Gujarat Cricket Association, Ahmedabad V. The Director of Income tax(Exemption), Ahmedabad

ITA 93/AHD/2011

• Counselvise Citation: 9320514 RSA 2011
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-01-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Charitable institution; Source of fund
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI MUKUL KUAMR SHRAWAT, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.93 / AHD/2011 (ASSESSMENT YEAR 2004-05.) GUJARAT CRICKET ASSOCIATION, 2 ND FLOOR, ASKSHAR ARCADE, OPP. MANINAGAR FIRE STATION, NAVRANGPURA, AHMEDABAD VS. DIT (EXEMPTION), AHMEDABAD PAN/GIR NO. : AAAAG1205C (APPELLANT) .. (RESPONDENT) APPELLANT BY: S/SHRI K.C. PATEL, M. K. PATEL, ADV., J C SHAREDALAL CA RESPONDENT BY: SHRI C.K. MISHRA, SR. DR DATE OF HEARING: 04.01.2012 DATE OF PRONOUNCEMENT: 31.01.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF DIT(E), AHMEDABAD DATED 06.12.2010 PASSED BY HIM U/S 12AA(3 ) OF THE INCOME TAX ACT, 1961. 2. VARIOUS GROUNDS ARE RAISED BY THE ASSESSEE BUT T HE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING THE ORDER PASSED BY TH E A.O. FOR CANCELING THE REGISTRATION GRANTED EARLIER TO THE ASSESSEE U/S 12 AA OF THE INCOME TAX ACT, 1961 W.E.F. ASSESSMENT YEAR 2004-05 AND ONWARD S. 3. IT IS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION REN DERED IN THE CASE OF VIDARBHA CRICKET ASSOCIATION VS CIT IN I.T.A.NO. 3/ NAG/2010 DATED I.T.A.NO. 93 /AHD/2011 2 30.05.2011 AND HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION. LD. D.R. OF THE REVENUE SUPPORTED THE ORDER OF LD. DIT(E). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL DECISION CITED BY THE LD. A.R. IN THE PRE SENT CASE, THE REGISTRATION OF THE ASSESSEE WAS CANCELLED BY THE D IT(E) ON THIS BASIS THAT THE MAIN SOURCE OF INCOME OF THE ASSESSEE IS DERIVE D FORM SPONSORSHIP, BANK INTEREST, ANNUAL SUBSCRIPTION, INCOME FROM ICC MATCHES, INCOME FROM TROPHY/TOURNAMENT MATCHES, SCRAP SALE, RENTAL INCOME AND SALE OF TICKETS. IT IS OBSERVED BY HIM THAT NONE OF THESE SOURCES OF INCOME HAS ANY NEXUS WITH THE EDUCATION OF THE CRICKETERS. HE ALSO OBSERVED THAT IN FACT, THE ASSESSEE HAS BEEN ENGAGED ITSELF IN TRANS ACTION OF COMMERCIAