE UP ON THE FOLLOWING DECISIONS: (A) DELHI & DELHI CRICKET ASSOCIATION VS. DIT(E) RE PORTED IN (2015) 38 ITR (TRIB.) 326 (B) SAURASHTRA CRICKET ASSOCIATION VS. CIT REPORTED IN (2014) 148 ITD 58. ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 8 OF 32 (C) DDIT VS. ALL INDIA FOOTBALL FEDERATION REPORTED I N 2015) 43 ITR (TRIB.) 656 DELHI (D) DIT (E) KARNATAKA BADMINTON ASSOCIATION, REPORT ED IN (2015) 378 ITR 700 (KAR.) (E) TAMIL NADU CRICKET ASSOCIATION VS. DIT (E) REPO RTED IN (2014) 360 ITR 633. 9. AS REGARDS THE DIT (E) CONTENTION THAT THE ASSES SEE IS PROVIDING CLUB FACILITY WHICH IS NOT IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE SOCIETY, IT IS STATED THAT THE CLUB FACILITY IS COVERED BY THE GENERAL OBJECTS OF THE SOCIETY AND THEREFOR E, IS NOT IN CONTRAVENTION OF ANY OF THE OBJECTS OF THE ASSESSEE . IN SUPPORT OF THE SAID CONTENTION, HE PLACED RELIANCE UPON THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KAMALA TOWNS TRUST (1996) REPORTED IN 217 ITR 699 (S.C). 10. AS REGARDS THE ABSENCE OF BILLS AND VOUCHERS FO R CERTAIN EXPENDITURE, HE SUBMITTED THAT THE ABSENCE OF BILLS AND VOUCHERS CANNOT BE A GROUND FOR CANCELLATION, BUT A T THE MOST CAN ONLY LEAD TO DISALLOWANCE OF THE SAME WHILE GRANTIN G EXEMPTION OF THE ASSESSED INCOME U/S 11 OF THE ACT. IN SUPPORT O F HIS CONTENTION, HE PLACED RELIANCE UPON THE DECISION OF THE TRIBUNAL AT CHANDIGARH IN THE CASE OF MAHARSHI MARKENDESHWAR EDUCATION TRUST VS.CIT IN ITA 277/CHD/2008. 11. AS REGARDS THE ASSESSEES CONDUCTING OF WOMENS CRICKET TOURNAMENT, THOUGH ONE OF THE OBJECT OF THE ASSESSEE TRUST IS TO CONDUCT CRICKET MATCHES ONLY FOR MEN, I T WAS SUBMITTED THAT THE CONDUCTING OF THE CRICKET TOURNA MENT IS IN KEEPING WITH THE OVERALL OBJECTS OF THE ASSOCIATION AND THE WOMENS CRICKET MATCH HAS BEEN CONDUCTED ONLY AT TH E INSTANCE ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 9 OF 32 OF THE BCCI TO WHICH AS THE ASSESSEE IS AFFILIATED. HE SUBMITTED THAT THE ASSESSEE HAD TO CONDUCT THE WOMEN CUP TOUR NAMENTS AS THE WOMENS ASSOCIATION WAS NOT FUNCTIONING AND WAS DONE AT THE BEHEST OF THE BCCI. IN SUPPORT OF THIS PROPOSIT ION THAT CONDUCTING OF WOMEN CRICKET MATCHES IS IN ACCORDANC E WITH THE OVERALL OBJECTS OF THE ASSOCIATION, HE PLACED RELIA NCE UPON THE FOLLOWING DECISIONS: (A) NIMMAGADDA FOUNDATION VS. DIT (E) REPORTED IN ( 2014) 36 ITR (TRIB) 268 HYDERABAD (B) COMMISSIONER OF INCOME-TAX VS. TRUSTEES OF DR. DIVEKAR CHARITY REPORTED IN (1977) 110 ITR 227 (BOM.) (C) CIT VS. SRI JAGANATHAN JEW REPORTED IN (1977) 1 07 ITR 9 (S.C) (D) A SANYASI RAO & ANR. VS. GOVT. OF A.P. AFFIRMED BY THE HON'BLE SUPREME COURT IN 1996 (219 ITR 330). 12. AS REGARDS THE CANCELLATION OF REGISTRATION W.E .F. 01.10.2004, IT IS SUBMITTED THAT, THE AMENDMENT TO SECTION 12AA (3) WHEREBY THE REGISTRATION CAN BE CANCELLED, HAS BEEN BROUGHT INTO THE STATUTE BOOK ONLY PROSPECTIVELY W.E.F. A.Y 2011 -12 AND CAN AT BEST BE WITHDRAWN ONLY FROM SUCH DATE AND NOT FROM 1.10.2004 AND THEREFORE, THE CANCELLATION OF REGISTRATION W.E.F. 1.10.2004 IS NOT IN ACCORDANCE WITH LAW. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS: (I) CBDT VIDE CIRCULAR NO.1/2011 DATED 6.4.2011. (II) DELHI & DELHI CRICKET ASSOCIATION VS. DIT (E) REPORTED IN (2015) 38 ITR (TRIB.) 326 (DEL.) (IV) PRITHVI RAJ MEMORIAL TRUST AND RESEARCH FOUNDA TION VS. DIT (E) REPORTED IN (2014) 31 ITR (TRIB.) 196 MUMBA I. (V) DIT(E) VS. MOOL CHAND KHAIRATI RAM TRUST REPORT ED IN (2011) 339 ITR 622 (DEL.) ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 10 OF 32 (VI) KAPUR EDUCATIONAL SOCIETY VS. CIT REPORTED IN (2010) 135 TTJ 250(LUCK.) (VII) OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CCI T REPORTED IN (2009) 315 ITR 382 (ALL.) (VIII) AJIT EDUCATIONAL TRUST VS. CIT REPORTED IN ( 2010) 46 DTR (80) 482 (AHD.) (IX) DIT(E) VS. NH KAPADIA EDUCATION TRUST REPORTED IN (2012) 136 ITD 111 (AHD.) IN VIEW OF THE ABOVE, THE LEARNED COUNSEL FOR THE A SSESSEE PRAYED THAT THE ORDER OF THE DIT (E) BE SET ASIDE. 13. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE DIT(E) AND SUBMITTED THAT SINCE THE ASSESSEE HAS NOT BEEN CARRYING ON CHARITABLE ACTIVITIES BY VIRTUE OF THE PROVISO TO SECTION 2(15) OF THE ACT, THE ASSESSEE WAS NOT ELIGIBLE FOR REGISTRATION U/S 12A OF THE ACT. HE SUBMITTED THAT THE DIT (E) HAS C LEARLY BROUGHT OUT THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE COMMERCIAL ACTIVITIES CARRIED OUT BY THE ASSESSEE WHICH CLEARL Y ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE SOCIETY AND THEREFORE, SUBMITTED THAT THE CANCELLATION IS JUSTIFIED. 14. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS AFFILIATED TO THE BCCI AND IS CONDUCTING CRICKET MATCHES IN HYDERABAD BY SALE OF TICKETS AND IS ALSO RECEIVING CONTRIBUTIONS AS WELL AS GETTING REV ENUE BY ADVERTISEMENTS, SPONSORSHIPS ETC, WHICH HAVE BEEN U TILIZED FOR CONSTRUCTION OF THE STADIUM AT HYDERABAD. ACCORDING TO THE DIT (E), ALL THESE ACTIVITIES ARE COMMERCIAL IN NATURE AND T HEREFORE, THE ASSESSEE FALLS WITHIN THE PROVISO TO SECTION 2(15) OF THE I.T. ACT AND HENCE ITS ACTIVITIES ARE NOT CHARITABLE. BY INSERTI ON OF THE PROVISO TO SECTION 2(15) OF THE ACT, THE DEFINITION OF CHARITA BLE ACTIVITY HAS ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 11 OF 32 UNDERGONE A CHANGE. EARLIER, THE DEFINITION OF CHAR ITABLE ACTIVITY INCLUDED THE ACTIVITY IN THE ADVANCEMENT OF ANY OB JECT OF GENERAL PUBLIC UTILITY, WHEREAS BY INSERTION OF THE PROVIS O, ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF SUCH ACTIVITY, INCLUDED CARRYING ON TRADE OR BUS INESS OR COMMERCE PROVIDED ITS TURNOVER CROSSES THE PRESCRIBED LIMIT. THUS, IT CAN BE SEEN THAT EVEN IF THE ASSESSEE CARRIES ON COMMERCIA L ACTIVITIES FOR THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY AND ITS TURNOVER IS LESS THAN THE PRESCRIBED LIMIT, IT DOES NOT LOSE ITS CHARITABLE NATURE. THUS, IT CAN BE SEEN THAT THE AS SESSEE WILL NOT LOSE ITS NATURE OF BEING A CHARITABLE INSTITUTION I TSELF BECAUSE IT IS ALSO CARRYING ON TRADE, COMMERCE OR BUSINESS ACTIVI TIES. THE DIT (E) HAS INVOKED THE PROVISO TO SECTION 2(15) OF THE I.T . ACT ONLY ON THE GROUND THAT THE ASSESSEE IS COLLECTING SUMS UNDER T HE HEADS OF CORPORATE FEES, IN-STADIA ADVERTISEMENT, SALE OF CO RPORATE BOXES ETC. TO BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT, THE ASSESSEE HAS TO BE CARRYING ON CHARITABLE ACTIVITIES AND HAS TO PRO VE THAT IT HAS APPLIED ITS INCOME FOR CHARITABLE PURPOSES AND THER E IS NO LIMITATION THAT THE ASSESSEE SHALL NOT MAKE ANY PROFIT OUT OF ITS ACTIVITIES. U/S 11, THE THRUST IS ON APPLICATION OF INCOME. THE DEF INITION OF CHARITABLE ACTIVITY HAS NOT UNDERGONE A CHANGE EXCE PT FOR RAISING THE LIMIT OF TURNOVER BY WHICH THE INCOME FROM COMM ERCIAL ACTIVITIES WOULD BECOME TAXABLE. IN THE CASE OF TAMIL NADU CR ICKET ASSOCIATION, THE HON'BLE MADRAS HIGH COURT HAS CON SIDERED THE CBDT CIRCULAR 1 OF 2011 AND ALSO THE HON'BLE SUPREM E COURTS DECISION IN THE CASE OF CIT VS. ANDHRA CHAMBER OF C OMMERCE, REPORTED IN (1965) 55 ITR 722(SC) TO HOLD THAT IF T HE PRIMARY OR DOMINANT PURPOSE OF THE TRUST OR INSTITUTION IS CHA RITABLE, ANOTHER OBJECT WHICH BY ITSELF MAY NOT BE CHARITABLE, BUT W HICH IS MERELY ANCILLARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 12 OF 32 NOT PREVENT THE TRUST OR INSTITUTION FROM BEING A V ALID CHARITY. THE RELEVANT PORTION OF THE HON'BLE MADRAS HIGH COURT O RDER IS REPRODUCED HEREUNDER FOR READY REFERENCE: 6. AFTER CONSIDERING THE GENUINENESS OF THESE OBJECTS , AS EARLY AS 2003 ,THE ASSESSEE WAS GRANTED REGISTRATION AS A TR UST UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFT ER CALLED AS THE 'ACT'). HOWEVER, ON 19.07.2011. A NOTICE WAS ISSUED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS) UNDER SECTION 1 2AA(3) OF THE ACT THAT THE STATEMENT OF INCOME AND EXPENDITURE RE VEALED THAT THE ASSESSEE DERIVED INCOME FROM THE FOLLOWING ACTIVITI ES: 1. SUBSCRIPTION 2. RENT FOR HIRING CRICKET GROUND, ROOMS AND PREMISES 3. FEES FOR PROVIDING SERVICES TO IPL 4. INCOME FROM ADVERTISEMENT 5. SUBSIDY FROM BCCI 6. SALE OF TICKET FOR CONDUCTING OF MATCHES 7. RESTAURANT AND CATERING INCOME ETC. THUS, THESE RECEIPTS WERE HELD TO BE IN THE NATURE OF TRADE OR COMMERCE OR BUSINESS AND HIT BY THE PROVISO TO SECT ION 2(15) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE 'AC T'). IN THE CIRCUMSTANCES, NOTICE WAS ISSUED PROPOSING TO WITHD RAW THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. 7. IMMEDIATELY, ON THE RECEIPT OF THE NOTICE, THE ASS ESSEE REPLIED THAT THE RECEIPTS WERE NOT IN THE NATURE OF TRADE O R COMMERCE OR BUSINESS, SINCE, THE INCOME OF THE ASSESSEE INCLUDE D INTEREST INCOME EARNED FROM FIXED DEPOSITS WITH BANKS; SUBSIDY FROM BCCI WAS A VOLUNTARY GRANT FROM THE PARENT BODY FOR PROMOTION AND DEVELOPMENT OF THE GAME OF CRICKET IN TAMIL NADU; T HERE WAS NO COMMERCIAL ACTIVITY INVOLVED IN THE CONDUCT OF THE IPL MATCHES FOR WHICH ONLY SUBSIDY WAS RECEIVED BY THE ASSESSEE FRO M BCCI LIKE OTHER CRICKET ASSOCIATIONS; THUS, THE RECEIPT OF SU BSIDY WAS NOT A PAYMENT FOR CARRYING ON OF ANY TRADE, COMMERCE OR B USINESS; THE TV SUBSIDY WAS GIVEN TO ALL STATE ASSOCIATIONS AND WAS PART OF THE SCHEME OF BCCI, BEING A VOLUNTARY DONATION, THERE W AS NO COMMERCIAL CHARACTER ATTACHED TO THESE RECEIPTS; SO TOO, THE DONATIONS AND CONTRIBUTIONS AND THE SALE OF TICKETS IN CONDUCTING MATCHES ORGANISED BY BCCI. POINTING OUT THAT THE AS SOCIATION WAS NOT RUNNING ANY CANTEEN OR RESTAURANT, THE ASSESSEE SUBMITTED THAT AS FAR AS FEE FOR PROVIDING SERVICES TO IPL IS CONC ERNED, THE ENTIRE INCOME FROM THE SALE OF TICKETS BELONGED TO THE FRA NCHISEE, AND ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 13 OF 32 THEREFORE, THERE WAS NO SERVICE RENDERED OR CHARGES MADE BY THE ASSESSEE. 8. REFERRING TO THE SATISFACTION RECORDED AS TO THE G ENUINENESS OF THE OBJECTS OF THE ASSOCIATION UNDER THE PROVISION CONT AINED IN SECTION 12AA OF THE ACT, THE ASSESSEE POINTED OUT THAT THE GENUINENESS OF THE OBJECTS OF THE TRUST, THUS NOT BEING IN QUESTION AN D THE OBJECTS OF THE TRUST THUS REMAINING THE SAME AS BEFORE AND THE ACT IVITIES ALSO BEING IN ACCORDANCE WITH THE OBJECTS OF THE TRUST, THERE WAS NO CASE MADE OUT FOR CANCELLING THE REGISTRATION. 9. AFTER HEARING THE ASSESSEE, THE RESPONDENT PASSED THE ORDER UNDER SECTION 12AA (3) REJECTING THE CLAIM OF THE A SSESSEE AND THEREBY CANCELLING THE REGISTRATION AS TRUST. 10. THE DIRECTOR OF INCOME TAX (EXEMPTIONS) VIEWED THA T THOUGH BCCI CONFIRMED THE PAYMENT TO THE ASSESSEE ON IPL M ATCHES AS GRANT OF SUBSIDY , THE SAME WAS NOT IN THE NATURE O F GRANT. IT WAS ALSO POINTED OUT THAT MOST OF THE ADVERTISEMENTS TH ROUGH TV TELECASTING ARE RECEIVED BY THE BCCI, IT BEING THE APEX BODY, THUS THE SO CALLED SUBSIDY GIVEN BY THE BCCI IS NOTHING BUT SOME SORT OF SHARING OF THE ADVERTISEMENT INCOME ON ACCOUNT OF H OLDING OF INTERNATIONAL TEST MATCHES AND ODI MATCHES, DUE TO WHICH THE BCCI HAS GATHERED HUGE ADVERTISEMENT INCOME; THUS, THE N ATURE OF RECEIPT, EVEN THOUGH CALLED SUBSIDY BY THE ASSESSEE WAS NECESSARILY IN THE NATURE OF INCOME RECEIVED BY THE ACTIVITY OF THE ASSESSEE. 11. AS REGARDS THE ENTRANCE FEE CHARGED, THE THE DIREC TOR OF INCOME TAX (EXEMPTIONS) HELD THAT THE RECEIPTS OUT OF IPL MATCHES BY GIVING ITS GROUND FOR CONDUCTING THOSE MATCHES WERE COMMERCIAL IN NATURE. 12. REFERRING TO SECTION 12AA(3) READ WITH SECTION 2(1 5) OF THE INCOME TAX ACT, 1961, THE RESPONDENT/DIRECTOR OF IN COME TAX (EXEMPTIONS) VIEWED THAT EVEN IF THE ACTIVITIES WER E CARRIED ON IN ACCORDANCE WITH THE ARRANGEMENT WITH THE OTHER PART Y, THE ACTIVITIES BEING NOT CHARITABLE, IT WAS HIT BY SECTION 12AA(3) OF THE INCOME TAX ACT, 1961; THUS IT WAS HELD THAT THE ACTIVITIES WERE NOT CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST; THE ACTIVITIES NOT BEING CHARITABLE, THE SAME COULD NOT BE HELD TO BE GENUINE AND THE INSTITUTION WAS NOT A CHARITABLE INSTITUTION. READI NG GENUINENESS INTO THE ACTIVITIES OF THE TRUST AND LOOKING AT THE THE OBJECTS OF THE TRUST, THE DIRECTOR OF INCOME TAX (EXEMPTIONS) HELD THAT 'GENUINENESS' WAS A TERM USED ONLY TO FIND OUT WHET HER THE INSTITUTION WAS CHARITABLE OR NOT; THUS ONCE THE IN STITUTION WAS HELD AS NOT FOR CHARITABLE PURPOSE, SECTION 12AA REGISTR ATION HAD TO BE NECESSARILY CANCELLED. IN THE CIRCUMSTANCES, THE RE GISTRATION ORIGINALLY GRANTED TO THE ASSESSEE STOOD CANCELLED WITH EFFECT FROM 01.04.2009. ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 14 OF 32 13. THE ASSESSEE CONTENDED BEFORE THE INCOME TAX APPEL LATE TRIBUNAL THAT SINCE ITS INCEPTION AND THE DATE OF G RANTING OF THE REGISTRATION UNDER THE ACT, THE OBJECTS OF THE ASSO CIATION EVER REMAINED SAME AND IT HAS NOT UNDERGONE ANY CHANGE T O QUESTION ITS GENUINENESS. THE ASSESSEE CONTENDED THAT THE VIEW O F THE DIRECTOR OF INCOME TAX (EXEMPTIONS) THAT THE ASSESSEE WAS NO T CARRYING ON CHARITABLE ACTIVITY AS PER SECTION 2(15) OF THE ACT IS ERRONEOUS IN LAW; IN ANY EVENT, ALL THAT SECTION 12AA(3) OF THE ACT PRESCRIBES FOR CANCELLATION IS THE GENUINENESS OF THE ACTIVITIES O F THE TRUST OR THAT THE ACTIVITIES ARE NOT CARRIED ON IN ACCORDANCE WIT H THE OBJECTS OF THE TRUST. THE ASSESSEE CONTENDED THAT IT CONDUCTS NATIONAL AND INTERNATIONAL MATCHES INCLUDING THE DISTRICT LEAGUE . IN ADDITION TO THE INCOME ARRIVED BY SALE OF TICKETS, INCOME OUT O F ADVERTISEMENT REVENUE ARISING OUT OF THE TELECAST RIGHTS AUCTIONE D TO DIFFERENT VISUAL MEDIA, OBTAINED FROM BCCI IN INDIA WAS DISTR IBUTED AMONG THE DIFFERENT STATES IN INDIA AND THIS IS IN THE NA TURE OF GRANT/SUBSIDY FROM BCCI WHICH HAD BEEN CONFINED BY BCCI. 14. THE INCOME TAX APPELLATE TRIBUNAL POINTED OUT THAT THE PHYSICAL PLAY OF CRICKET GAME WAS NOT THE SOLE POIN T WHICH WOULD DECIDE AS TO WHETHER THE ASSESSEE ASSOCIATION WAS C ARRYING ON ITS ACTIVITIES AS STATED IN THE MEMORANDUM OF ASSOCIATI ON OR THE ACTIVITIES WERE GENUINE OR NOT. THE TRIBUNAL POINTE D OUT THAT THE ACTIVITIES WERE GENUINE; HOWEVER THE MATCHES CONDUC TED DID NOT GO TO THE EXTENT OF 'ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY'. THE TRIBUNAL ALSO POINTED OUT THAT THE AC TIVITIES DID NOT COME WITHIN THE CONCEPTUAL FRAMEWORK OF CHARITY, VI S-A-VIS THE ACTIVITY OF GENERAL PUBLIC UTILITY AS GIVEN UNDER S ECTION 2(15) AND THE ACTIVITIES WERE ALL COMMERCIAL IN CHARACTER. TH US THE MATCHES CONDUCTED WERE NOT CONDUCTED IN ACCORDANCE WITH THE OBJECTS OF THE ASSOCIATION AND AS EXPLAINED IN THE PROVISO TO THE PROVISION IN SECTION 2(15). THUS, ACCORDING TO THE TRIBUNAL, WHE N THE ASSESSEE'S CASE WAS FULLY COVERED BY THE PROVISO, THE PROCEEDI NGS TAKEN UNDER SECTION 12AA(3) WERE JUSTIFIED. THUS THE TRIBUNAL V IEWED THAT THE PROVISIONS UNDER SECTION 12 AA (3) COULD NOT BE REA D IN DISREGARD OF SECTION 2(15) FIRST PROVISO. IT FURTHER HELD THA T AFTER THE INSERTION OF FIRST PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT, 1961, EFFECTIVE FROM 1ST APRIL, 2009, EVERY ACTIVITY ON T HE ADVANCEMENT OF THE GENERAL PUBLIC UTILITY TO BE CALLED AS FOR 'CHA RITABLE PURPOSE' HAS TO QUALIFY ITSELF AS CHARITABLE ACTIVITY WITHIN THE MEANING OF THE EXPRESSION 'CHARITABLE PURPOSE'. AS SUCH, THE ACTIV ITIES OF THE ASSESSEE COULD NOT BE CONSIDERED AS FOR A CHARITABL E PURPOSE. THE INCOME TAX APPELLATE TRIBUNAL POINTED OUT THAT THE PROVISO INSERTED WITH EFFECT FROM 01.04.2009 CLEARLY POINTED OUT THA T ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NO T BE A CHARITABLE PURPOSE, IF IT INVOLVED THE CARRYING ON OF ANY ACTI VITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF R ENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 15 OF 32 APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. CONSIDERING THE SAID AMENDMENT AND LOOKING AT THE A CTIVITIES OF THE ASSESSEE, THE INCOME TAX APPELLATE TRIBUNAL HELD TH AT THE CONDUCT OF THE MATCHES BY CRICKET ASSOCIATIONS COULD BE NOT HING BUT IN THE NATURE OF COMMERCIAL VENTURES AND THE ASSESSEE WAS SELLING THE GAME FOR THE HIGHEST AMOUNT OF REVENUE AND THE EFFE CT AND THE THRUST OF THE ASSESSEE WAS TOWARDS MAXIMISING THE REVENUE. CITING IPL MATCHES HELD AND THE MANNER OF SELECTION OF PLAYERS , THE INCOME TAX APPELLATE TRIBUNAL HELD THAT THE MATCHES WERE B IG GAME WITH BIG MONEY INVOLVED; IN THE WORDS OF THE INCOME TAX APPELLATE TRIBUNAL, 'IN FACT IT IS AN ENTERTAINMENT INDUSTRY BY ITSELF'. IT POINTED OUT THAT 78% OF THE TOTAL RECEIPTS CAME OUT OF ADVERTISEMENT REVENUE AND IN THE BACKGROUND OF THE NATURE OF ACTI VITY UNDERTAKEN, THE ENTIRE ACTIVITY OF COMMERCIAL NATURE WERE ORIEN TED TOWARDS EARNING HYPER PROFITS AND THESE ACTIVITIES CONTRIBU TED 86.5% OF THE RECEIPTS OF THE ASSESSEE IN THE FINANCIAL YEAR 2008 -09. IN THIS BACKGROUND, THE INCOME TAX APPELLATE TRIBUNAL REFER RED TO THE DECISION REPORTED IN THE CASE OF BANGALORE RACE CLU B V. CIT [1970] 77 ITR 435 (MYS.) WHICH RELATED TO THE CASE OF HORSE RACING AND HELD THE SAME COULD NOT BE HELD TO BE OF PUBLIC UTI LITY OR INTEREST. AFTER REFERRING TO THE DECISION OF THIS COURT REPOR TED IN 343 ITR 300 IN THE CASE OF CIT V. SARVODAYA ILAKKIYA PANNAI [2012] 343 ITR 300/206 TAXMAN 115/20 TAXMANN .COM 546 (MAD.) WHEREIN, THIS COURT CONSIDERED THE EFFECT OF SECTI ON 12AA(3) OF THE ACT, THE INCOME TAX APPELLATE TRIBUNAL HELD THAT THIS COURT HAD NOT CONSIDERED THE EFFECT OF SECTION 2(15) PROV ISO AND THE NECESSARY FACTS OF THE CASE RELATING TO CHARITABLE PURPOSE WAS NOT HIGHLIGHTED. IT ALSO REFERRED TO THE DECISION OF TH E AHMEDABAD BENCH-A RENDERED IN THE CASE OF GUJARAT CRICKET ASS OCIATION V. DIT (EXEMPTION) [2013] 33 TAXMANN.COM 387 (AHD. - TRIB. ) AS WELL AS OTHER DECISION OF THE NAGPUR BENCH RENDERED IN THE CASE OF M/S. VIDARBHA CRICKET ASSOCIATION V. CIT IT APPEAL NO.3 (NAG.) OF 2010, DATED 30.05.2011, WHICH WERE AGAINST THE SIMI LAR REJECTION ORDER PASSED AND REVERSED BY THE INCOME TAX APPELLA TE TRIBUNAL AND HELD THAT THESE ORDERS HAD CONSIDERED ONLY THE PHYSICAL ASPECT OF THE CRICKET GAME PROMOTED BY THE ASSESSEE; HOWEV ER, ALL THE ASSESSEE'S ACTIVITIES CENTERED AROUND THE CELEBRATE D GAME OF CRICKET. 15. AS FAR AS ON THE CRUCIAL QUESTION OF GENERAL PUBLI C UTILITY WAS CONCERNED, THE INCOME TAX APPELLATE TRIBUNAL HELD T HAT THE ACTIVITIES OF THE ASSESSEE ARE ALL COMMERCIAL ACTIV ITIES. THE INCOME TAX APPELLATE TRIBUNAL HELD THAT THE ACTIVITIES OF THE ASSOCIATION ARE NOT IN THE NATURE OF ACTIVITIES FOR ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY; CONSEQUENTLY, THE APPEAL HA S TO BE DISMISSED. THE INCOME TAX APPELLATE TRIBUNAL UPHELD THE REJECT ION ORDER PASSED UNDER SECTION 12AA OF THE INCOME TAX ACT. TH E INCOME TAX APPELLATE TRIBUNAL FURTHER VIEWED THAT THERE WAS NO CONFLICT BETWEEN THE FIRST PROVISO TO SECTION 2(15) OF THE A CT AND THE CONDITIONS LAID DOWN UNDER SECTION 12AA(3) OF THE A CT FOR ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 16 OF 32 CANCELLING THE REGISTRATION; THUS, WHEN THE ASSESSE E'S CASE IS HIT BY SECTION 2(15) OF THE ACT, CONSEQUENTIAL ACTION IS A UTOMATIC TO PASS AN ORDER UNDER SECTION 12AA(3) OF THE INCOME TAX AC T, 1961. IT FURTHER POINTED OUT THAT WHEN THE ASSESSEE WAS GIVE N REGISTRATION ORIGINALLY, IT WAS ON THE GROUND THAT IT WAS A CHAR ITABLE INSTITUTION INASMUCH AS IT ENGAGED ITSELF IN THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY; HOWEVER, WHEN THE REVENUE H AD FOUND THE ASSESSEE'S ACTIVITIES WERE ORIENTED TOWARDS GENERAT ING INCOME BY CONVERTING THE SPORT OF CRICKET INTO A CELEBRATED I NDUSTRY, THE ACTIVITIES NOT BEING GENUINE, RIGHTLY, THE REVENUE HAD CANCELLED THE REGISTRATION GRANTED UNDER SECTION 12AA OF THE INCO ME TAX ACT, 1961. AGGRIEVED BY THE SAME, THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE. 16. LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE TOOK US THROUGH THE VARIOUS OBJECTS OF THE ASSOCIATION AND POINTED OUT TO THE CLEAR DISTINCT WORDS USED IN SECTION 12AA(1) AN D 12AA(3) OF THE ACT AS WELL AS THE FIRST PROVISO TO SECTION 2(15) O F THE ACT AND POINTED OUT THAT THE GRANT OF REGISTRATION ORIGINAL LY AS EARLY AS 2003 CLEARLY POINTED OUT THE SATISFACTION OF THE AUTHORI TIES THAT THE ASSESSEE WAS PUBLIC CHARITABLE TRUST UNDER SECTION 12AA OF THE ACT. REFERRING TO SECTION 12AA (3) OF THE ACT, HE FURTHE R POINTED OUT THAT THE CANCELLATION OF REGISTRATION GRANTED IS POSSIBL E ONLY UNDER THE STATED CIRCUMSTANCES, VIZ., ON THE COMMISSIONER REC ORDING HIS SATISFACTION THAT THE ACTIVITIES OF THE TRUST ARE N OT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION; THUS UNLESS AND UNTIL THE SHOW CAUSE N OTICE ISSUED CONTAINED THE GROUNDS AND MATERIALS AS PRESCRIBED U NDER SECTION 12AA(3) OF THE ACT, THE QUESTION OF CANCELLATION OF REGISTRATION, PER SE, DOES NOT ARISE. 17. LEARNED SENIOR COUNSEL APPEARING FOR THE APPELLANT FURTHER POINTED OUT THAT THE APPELLANT WAS GRANTED REGISTRA TION UNDER SECTION 12AA OF THE ACT ONLY ON THE COMMISSIONER SA TISFYING HIMSELF ON THE OBJECTS OF THE TRUST AND THE GENUINE NESS OF THE ACTIVITIES. THE NATURE OF ACTIVITY CARRIED ON BY TH E ASSESSEE CONTINUES TO BE THE SAME WITHOUT ANY CHANGE TILL TH IS DATE AND IF ANY OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE RESULT ED IN AN INCOME NOT INCIDENTAL AND NOT CONNECTED WITH THE MAIN ACTIVITY OR MAIN OBJECT OF THE TRUST, IT WOULD BE A MATTER FOR ASSESSMENT. THUS WHAT HAS TO BE A SUBJECT MATTER FOR ASSESSMENT CANNOT BE CONSID ERED AS A GROUND FOR CANCELLING THE REGISTRATION UNDER SECTIO N 12 AA (3). 18. TAKING US THROUGH CIRCULAR NO.11 OF 2008 OF CENTRA L BOARD OF DIRECT TAXES DATED 19.12.2008 ISSUED IMMEDIATELY IN THE WAKE OF THE INSERTION OF PROVISO TO SECTION 2(15) OF THE IN COME TAX ACT, 1961, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSE SSEE SUBMITTED THAT AS IS EVIDENT FROM THE READING OF THE CIRCULAR , THE QUESTION OF REJECTION OF REGISTRATION UNDER SECTION 12AA(3) WOU LD ARISE ONLY IN THOSE CASES WHERE AN ENTITY USES THIS STATUS OF CHA RITABLE INSTITUTION ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 17 OF 32 WITH A CHARITABLE OBJECT OF GENERAL PUBLIC UTILITY AS A MASK OR A DEVICE TO HIDE THE TRUE PURPOSE AND THAT OBJECT IS NOTHING OTHER THAN TRADE, COMMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATION TO TRADE, COMMERCE OR BUSINESS; AS FAR AS THE PRESENT CASE IS CONCERNED, REVENUE HAS NOT SUBSTANTIATED WITH AN Y MATERIAL TO SHOW THE ABSENCE OF GENUINENESS; ALL THAT THE REVEN UE ALLEGES IS BY CONDUCT OF MATCHES, IT HAS EXHIBITED A SENSE OF BUS INESS OR COMMERCIAL CHARACTER. THIS ACCORDING TO THE ASSESSE E IS NOT A GOOD GROUND FOR CANCELLING THE REGISTRATION UNDER SECTIO N 12AA OF THE INCOME TAX ACT, 1961. 19. GOING BY THE TENOR OF THE LANGUAGE IN SECTION 12AA (3) OF THE ACT AND SECTION 12AA(1) OF THE ACT, THE CANCELLATIO N OF THE REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT, 1961 IS WITHOUT ANY SUBSTANCE. HE FURTHER POINTED OUT THAT WHEN IN A SIMILAR ASSESSEE'S CASE VIZ., GUJARAT CRICKET ASSOC IATION (SUPRA) IN THE CASE OF VIDARBHA CRICKET ASSOCIATION V. COMMISS IONER OF INCOME TAX-I, NAGPUR THE INCOME TAX APPELLATE TRIBU NAL AHMEDABAD BENCH-A DATED 31.01.2012 AND IN I.T.A.NO.3/NAG/10 DATED 30.05.2011 OF THE NAGPUR BENCH, RESPECTIVELY ON THE VERY SAME ALLEGATIONS FOR CANCE LLATION OF REGISTRATION UNDER SECTION 12AA(3) HAD HELD THAT TH E CANCELLATION OF THE REGISTRATION UNDER SECTION 12AA OF THE INCOME T AX ACT, 1961 WAS CONTRARY TO LAW, THE CHENNAI BENCH OF THE ITAT OUGHT TO HAVE FOLLOWED THESE DECISIONS, WHICH WERE RENDERED AS EA RLY AS 2011 AND 2012. HE FURTHER POINTED OUT TO THE UNREPORTED DECI SION OF THIS COURT IN THE CASE OF GOWRI ASHRAM V. DIT (EXEMPTION S) [2013] 356 ITR 325/217 TAXMAN 97/36 TAXMANN.COM 15 (MAD.) AS WELL AS IN THE CASE OF CITV. NATIONAL INSTITUTE OF AERONAUT ICAL ENGG. EDUCATIONAL SOCIETY [2009] 315 ITR 428/184 TAXMAN 2 64 (UTTARANCHAL) AND SUBMITTED THAT THEY STAND ON A DIFFERENT LINE, THEY BEING THE DECISIONS RENDERED ON THE REJECTION OF TH E APPLICATION FOR REGISTRATION. HE ALSO REFERRED TO THE DECISION OF T HIS COURT REPORTED IN THE CASE OF SARVODAYA ILAKKIYA PANNAI (SUPRA), W HEREIN, UNDER SIMILAR CIRCUMSTANCES, THIS COURT HAD HELD THAT WHE N A TRUST IS REGISTERED WITH DEFINITE OBJECTS TO CARRY ON ITS AC TIVITIES AND UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961, THE COMMI SSIONER IS EMPOWERED TO CANCEL REGISTRATION ONLY ON TWO CONDIT IONS LAID DOWN UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961. HE FURTHER POINTED OUT THAT WHETHER THE INCOME DERIVED FROM SU CH TRANSACTION WOULD BE ASSESSED TO TAX OR WHETHER THE TRUST WOULD BE ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE INCOME TAX ACT, 1 961 ARE ENTIRELY MATTERS TO BE CONSIDERED AT THE TIME OF AS SESSMENT. THUS, PLACING RELIANCE ON THE DECISION OF THIS COURT REPO RTED IN SARVODAYA ILAKKIYA PANNAI (SUPRA), LEARNED SENIO R COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE INCOM E TAX APPELLATE TRIBUNAL COMMITTED SERIOUS ERROR IN UPHOLDING THE R EJECTION ORDER PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS). ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 18 OF 32 20. COUNTERING THE CLAIM MADE BY THE LEARNED SENIOR CO UNSEL APPEARING FOR THE ASSESSEE, LEARNED STANDING COUNSE L APPEARING FOR THE REVENUE, HOWEVER, SUBMITTED THAT THE CONDITION FOR CONTINUANCE OF THE REGISTRATION DEPENDS ON THE SATISFACTION OF THE CONDITIONS GIVEN UNDER THE DEFINITION OF 'CHARITABLE PURPOSE' LAID DOWN UNDER SECTION 2(15) OF THE ACT; WHEN THE ASSESSEE'S ACTIV ITIES DO NOT GO HAND IN HAND WITH THE OBJECTS OF THE ASSESSEE'S ASS ESSMENT, RIGHTLY, THE REVENUE HAD CANCELLED THE REGISTRATION. HE FURT HER POINTED OUT THAT AT THE TIME OF GRANT OF REGISTRATION, THE COMM ISSIONER IS EMPOWERED TO LOOK INTO THE OBJECTS OF THE TRUST, FO R THE PURPOSE OF GRANT OF REGISTRATION. HOWEVER, AFTER GRANTING REGI STRATION, IF THE REVENUE FINDS THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND THAT THE ADVANCEMENT OF THE OBJECT OF THE GENERAL P UBLIC UTILITY IS NOT IN TERMS OF THE OBJECTS OF THE TRUST AND THAT THE O BJECTS ARE IN THE NATURE OF CARRYING ON TRADE, COMMERCE OR BUSINESS, THE GRANT OF REGISTRATION ORIGINALLY GIVEN MAY BE CANCELLED; THU S, RIGHTLY, THE REGISTRATION WAS CANCELLED, HENCE, NO EXCEPTION COU LD BE TAKEN TO THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL. 21. HEARD LEARNED SENIOR COUNSEL APPEARING FOR THE ASS ESSEE AND LEARNED STANDING COUNSEL APPEARING FOR THE REVENUE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 22. WE HAD ALREADY EXTRACTED IN THE PRECEDING PARAGRAP H, THE OBJECTS OF THE ASSOCIATION. GOING BY THE OBJECTS, W E FIND THAT THE TRUST FALLS UNDER THE HEAD OF 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' AND HENCE FALLS WITHIN THE MEANING OF CHAR ITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT. SECTION 2(15) OF TH E ACT DEFINES 'CHARITABLE PURPOSE' AS IT ORIGINALLY STOOD AT THE TIME OF GRANT OF REGISTRATION AS UNDER: ' 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF G ENERAL PUBLIC UTILITY.' 23. SECTION 2(15) WAS AMENDED UNDER FINANCE ACT,2008, WITH EFFECT FORM 1.4.2009 BY SUBSTITUTING THE FOLLOWING PROVISION WH ICH READS S UNDER: '2. DEFINITIONS. .... (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF T HE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATE RHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY. PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR AN Y ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY;)' ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 19 OF 32 24. SECTION 2(15) AS IT STOOD PRIOR TO 1983 DEFINED 'C HARITABLE PURPOSE' TO INCLUDE RELIEF OF THE POOR, EDUCATION, MEDICAL RELI EF, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY NOT INVO LVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT. THE PHRASE 'NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT' WAS OMITTED FROM THE SECTION BY THE FINANCE ACT 1983, WITH EFFECT FROM 01.04.1984, CONSEQUENT ON THE AMENDMENT TO SECTION 11, WHERE UNDER PROFITS AND GAINS OF BUSINESS IN THE CASE OF CHARITABLE OR RELIGIOUS TRUST AND INSTITUTIONS WOULD NOT BE ENTITLED TO EXEMPTION UND ER THAT SECTION, EXCEPT IN CASES WHERE THE BUSINESS FULFILLED THE CONDITIONS U NDER SECTION 11 (4). THE SECTION WAS ONCE AGAIN AMENDED BY SUBSTITUTION IN T HE YEAR 2008 UNDER THE FINANCE ACT, 2008, WITH EFFECT FROM 01.04.2009, STR EAMLINING THE DEFINITION OF 'CHARITABLE PURPOSE', CONSIDERING THE FACT THAT TAK ING ADVANTAGE OF THE PHRASE 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY', NUMBER OF ENTITIES OPERATING ON COMMERCIAL LINES CLAIMED EXEMPTION ON THEIR INCOME EITHER UNDER SECTION 20(23C) OR UNDER SECTION 11 OF THE AC T. THUS, TO LIMIT THE SCOPE OF THIS EXPRESSION, SECTION WAS AMENDED IN THE YEAR 2008 THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY SHALL NOT BE A CHARITABLE PURPOSE, IF THE OBJECT INVOLVED THE CARR YING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIV ITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. THOUGH THE SECTION AS IT STOOD PRIOR TO THE SUBSTITUTION IN 2008 CONTAINED NO PROV ISION AS IN THE PROVISO UNDER THE 2008 AMENDMENT, YET THE SUPREME COURT HEL D THAT THAT IF THE PRIMARY OR DOMINANT PURPOSE OF A TRUST OR INSTITUTI ON IS CHARITABLE, ANOTHER OBJECT WHICH BY ITSELF MAY NOT BE CHARITABLE BUT WH ICH IS MERELY ANCILLARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT PREVENT THE TRUST OR INSTITUTION FROM BEING A VALID CHARITY: VIDE CIT V. ANDHRA CHAMBER OF COMMERCE [1965] 55 ITR 722 (SC) (REFERRED TO IN THE DECISION REPORTED IN ADDL. CIT V. SURAT ART SILK CLOTH MFRS. ASSOCIAT ION [1980] 121 ITR 1/[1979] 2 TAXMAN 501 (SC) . THUS IF THE DOMINANT OBJECT OR THE PRIMARY OBJECT WAS CHARITABLE, THE SUBSIDIARY OBJEC T FOR THE PURPOSE OF SECURING THE FULFILLMENT OF THE DOMINANT OBJECT WOU LD NOT MILITATE AGAINST ITS CHARITABLE CHARACTER AND THE PURPOSE WOULD NOT BE A NY THE LESS CHARITABLE. THE AMENDMENT IN THE YEAR 2008 MADE A DRASTIC AMEND MENT TO DENY THE STATUS OF A CHARITABLE PURPOSE TO AN INSTITUTION WITH THE OBJECT OF GENERAL PUBLIC UTILITY, HAVING 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 OTHER CONSIDERAT ION. 25. PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT STA TES THAT IF THE OBJECTS INVOLVE THE CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY, THE STATUS OF THE INSTITUTION WILL NOT BE ONE FOR 'CHAR ITABLE PURPOSE'. 26. THE CENTRAL BOARD OF DIRECT TAXES, IN PARAGRAPH 3. 2 POINTED OUT TO THE SCOPE OF THE CIRCULAR AS UNDER: ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 20 OF 32 'IN SUCH A CASE, THE OBJECT OF 'GENERAL PUBLIC UTIL ITY' WILL BE ONLY A MASK OR A DEVICE TO HIDE THE TRUE PURPOSE, WHICH IS TRADE, CO MMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATION TO TRADE, COMM ERCE OR BUSINESS. EACH CASE WOULD, THEREFORE, BE DECIDED ON ITS OWN FACTS AND NO GENERALIZATION IS POSSIBLE. ASSESSEES, WHO CLAIM THAT THEIR OBJECT IS 'CHARITABLE PURPOSE' WITHIN THE MEANING OF SECTION 2(15), WOULD BE WELL ADVISED TO ESCHEW ANY ACTIVITY WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS OR THE RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS.' 27. THUS, THE ANXIETY OF THE PARLIAMENT IN INTRODUCING THE PROVISO TO SECTION 2(15) OF THE ACT IS ONLY TO CHECK THOSE INSTITUTION , WHICH ATTEMPT TO GAIN EXEMPTION UNDER THE CLOAK OF A TRUST. 28. SECTION 11 OF THE ACT STATES THAT INCOME FROM PROP ERTY HELD FOR RELIGIOUS OR CHARITABLE PURPOSES SHALL NOT BE INCLUDED IN THE TO TAL INCOME OF THE PREVIOUS YEAR. SECTION 12 DEALS WITH INCOME OF TRUSTS OR INS TITUTIONS FROM CONTRIBUTIONS. SECTION 12A DEALS WITH MAKING APPLICATION FOR REGIS TRATION OF THE TRUST/ASSOCIATION SO THAT THE SAID INSTITUTION WILL HAVE THE BENEFIT OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. 29. SECTION 12AA OF THE ACT PRESCRIBES PROCEDURE FOR R EGISTRATION. AS PER THIS, ON RECEIPT OF THE APPLICATION FOR REGISTRATION, THE COMMISSIONER IS TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INS TITUTION IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION. THE SECTION FURTHER EMPOWERS THE COMMISSIONER TO MAKE S UCH ENQUIRY AS HE DEEMS NECESSARY IN THIS REGARD. ONCE THE COMMISSION ER IS SATISFIED HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND T HE GENUINENESS OF THE ACTIVITIES OF THE TRUST, HE HAS TO PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; IF HE IS NOT SO SATISFIED, HE HAS T O PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION. 30. SECTION 12AA(3) OF THE ACT INSERTED WITH EFFECT FR OM 01.10.2004 UNDER THE FINANCE (NO.2) ACT, 2004 AND THE AMENDMENT INSERTED BY FINANCE ACT, 2010, WITH EFFECT FROM 01.06.2010 THEREIN EMPOWERING THE COMMISSIONER TO CANCEL THE REGISTRATION GRANTED UNDER THE STATED CIRCUMSTA NCES, READS AS UNDER: 'PROVISION INSERTED UNDER FINANCE ACT, 2004: SECTION 12AA(3):- WHERE A TRUST OR AN INSTITUTION H AS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AN D SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SU CH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION. PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD.' 31. AFTER AMENDMENT IN THE YEAR 2010, SECTION 12AA(3) OF THE INCOME TAX ACT READS AS FOLLOWS: 'SECTION 12AA(3):- WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGISTRATION AT ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 21 OF 32 ANY TIME UNDER SECTION 12A AS IT STOOD BEFORE ITS A MENDMENT BY THE FINANCE (NO.2) ACT, 1996 (33 OF 1996) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION AR E NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANC ELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD.' 32. THUS IN CONTRAST TO SECTION 12AA(1)(B) OF THE INCO ME TAX ACT, 1961, WHERE THE GRANT OF REGISTRATION REQUIRES SATISFACTI ON ABOUT THE OBJECTS OF THE TRUST AS WELL AS GENUINENESS OF THE ACTIVITIES, FOR THE CANCELLATION OF THE REGISTRATION UNDER SECTION 12AA(3), ALL THAT IT IS INSISTED UPON IS THE SATISFACTION AS TO WHETHER THE ACTIVITIES OF THE TR UST OR INSTITUTION ARE GENUINE OR NOT AND WHETHER THE ACTIVITIES ARE BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THUS, EVEN IF THE TRUST IS A GENUINE ONE I.E., THE OBJECTS ARE GENUINE, IF THE ACTIVITIES ARE NOT GENUINE AND THE SAME NOT BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST, THIS WILL OFFER A GOOD GROUND FOR CANCELLATION. THUS, IN EVERY CASE, GRANT OF REGISTR ATION AS WELL AS CANCELLATION OF REGISTRATION RESTS ON THE SATISFACTION OF THE CO MMISSIONER ON FINDINGS GIVEN ON THE PARAMETERS GIVEN IN SECTION 12AA(1) AND 12AA (3) OF THE ACT, AS THE CASE MAY BE. 33. REGISTRATION OF THE TRUST UNDER THE ACT, CONFERS C ERTAIN BENEFITS FROM TAXATION UNDER THE PROVISIONS OF THE ACT. THE CONDI TIONS UNDER WHICH THE INCOME OF THE TRUST WOULD BE EXEMPTED UNDER THE PRO VISIONS OF THE ACT ARE CLEARLY LAID DOWN UNDER SECTION 11 AS WELL AS IN SE CTION 12 OF THE ACT. SECTION 11 OF THE ACT SPECIFICALLY POINTS OUT THE CIRCUMSTA NCES UNDER WHICH INCOME OF THE TRUST IS NOT TO BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON. SO TOO, SECTION 12 OF THE ACT ON THE INCOME DERIVED FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES. 34-35. THUS, WHEN THE ASSESSEE IS IN RECEIPT OF INCOME FR OM ACTIVITIES, WHICH FITS IN WITH SECTIONS 11 AND 12 OF THE ACT AS WELL AS FROM SOURCES WHICH DO NOT FALL STRICTLY WITH THE OBJECTS OF THE TRUST, WOULD NOT GO FOR CANCELLATION OF REGISTRATION UNDER SECTION 12AA OF THE ACT ON THE S OLE GROUND THAT THE ASSESSEE IS IN RECEIPT OF INCOME WHICH DOES NOT QUA LIFY FOR EXEMPTION STRAIGHT AWAY BY ITSELF. ALL THAT ULTIMATELY WOULD ARISE IN SUCH CASES IS THE QUESTION OF CONSIDERING WHETHER SECTION 11 OF THE ACT WOULD AT ALL APPLY TO EXEMPT THESE INCOME FROM LIABILITY. THESE ARE MATTERS OF ASSESSM ENT AND HAS NOTHING TO DO WITH THE GENUINENESS OF THE ACTIVITY OR THE ACTIVIT IES NOT IN CONFORMITY WITH THE OBJECTS OF THE TRUST. AS RIGHTLY POINTED OUT BY LEA RNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, AS IS EVIDENT FROM THE READING OF CIRCULAR NO.11 OF 2008 DATED 19.12.2008, THE OBJECT OF THE INSERTION OF FIRST PROVISO TO SECTION 2(15) OF THE ACT WAS ONLY TO CURTAIL INSTITUTION, W HICH UNDER THE GARB OF 'GENERAL PUBLIC UTILITY', CARRY ON BUSINESS OR COMM ERCIAL ACTIVITY ONLY TO ESCAPE THE LIABILITY UNDER THE ACT THEREBY GAIN UNM ERITED EXEMPTION UNDER SECTION 11 OF THE ACT. ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 22 OF 32 36. IN THE DECISION REPORTED IN SINHAGAD TECHNICAL EDU CATION SOCIETY V.CIT [2012] 343 ITR 23/206 TAXMAN 314/19 T AXMANN.COM 136 (BOM.) THE BOMBAY HIGH COURT HELD AS FOLLOWS: 'AS A RESULT OF THE AMENDMENT, WHICH HAS BEEN BROUG HT ABOUT BY THE FINANCE ACT OF 2010, SUB-SECTION (3) OF SECTION 12AA HAS BE EN AMENDED SPECIFICALLY TO EMPOWER THE COMMISSIONER TO CANCEL A REGISTRATION O BTAINED UNDER SECTION 12A AS IT STOOD PRIOR TO ITS AMENDMENT BY THE FINAN CE (NO.2) ACT, 1996. SUB- SECTION (3) WAS INSERTED INTO THE PROVISIONS OF SEC TION 12AA BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 1 OCTOBER 2004. A S IT ORIGINALLY STOOD, UNDER SUB-SECTION (3), A POWER TO CANCEL REGISTRATION WAS CONFERRED UPON THE COMMISSIONER WHERE A TRUST OR AN INSTITUTION HAD BE EN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OF SECTION 12AA . THE COMMISSIONER, AFTER SATISFYING HIMSELF THAT THE OBJECTS OF THE TRUST OR AN INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, WAS VESTED WITH TH E POWER TO PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST O R INSTITUTION. BY THE FINANCE ACT OF 2010, SUB-SECTION (3) WAS AMENDED SO AS TO E MPOWER THE COMMISSIONER TO CANCEL THE REGISTRATION OF A TRUST OR AN INSTITU TION WHICH HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A (AS IT S TOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO.2) ACT, 1996). AS A RESULT OF TH E AMENDMENT, A REGULATORY FRAMEWORK IS NOW SOUGHT TO BE PUT IN PLACE SO AS TO COVER ALSO A TRUST OR AN INSTITUTION WHICH HAS OBTAINED REGISTRATION UNDER S ECTION 12A AS IT STOOD PRIOR TO ITS AMENDMENT IN 1996. ** ** ** POWER UNDER SECTION 12AA(3) CAN BE EXERCISED BY THE COMMISSIONER IN RESPECT OF A TRUST REGISTERED PRIOR TO 1 JUNE 2010. THE MERE FACT THAT A PART OF THE REQUISITES FOR THE ACTION UNDER SECTION 12AA (3 ) IS DRAWN FROM A TIME PRIOR TO ITS PASSING NAMELY REGISTRATION AS A CHARI TABLE TRUST UNDER SECTION 12A PRIOR TO 2010 WOULD NOT MAKE THE AMENDMENT RETR OSPECTIVE IN OPERATION. THE AMENDMENT DOES NOT TAKE AWAY ANY VESTED RIGHT N OR DOES IT CREATE NEW OBLIGATIONS IN RESPECT OF PAST ACTIONS.' 37. AS ALREADY POINTED OUT EARLIER, THE QUESTION AS TO WHETHER THE PARTICULAR INCOME OF TRUST IS ELIGIBLE FOR EXEMPTION UNDER SEC TION 12 OF THE ACT IS A MATTER OF ASSESSMENT AND THIS COURT HAD POINTED OUT IN THE DECISION REPORTED IN THE CASE OF SARVODAYA ILAKKIYA PANNAI (SUPRA), A S UNDER: 'IN ORDER TO AVAIL THE BENEFIT OF EXEMPTION UNDER S ECTION 11 OF THE INCOME TAX ACT, 1961, A TRUST CAN MAKE AN APPLICATION TO THE C OMMISSIONER FOR REGISTRATION UNDER SECTION 12A OF THE INCOME TAX AC T, 1961. ON RECEIPT OF THE SAID APPLICATION FOR REGISTRATION OF A TRUST OR INS TITUTION, THE COMMISSIONER SHOULD SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION. IN ORDER TO SATISFY HIMSELF, THE COMMI SSIONER MAY ALSO MAKE SUCH ENQUIRY AS HE MAY DEEM NECESSARY IN THAT BEHALF. IN THE EVENT THE COMMISSIONER SATISFIES HIMSELF THAT THE TRUST IS EN TITLED TO REGISTRATION KEEPING IN MIND THE OBJECTS, SHALL GRANT REGISTRATION IN WR ITING IN TERMS OF SECTION 12AA(1)(B)(I) OF THE INCOME TAX ACT, 1961. IN THE E VENT THE COMMISSIONER IS NOT SATISFIED, HE SHALL REFUSE SUCH REGISTRATION IN TERMS OF SECTION ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 23 OF 32 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961. ONCE SU CH A SATISFACTION IS ARRIVED AT BY THE COMMISSIONER TO GRANT, SUCH REGIS TRATION CANNOT BE CANCELLED BY FOLLOWING THE VERY SAME PROVISION OF S ECTION 12AA(B)(I) OF THE INCOME TAX ACT, 1961 TO GO INTO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. HOWEVER, THE COMMISSIONER IS EMPOWERED TO REVOKE TH E CERTIFICATE IN TERMS OF SECTION 12AA(3) OF THE INCOME TAX ACT, 1961. AS COM MISSIONER IS EMPOWERED TO REVOKE THE CERTIFICATE IN TERMS OF SECTION 12AA( 3) OF THE INCOME TAX ACT, 1961. AS PER THE SAID PROVISION, IN THE EVENT THE C OMMISSIONER IS SATISFIED SUBSEQUENTLY I.E., AFTER REGISTRATION THAT THE ACTI VITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR NOT BEING CARRIED OU T IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR THE INSTITUTION AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUS T OR INSTITUTION.' 38. AFTER THE GRANT OF REGISTRATION, IF THE COMMISSION ER IS SATISFIED SUBSEQUENTLY THAT THE ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE OR THEY ARE NOT CARRIED ON IN ACCORDANCE WITH THE TRUST/ INSTIT UTION, HE COULD PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUS T OR INSTITUTION. 39. REFERRING TO SECTION 11 AND 12A OF THE ACT, THIS C OURT POINTED OUT THAT THE ACT OF GRANTING REGISTRATION UNDER SECTION 12AA(1) ITSELF IS A RESULT OF A SATISFACTION RECORDED BY THE COMMISSIONER AS REGARD S THE GENUINENESS OF THE OBJECTS OF THE TRUST AS WELL AS THE ACTIVITIES OF T HE TRUST AND ONCE A SATISFACTION IS ARRIVED AT BY THE COMMISSIONER, THE CANCELLATION COULD ONLY BE IN TERMS OF SECTION 12AA(3) OF THE INCOME TAX ACT, 1961. 40. THIS COURT POINTED OUT THAT THE CANCELLATION MADE IN THE CASE OF ASSESSEE THEREIN WAS NOT ON THE GROUND THAT THE ACTIVITIES W ERE NOT GENUINE, BUT THE ACTIVITIES OF THE TRUST IN PUBLICATION AND SALE AND SPREAD OF SARVODAYA LITERATURE AND GANDHIAN IDEOLOGIES WAS NOT THE OBJE CTS OF THE TRUST. THIS COURT POINTED OUT THAT THE CANCELLATION WAS MADE NO T ON THE GROUND THAT THE ACTIVITIES OF THE TRUST WERE NOT GENUINE BUT THE AC TIVITIES OF THE TRUST WERE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST; WHEN T HE TRUST WAS REGISTERED WITH DEFINITE OBJECTS, CARRYING ON SUCH ACTIVITIES WOULD BE IN TERMS OF THE OBJECTS FOR WHICH REGISTRATION WAS GRANTED. 41. REFERRING TO SECTION 12AA OF THE INCOME TAX ACT, 1 961, THIS COURT HAS HELD AS UNDER: '9. UNDER SECTION 12AA, THE COMMISSIONER IS EMPOWER ED TO GRANT OR REFUSE THE REGISTRATION AND AFTER GRANTING REGISTRATION, W OULD BE EMPOWERED TO CANCEL AND THAT TOO, ONLY ON TWO CONDITIONS LAID DO WN UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961. WHETHER THE INCOME DER IVED FROM SUCH TRANSACTION WOULD BE ASSESSED FOR TAX AND ALSO WHET HER THE TRUST WOULD BE ENTITLED TO EXEMPTION UNDER SECTION 11 ARE ENTIRELY THE MATTERS LEFT TO THE ASSESSING OFFICER TO DECIDE AS TO WHETHER IT SHOULD BE ASSESSED OR EXEMPTED.' 42. IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN THE ABOVE SAID DECISION, WE DO NOT FIND THAT THE SCOPE OF SECTION 12AA(3) OF THE ACT IS OF ANY DOUBT FOR A FRESH LOOK. IT IS RELEVANT HEREIN TO POINT OUT TH AT IN TWO OTHER ASSESSEE'S CASE, THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH- A RENDERED IN THE CASE OF GUJARAT CRICKET ASSOCIATION (SUPRA) AND THAT OF THE NAGPUR BENCH RENDERED ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 24 OF 32 IN THE CASE OF VIDARBHA CRICKET ASSOCIATION (SUPRA) , CONSIDERED THE SAID DECISION REPORTED IN SARVODAYA ILAKKIYA PANNAI (SUP RA) RENDERED UNDER SECTION 12AA(3) OF THE ACT. ON APPEAL BEFORE THE RE SPECTIVE HIGH COURTS, THE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL WAS C ONFIRMED. 43. LEAVING THAT ASIDE, THERE BEING NO DISPUTE RAISED BY THE REVENUE AS TO THE GENUINENESS OF THE TRUST, OR AS TO THE ACTIVITIES O F THE TRUST NOT BEING IN ACCORDANCE WITH THE OBJECTS OF THE TRUST, THE QUEST ION OF CANCELLATION UNDER SECTION 12AA OF THE ACT DOES NOT ARISE. WE FURTHER HOLD THAT AT THE TIME OF GRANT OF REGISTRATION ON 28.3.2003, THE SAME WAS MA DE TAKING INTO CONSIDERATION THE OBJECTS OF THE INSTITUTION FITTIN G IN WITH THE DEFINITION OF 'CHARITABLE PURPOSE' DEFINED UNDER SECTION 2(15) OF THE ACT AND THE SUBSTITUTION OF THE SECTION ITSELF CAME ONLY 2008, WITH EFFECT FROM 01.04.2009. AS RIGHTLY POINTED OUT BY THE LEARNED SENIOR COUNSE L APPEARING FOR THE ASSESSEE, THE CIRCULAR CLEARLY BRINGS OUT THE OBJEC T OF THE AMENDMENT AND THE AMENDED PROVISION HAS NO RELEVANCE TO THE CASE . TH E POWER REGARDING CANCELLATION, HENCE HAS TO BE SEEN WITH REFERENCE T O THE REGISTRATION AND THE OBJECT SATISFYING THE DEFINITION ON 'CHARITABLE PUR POSE', AS IT STOOD AT THE TIME OF REGISTRATION AND NOT BY THE SUBSEQUENT AMENDMENT TO SECTION 2(15) OF THE INCOME TAX ACT. 44. LEARNED STANDING COUNSEL APPEARING FOR THE REVENUE PLACED HEAVY RELIANCE ON THE PROVISO TO SECTION 12AA(3) OF THE A CT AND SUBMITTED THAT WHEN THE ASSESSEE HAS INCOME RECEIVED FROM CONDUCT OF TH E MATCHES, WHICH ARE COMMERCIAL IN NATURE, AS HAD BEEN FOUND BY THE INCO ME TAX APPELLATE TRIBUNAL, THE OBJECTS OF THE TRUST CEASED TO BE CHA RITABLE. HE SUBMITTED THAT GOING BY THE DEFINITION OF SECTION 2(15) OF THE ACT , RIGHTLY, THE COMMISSIONER ASSUMED JURISDICTION UNDER SECTION 12AA(3) OF THE A CT TO CANCEL THE REGISTRATION. HE FURTHER POINTED OUT THAT FOR THE F INDING TO BE RECORDED THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE, ONE MUST N ECESSARILY LOOK INTO THE OBJECTS OF THE ASSOCIATION; IF THE OBJECTS OF THE A SSOCIATION REVEAL COMMERCIAL NATURE IN THE CONDUCT OF MATCHES, THE ASSOCIATION C ANNOT BE ONE FOR CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15) OF THE ACT. THUS, THERE COULD BE NO INHIBITION FOR THE COMMISSIONER TO ASSUME JURISDICT ION TO ISSUE SHOW CAUSE NOTICE CALLING UPON THE ASSESSEE TO STATE WHETHER T HE ASSOCIATION IS GENUINE OR NOT. HE FURTHER SUBMITTED THAT ON LOOKING AT THE AC TIVITIES OF THE ASSOCIATION, THE COMMISSIONER HAD RIGHTLY COME TO THE CONCLUSION THAT THE ASSESSEE'S REGISTRATION WAS LIABLE TO BE WITHDRAWN. 45. WE DO NOT ACCEPT THE SUBMISSION OF LEARNED STANDIN G COUNSEL APPEARING FOR THE REVENUE. AS RIGHTLY OBSERVED BY LEARNED SEN IOR COUNSEL APPEARING FOR THE ASSESSEE, THE REVENUE GRANTED REGISTRATION UNDE R SECTION 12AA OF THE ACT SATISFYING ITSELF AS TO THE OBJECTS OF THE ASSOCIAT ION BEFITTING THE STATUS AS CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15), AS IT STOOD IN 2003 AND AFTER GRANTING THE REGISTRATION, IF THE REGISTRATIO N IS TO BE CANCELLED, IT MUST BE ONLY ON THE GROUNDS STATED UNDER SECTION 12AA(3) OF THE ACT WITH REFERENCE TO THE OBJECTS ACCEPTED AND REGISTERED UNDER SECTION 1 2AA, AS PER THE LAW THEN STOOD UNDER THE DEFINITION OF SECTION 2(15) OF THE INCOME TAX ACT. EVEN THEREIN, COURTS HAVE DEFINED AS TO WHEN AN INSTITUT ION COULD BE HELD AS ONE FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. THUS, IF A PARTICULAR ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 25 OF 32 ACTIVITY OF THE INSTITUTION APPEARED TO BE COMMERCI AL IN CHARACTER, AND IT IS NOT DOMINANT, THEN IT IS FOR THE ASSESSING OFFICER TO C ONSIDER THE EFFECT OF SECTION 11 OF THE ACT IN THE MATTER OF GRANTING EXEMPTION O N PARTICULAR HEAD OF RECEIPT. THE MERE FACT THAT THE SAID INCOME DOES NO T FIT IN WITH SECTION 11 OF THE ACT WOULD NOT, BY ITSELF, HEREIN LEAD TO THE CO NCLUSION THAT THE REGISTRATION GRANTED UNDER SECTION 12AA IS BAD AND HENCE, TO BE CANCELLED. 46. IT MAY BE OF RELEVANCE TO NOTE THE LANGUAGE USED I N THE DEFINITION 'CHARITABLE PURPOSE' IN SECTION 2(15) OF THE ACT, W HICH STATES THAT CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MED ICAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. THE ASSESSEE'S CASE FALLS WITHIN THE PHRASE OF THE DEFINITION 'GENERAL PUBLIC UTILITY'. IN THE DECISION REPORTED IN THE CASE OFHIRALAL BHAGWATI V. CIT [200 0] 246 ITR 188 THE GUJARAT HIGH COURT CONSIDERED THE SAID PHRASE IN TH E CONTEXT OF SECTION 12AA REGISTRATION AND HELD THAT REGISTRATION OF THE CHAR ITABLE TRUST UNDER SECTION 12AA OF THE ACT IS NOT AN IDLE OR EMPTY FORMALITY; THE COMMISSIONER OF INCOME-TAX HAS TO EXAMINE THE OBJECTS OF THE TRUST AS WELL AS AN EMPIRICAL STUDY OF THE PAST ACTIVITIES OF THE APPLICANT; THE COMMISSIONER OF INCOME-TAX HAS TO EXAMINE THAT IT IS REALLY A CHARITABLE TRUST OR INSTITUTION ELIGIBLE FOR REGISTRATION; THE OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC IS AN OBJECT OF 'GENERAL PUBLIC UTILITY'. THE GUJARAT HIGH COURT HE LD THAT TO SERVE AS A CHARITABLE PURPOSE, IT IS NOT NECESSARY THAT THE OB JECT MUST BE TO SERVE THE WHOLE OF MANKIND OR ALL PERSONS LIVING IN A COUNTRY OR PROVINCE; IT IS REQUIRED TO BE NOTED THAT IF A SECTION OF THE PUBLIC ALONE A RE GIVEN THE BENEFIT, IT CANNOT BE SAID THAT IT IS NOT A TRUST FOR CHARITABLE PURPO SE IN THE INTEREST OF THE PUBLIC; IT IS NOT NECESSARY THAT THE PUBLIC AT LARGE MUST G ET THE BENEFIT; THE CRITERIA HERE IS THE OBJECTS OF GENERAL PUBLIC UTILITY. THUS , THE GUJARAT HIGH COURT HELD THAT IN ORDER TO BE CHARITABLE, THE PURPOSE MUST BE DIRECTED TO THE BENEFIT OF THE COMMUNITY OR A SECTION OF THE COMMUNITY; THE EX PRESSION 'OBJECT OF GENERAL PUBLIC UTILITY', HOWEVER, IS NOT RESTRICTED TO THE OBJECTS BENEFICIAL TO THE WHOLE OF MANKIND; AN OBJECT BENEFICIAL TO A SEC TION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY; THE SECTION OF TH E COMMUNITY SOUGHT TO BE BENEFITED MUST UNDOUBTEDLY BE SUFFICIENTLY DEFINED AND IDENTIFIABLE BY SOME COMMON QUALITY OF A PUBLIC OR IMPERSONAL NATURE. 47. THE ABOVE SAID DECISION HIRALAL BHAGWATI (SUPRA) C AME UP ON APRIL 18, 2000. EVIDENTLY, THE REVENUE HAS NOT GONE ON APPEAL AS AGAINST THIS JUDGMENT. IN THE DECISION REPORTED IN THE CASE OFASSTT. CIT V . SURAT CITY GYMKHANA [2008] 300 ITR 214/170 TAXMAN 612 (SC) REFERENCE WAS MADE ABOUT THIS DECISION AND THE APEX COURT POINTED OUT THAT THE REVENUE DID NOT CHALLENGE THIS CASE AND IT ATTAINED FINALITY. 48. IT IS NO DOUBT TRUE THAT THE DECISION REPORTED IN THE CASE OF SURAT CITY GYMKHANA (SUPRA) WAS IN THE CONTEXT OF SECTION 10(2 3) OF THE INCOME TAX ACT, 1961, NEVERTHELESS, THE FACT REMAINS THAT THE UNDER STANDING OF THE SCOPE OF THE EXPRESSION 'GENERAL PUBLIC UTILITY' WOULD NEVERTHEL ESS IS OF RELEVANCE HEREIN. ADMITTEDLY WHEN THE ASSESSEE WAS GRANTED REGISTRATI ON, THE REVENUE RECORDED ITS SATISFACTION THAT THE OBJECTS ARE OF CHARITABLE PURPOSE. THUS ONLY POSSIBLE ENQUIRY UNDER SECTION 12AA OF THE ACT FOR CANCELLAT ION IS TO FIND OUT WHETHER THE ACTIVITIES OF THE TRUST ARE GENUINE OR IN ACCOR DANCE WITH THE OBJECTS OF THE ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 26 OF 32 TRUST. IF ANY OF THE INCOME ARISING ON THE ACTIVITI ES ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST, THE ASSESSEE'S INCOME, AT BEST, MAY NOT GET THE EXEMPTION UNDER SECTION 11 OF THE ACT. BUT THIS, BY ITSELF, DOES NOT RESULT IN STRAIGHT REJECTION OF THE REGISTRATION AS 'TRUST' U NDER SECTION 12AA OF THE ACT. CONSEQUENTLY, WE REJECT THE PRAYER OF THE REVENUE T HAT SECTION 12AA(1) OF THE INCOME TAX ACT, 1961 MUST BE READ ALONG WITH SECTIO N 12AA(3) OF THE INCOME TAX ACT, 1961 BEFORE CONSIDERING THE CANCELLATION. 49. AS FAR AS THE UNREPORTED DECISION OF THIS COURT IN GOWRI ASHRAM (SUPRA) IS CONCERNED, ON WHICH HEAVY RELIANCE WAS PLACED BY TH E REVENUE, THE SAID DECISION RELATES TO THE REJECTION OF THE REGISTRATI ON AT THE THRESHOLD OF THE APPLICATION FILED FOR REGISTRATION. SO TOO THE DECI SION OF THE APEX COURT REPORTED IN THE CASE OF NATIONAL INSTITUTE OF AERON AUTICAL ENGG. EDUCATIONAL SOCIETY (SUPRA), WHEREIN, REJECTION WAS MADE ON THE THRESHOLD OF APPLICATION FOR REGISTRATION MADE BY THE ASSESSEE. THE DECISION S RELIED ON IS THUS DISTINGUISHABLE AND HAS NO RELEVANCE TO THE FACTS O F THE PRESENT CASE. 50. AS FAR AS UNREPORTED DECISION OF THIS COURT IN GOW RI ASHRAM (SUPRA) IS CONCERNED, WHILE REJECTING THE APPEAL FILED BY THE ASSESSEE ON THE REJECTION OF THE APPLICATION FOR REGISTRATION, THIS COURT OBSERV ED THAT IT WAS OPEN FOR THE ASSESSEE SOCIETY TO RENEW ITS APPLICATION AS AND WH EN IT EXPANDED THE OBJECTS OF THE SOCIETY AND WERE APPROVED BY THE COMPETENT C OURT. THE REJECTION ORDER PASSED BY THE REVENUE WAS ON THE GROUND THAT THE OB JECTS OF THE TRUST WERE NOT CHARITABLE IN CHARACTER. THIS DECISION ALSO HAS NO RELEVANCE TO THE CASE ON HAND. 51. AS ALREADY NOTED IN THE PRECEDING PARAGRAPHS, CONS IDERING THE PROVISION UNDER SECTION 12AA(3) OF THE ACT, THE CANCELLATION OR REGISTRATION IN A GIVEN CASE COULD BE DONE ONLY UNDER THE STATED CIRCUMSTAN CES UNDER SECTION 12AA(3) OF THE ACT AND IN THE BACKGROUND OF THE DEF INITION RELEVANT TO THE PARTICULAR YEAR OF REGISTRATION. AS RIGHTLY POINTED OUT BY THE ASSESSEE, REVENUE DOES NOT ALLEGE ANYTHING AGAINST THE GENUINENESS OF THE OBJECTS OF THE ASSESSEE OR ITS ACTIVITIES. IT RESTS ITS ORDER ONLY ON THE G ROUND OF THE ASSESSEE RECEIVING INCOME FROM HOLDING OF MATCHES WHICH ACCORDING TO T HE ASSESSEE WERE NOT HELD BY IT. THUS, AS REGARDS THE QUESTION AS TO WHE THER THE PARTICULAR INCOME QUALIFIED UNDER SECTION 11 OF THE ACT OR NOT IS NOT THE SAME AS ACTIVITY BEING GENUINE OR NOT. IN THE CIRCUMSTANCES, WE DO NOT AGR EE WITH THE VIEW OF THE INCOME TAX APPELLATE TRIBUNAL THAT THE ORDER PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS) WAS IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT, 1961. HE VIEWED THAT THE CONDUCT OF TEST MATCHES AND ODI ARE IN THE NATURE OF COMMERCE OR BUSINESS. THOUGH T HE ASSESSEE CLAIMED THEIR ACTIVITIES FOR PROMOTION OF SPORTS, HE HELD THAT TH E DOMINANT FEATURE IS EVIDENT FROM THE HUGE PROFITS RECEIVED AND HENCE THE AMOUNT RECEIVED FROM BCCI AS SUBSIDY ARE COMMERCIAL. AS REGARDS CONDUCTING OF IP L MATCHES, HE POINTED OUT THAT THOUGH NO SERVICES ARE RENDERED BY THE ASS ESSEE FOR CONDUCTING THE MATCHES, THE GROUND WHERE THE MATCHES ARE PLAYED AR E GIVEN FOR RENT WHICH IS A COMMERCIAL VENTURE. THE SUBSIDY RECEIVED FROM BCC I INCLUDED MAINLY TV ADVERTISEMENTS SOLD BY BCCI FOR THE CONDUCT OF IPL AND THEIR COMMERCIAL RECEIPTS ARISING FOR IPL TRANSACTIONS. THEREFORE, T HE NATURE OF RECEIPT WAS IMPORTANT THAN THE NAME OF ACCOUNT UNDER WHICH IT W AS ACCOUNTED. THUS HE ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 27 OF 32 VIEWED THAT THE OBJECTS AND ACTIVITIES WOULD NO LON GER COME WITHIN THE DEFINITION OF SECTION 2(15) OF THE ACT AFTER THE AM ENDMENT COME IN EFFECT FROM 01.04.2009. 52. AS RIGHTLY POINTED OUT BY THE ASSESSEE, THE REVENU E DOES NOT QUESTION THE OBJECTS OF THE ASSOCIATION AS NOT GENUINE OR ARE IN ACCORDANCE WITH THE OBJECTS. ALL THAT THE REVENUE STATED WAS THAT THE N ATURE OF RECEIPT COULD NOT BE CALLED A SUBSIDY. THUS REVENUE CAME TO THE CONCLUSI ON THAT THE OBJECTS AND ACTIVITIES COULD NOT COME WITHIN THE MEANING OF 'CH ARITABLE PURPOSE' UNDER SECTION 2(15) OF THE ACT. 53. ON GOING THROUGH THE MATERIALS, THE INCOME TAX APP ELLATE TRIBUNAL POINTED OUT THAT INSTEAD OF PROMOTING AND DEVELOPIN G THE GAME OF CRICKET, THE ASSESSEE WAS PROMOTING AND DEVELOPING CRICKET AS AN ENTERTAINMENT AND THE TICKETS ARE HIGHLY PRICED; HERE, THE ASSESSEE HAS S HIFTED THE ACTIVITIES OF GENERAL PUBLIC UTILITY TO COMMERCIAL ACTIVITY FOR G ENERATING REVENUE; THE PUBLIC MERELY PARTICIPATE TO VIEW COSTLY MATCHES; H ENCE THE CONDITIONS OF SECTION 12AA(3) WERE SATISFIED. THE INCOME TAX APPE LLATE TRIBUNAL AGREED WITH THE DIRECTOR OF INCOME TAX (EXEMPTIONS) THAT T HE EXPRESSION 'SUBSIDY FROM BCCI' WAS A MISLEADING NOMENCLATURE AND IT WAS A SHARE FROM THE REVENUE COLLECTED BY BCCI FROM THE SALE OF TELECAST RIGHTS. THE SURPLUS FROM IPL SEASON-I WORKED OUT TO 8.5% OF THE TOTAL RECEIP TS. IT FURTHER HELD THAT 78% OF THE TOTAL RECEIPT CAME OUT OF ADVERTISEMENT REVE NUE. 54. THE INCOME TAX APPELLATE TRIBUNAL POINTED OUT THAT THE PHYSICAL ASPECT OF THE GAME WAS ONE IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE AND THE ACTIVITIES ARE GENUINE. HOWEVER, THE MATCHES HELD W ERE NOT IN ADVANCEMENT OF ANY SPECIFIC OBJECT OF GENERAL PUBLIC UTILITY. THE PATTERN OF RECEIPT IS COMMERCIAL IN CHARACTER AND THE MATCHES CONDUCTED A RE NOT IN ACCORDANCE WITH THE OBJECTS OF THE ASSOCIATION. THUS, IT REJEC TED THE ASSESSEE'S CASE AND HELD THAT BOTH THE CONDITIONS UNDER SECTION 12AA(3) OF THE ACT STOOD ATTRACTED. 55. AS SEEN FROM THE OBSERVATION OF THE INCOME TAX APP ELLATE TRIBUNAL, ALTHOUGH GENERALLY IT ACCEPTED THE CASE OF THE ASSE SSEE THAT THE PHYSICAL ASPECT OF THE GAME WAS ONE IN ACCORDANCE WITH THE O BJECTS, THE QUANTUM OF RECEIPT APPARENTLY LED THE INCOME TAX APPELLATE TRI BUNAL AND THE REVENUE TO COME TO THE CONCLUSION THAT THE ACTIVITIES ARE COMM ERCIAL AND HENCE BY SECTION 2(15) PROVISO TO THE ACT, THE RECEIPT FROM BCCI COULD NOT BE CALLED AS SUBSIDY. AS FOR THE OBSERVATION OF THE INCOME TAX A PPELLATE TRIBUNAL THAT THE TWIN CONDITIONS STOOD SATISFIED IS CONCERNED, IT IS NOT DENIED BY THE REVENUE THAT AT THE TIME OF GRANTING REGISTRATION, THE COMM ISSIONER HAD SATISFIED HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENU INENESS OF THE ACTIVITIES AS FALLING WITHIN THE MEANING OF 'CHARITABLE PURPOSE', AS IT STOOD IN 2003. THE REVENUE DOES NOT DENY AS A MATTER OF FACT THAT THE OBJECTS REMAIN AS IT WAS IN 2003 AND THERE IS NO CHANGE IN ITS CONTENT TO CALL THE ASSESSEE'S OBJECT AS NOT GENUINE. THERE ARE NO MATERIALS TO INDICATE THAT TH E GRANT OF REGISTRATION WAS NOT BASED ON MATERIALS INDICATING OBJECTS OF GENERA L PUBLIC UTILITY. 56. THE ASSESSEE IS A MEMBER OF BOARD OF CONTROL FOR C RICKET IN INDIA (BCCI), WHICH IN TURN IS A MEMBER OF ICC(INTERNATIONAL CRIC KET COUNCIL). BCCI ALLOTS TEST MATCHES WITH VISITING FOREIGN TEAM AND ONE DAY INTERNATIONAL MATCHES TO ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 28 OF 32 VARIOUS MEMBER CRICKET ASSOCIATION WHICH ORGANISE T HE MATCHES IN THEIR STADIA. THE FRANCHISEES CONDUCT MATCHES IN THE STAD IA BELONGING TO THE STATE CRICKET ASSOCIATION. THE STATE ASSOCIATION IS ENTIT LED TO ALL IN-STADIA SPONSORSHIP ADVERTISEMENT AND BEVERAGE REVENUE AND IT INCURS EXPENSES FOR THE CONDUCT OF THE MATCHES. BCCI EARNS REVENUE BY W AY OF SPONSORSHIP AND MEDIA RIGHTS AS WELL AS FRANCHISEE REVENUE FOR IPL AND IT DISTRIBUTES 70% OF THE REVENUE TO THE MEMBER CRICKET ASSOCIATION. THUS THE ASSESSEE IS ALSO THE RECIPIENT OF THE REVENUE. THUS, FOR INVOKING SECTIO N 12AA READ WITH SECTION 2(15) OF THE ACT, REVENUE HAS TO SHOW THAT THE ACTI VITIES ARE NOT FITTING WITH THE OBJECTS OF THE ASSOCIATION AND THAT THE DOMINANT AC TIVITIES ARE IN THE NATURE OF TRADE, COMMERCE AND BUSINESS. WE DO NOT THINK THAT BY THE VOLUME OF RECEIPT ONE CAN DRAW THE INFERENCE THAT THE ACTIVITY IS COM MERCIAL. THE INCOME TAX APPELLATE TRIBUNAL'S VIEW THAT IT IS AN ENTERTAINME NT AND HENCE OFFENDED SECTION 2(15) OF THE ACT DOES NOT APPEAR TO BE CORR ECT AND THE SAME IS BASED ON ITS OWN IMPRESSION ON FREE TICKET, PAYMENT OF EN TERTAINMENT TAX AND PRESENCE OF CHEER GROUP AND GIVEN THE IRRELEVANT CO NSIDERATION. THESE CONSIDERATIONS ARE NOT GERMANE IN CONSIDERING THE Q UESTION AS TO WHETHER THE ACTIVITIES ARE GENUINE OR CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE ASSOCIATION. WE CAN ONLY SAY THAT THE INCOME TAX AP PELLATE TRIBUNAL RESTED ITS DECISION ON CONSIDERATION WHICH ARE NOT RELEVAN T FOR CONSIDERING THE TEST SPECIFIED UNDER SECTION 12AA(3) TO IMPOSE COMMERCIA L CHARACTER TO THE ACTIVITY OF THE ASSOCIATION. IN THE CIRCUMSTANCES, WE AGREE WITH THE ASSESSEE THAT THE REVENUE HAS NOT MADE OUT ANY GROUND TO CAN CEL THE REGISTRATION UNDER SECTION 12AA(3) OF THE ACT. 15. THUS, IT CAN BE SEEN THAT THE ALLEGED COMMERCIA L ACTIVITIES CARRIED ON BY THE ASSESSEE WERE ALSO CAR RIED ON BY THE TAMIL NADU CRICKET ASSOCIATION AND THE ABOVE JUDGME NT IS CLEARLY APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THER EFORE, ON THIS GROUND, REGISTRATION COULD NOT HAVE BEEN INVOKED U/ S 12AA(3) OF THE ACT. 16. FURTHER, THE CBDT VIDE CIRCULAR NO.21 OF 2016 HA S ALSO CLARIFIED THE POSITION AS UNDER: SUBJECT - CLARIFICATION REGARDING CANCELLATION OF REGISTRATION U/S 12A OF THE INCOME-TAX ACT 1961 IN CERTAIN CIRCUMSTANCES ~ REGARDING SECTIONS 11 AND 12 OF THE INCOME-TAX ACT, 1961 (ACT) EXEMPT INCOME OF CHARITABLE TRUSTS OR ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 29 OF 32 INSTITUTIONS, IF SUCH INCOME IS APPLIED FOR CHARITAB LE PURPOSE AND SUCH INSTITUTION IS REGISTERED UNDER SECTION L2AA OF THE ACT. 2. SECTION 2(L5) OF THE ACT PROVIDES DEFINITION OF 'CHARITABLE PURPOSE'. IT INCLUDES 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' PROVIDE D IT DOES NOT INVOLVE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ETC. FOR FINANCIAL CONSIDERATION, THE 2 ND PROVISO TO SAID SECTION, INTRODUCED W.E.F. 01-04-2009 VIDE FINANCE ACT 2010, PROVIDES THAT IN CASE WHERE THE ACTIVITIE S OF ANY TRUST OR INSTITUTION IS OF THE NATURE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND IT INVOLVES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS; BUT THE AGGREGATE VALUE OF RECEIPTS FROM SUCH COMMERCIAL ACTIVITIES DOES NOT EXCEED RS. 25,OO,000/~ IN THE PREVIOUS YEAR, THE PURPOSE OF SUCH TRUST/INSTITUTIO N SHALL BE DEEMED AS 'CHARITABLE' DESPITE: IT DERIVING CONSIDERATION FROM SUCH ACTIVITIES. HOWEVER, IF THE AGGREGATE VALUE OF THESE RECEIPTS EXCEEDS THE SPECIFIED CUT-OFF, THE ACTIVITY WOULD NO LONGER BE CONSIDERED AS CHARITABLE AND THE INCOME OF THE TRUST/INSTITUTION 'WOULD NOT BE ELIGIBLE FOR TAX EXEMPTION IN THAT YEAR. THUS AN ENTITY, PURSUING ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY, COULD BE TREATED AS A CHARITABLE INSTITUTION IN ONE YEAR AND NOT A CHARITABLE INSTITUTION IN THE OTHER YEAR DEPENDING ON THE- AGGREGATE VALUE OF RECEIPTS FROM COMMERCIAL ACTIVITIES. THE POSITION REMAINS SIMILAR WHEN THE FIRST AND SECOND PROVISOS OF SECTION 2(15) GET SUBSTITUTED BY THE NEW PROVISO INTRODUCED W.E.F 01-04-2016 VIDE FINANCE ACT, 2015, CHANGING THE CUT-OFF BENCHMARK AS 20'% OF THE TOTAL RECEIPTS INSTEAD OF THE FIXED LIMIT OF RS.25,00,000/- AS IT EXISTED EARLIER. 3. THE TEMPORARY EXCESS OF RECEIPTS BEYOND THE SPECIFIED CUT-OFF IN ONE YEAR MAY NOT NECESSARILY B E THE OUTCOME OF ALTERATION IN THE VERY NATURE OF THE ACTIVITIES OF THE TRUST OR INSTITUTION REQUIRING CANCELLATION OF REGISTRATION ALREADY GRANTED TO THE TRUST OR INSTITUTION. HENCE, SECTION 13 OF THE-ACT HAS ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 30 OF 32 BEEN AMENDED VIDE FINANCE ACT, 2012 BY INSERTING A NEW SUB-SECTION (8) THEREIN TO PROVIDE THAT SUCH ORGANIZATION WOULD NOT GET BENEFIT OF TAX EXEMPTION IN THE PARTICULAR YEAR IN WHICH ITS RECEIPTS FROM COMMERCIAL ACTIVITIES EXCEED THE THRESHOLD WHETHER OR NOT THE REGISTRATION GRANTED IS CANCELLED. THIS AMENDMENT HAS TAKEN EFFECT RETROSPECTIVELY FROM 1'1 APRIL. 2009 AND ACCORDINGLY APPLIES IN RELATION TO THE ASSESSMENT YEAR 2009-10 ONWARDS. 4. IN VIEW OF THE AFORESAID POSITION, IT IS CLARIFI ED THAT IT SHALL NOT BE MANDATORY TO CANCEL THE REGISTRATION ALREADY GRANTED U/S 12.AA TO A CHARITABLE INSTITUTION MERELY ON THE GROUND THAT THE CUT-OFF SPECIFIED IN THE PROVISO TO SECTION 2{15) O F THE ACT IS EXCEEDED IN A PARTICU.LAR YEAR WITHOUT THERE BEING ANY CHANGE; IN THE NATURE OF ACTIVITIES OF TH E INSTITUTION. IF IN ANY PARTICULAR YEAR, THE SPECIFI ED CUT-OFF IS EXCEEDED, THE TAX EXEMPTION WOULD BE DENIED TO THE INSTITUTION IN THAT YEAR AND CANCELLATION OF REGISTRATION WOULD NOT BE MANDATORY UNLESS SUCH CANCELLATION BECOMES NECESSARY ON THE GROUNDS] PRESCRIBED UNDER THE ACT. 5. WITH THE INTRODUCTION OF CHAPTER XII-EB IN THE AC T VIDE FINANCE ACT. 2016, PRESCRIBING SPECIAL PROVISIONS RELATING TO TAX ON ACCRETED INCOME OF CERTAIN TRUSTS AND INSTITUTIONS, CANCELLATION OF REGISTRATION GRANTED U/S 12AA MAY LEAD TO A CHARITABLE INSTITUTION GETTING HIT BY SUB-SECTION ( 3) OF SECTION 115TD AND BECOMING LIABLE TO TAX ON ACCRETED INCOME. THE CANCELLATION OF REGISTRATION WITHOUT JUSTIFIABLE REASONS MAY, THEREFORE, CAUSE ADDITIONAL HARDSHIP TO AN ASSESSEE INSTITUTION DUE TO ATTRACTION OF TAX-LIABILITY ON ACCRETED INCOME. T HE FIELD AUTHORITIES ARE, THEREFORE, ADVISED NOT TO CAN CEL THE REGISTRATION OF A CHARITABLE INSTITUTION GRANTE D U/S 12AA JUST BECAUSE THE PROVISO TO SECTION 2(15) COMES INTO PLAY. 'THE PROCESS FOR CANCELLATION OF REGISTRATION IS TO BE INITIATED STRICTLY IN ACCORDAN CE WITH SECTION 12AA(3) AND 12AA(4} AFTER CAREFULLY EXAMINING THE APPLICABILITY OF THESE PROVISIONS. ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 31 OF 32 6. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. SD/ DEEPSHIKHA SHARMA DIRECTOR TO THE GOVT. OF INDIA 17. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DI T (E) VS. KHAR GYMKHANA VIDE DECISION DATED 6 TH JUNE, 2016 IN IT APPEAL NO.2349 OF 2013 HAS ALSO HELD THAT THE DIT H AS NO JURISDICTION TO CANCEL REGISTRATION OF A CHARITABLE INSTITUTION ON THE GROUND THAT IT IS CARRYING ON COMMERCIAL ACTIVITIES WHICH ARE IN BREACH OF THE AMENDED DEFINITION OF CHARITABLE PUR POSE IN SECTION 2(15) AND THAT REGISTRATION CAN BE CANCELLE D ONLY IF THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS AND FURTHER THAT THI S IS CLARIFIED BY CIRCULAR NO.21 OF 2016. THUS, IT CAN BE SEEN THAT T HE REGISTRATION WITHDRAWN U/S 12AA(3) OF THE ACT IS NOT SUSTAINABLE IN THE CASE OF THE ASSESSEE BEFORE US. 18. AS REGARDS THE OTHER GROUNDS I.E. HOLDING OF A CRICKET MATCH FOR WOMEN IN VIOLATION OF THE OBJECT NO.(XXVI II), WE FIND THAT THE MAIN OBJECT OF THE ASSESSEE IS TO PROMOTE THE G AME OF CRICKET AND PARTICULARLY FOR MEN ONLY AS THERE IS A SEPARAT E CRICKETING BODY FOR WOMEN. THE REASON GIVEN BY THE ASSESSEE FO R HOLDING WOMENS CRICKET MATCH IS THAT IT WAS HELD AT THE IN STANCE OF THE BCCI PARTICULARLY SINCE THE WOMEN CRICKET ASSOCIATI ON WAS NOT FUNCTIONING. WE FIND THAT THIS ACTIVITY CANNOT BE S AID TO BE EXACTLY IN CONTRAVENTION OF THE OBJECTS OF THE ASSESSEE SOC IETY. EVEN IF IT IS TO BE CONSIDERED TO BE IN VIOLATION OF THE OBJEC T, IT IS A SOLITARY DEVIATION AND THE AO MIGHT CONSIDER DISALLOWING THE INCOME ITA NO 649 OF 2015 HYDERABAD CRICK ET ASSOCIATION HYDERABAD PAGE 32 OF 32 DERIVED BY THE ASSESSEE FROM CONDUCTING OF SUCH A M ATCH WHILE COMPUTING THE EXEMPT INCOME U/S 11 OF THE I.T. ACT. 19. FURTHER, AS REGARDS THE EXPENDITURE WHICH IS NOT SUPPORTED BY BILLS AND VOUCHERS ALSO, WE ARE OF THE OPINION THAT IT CAN ONLY LEAD TO DISALLOWANCE AND NOT FOR WITHDRAWA L OF REGISTRATION U/S 12AA(3) OF THE ACT. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE DIT (E) AND ASSESSEES APPE AL IS ACCORDINGLY ALLOWED. SINCE WE HAVE ALREADY SET ASIDE WITHDRAWAL OF THE REGISTRATION U/S 12AA(3) OF THE ACT, WE SEE NO REAS ON TO ADJUDICATE THE OTHER GROUND OF APPEAL I.E. THE DATE FROM WHICH THE REGISTRATION SHALL BE WITHDRAWN OR CANCELLED. 20. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH OCTOBER, 2016. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 13 TH OCTOBER, 2016. VINODAN/SPS COPY TO: 1 M/S. SEKHAR AND SURESH, CAS, 133/4 R.P. ROAD, SEC UNDERABAD 500003 2 COMMISSIONER OF INCOME TAX (EXEMPTIONS) AAYKAR BH AVAN, BASHEERBAGH, HYDERABAD 3 DY.CIT (E)- HYDERABAD 4 THE DR, ITAT HYDERABAD 5 GUARD FILE BY ORDER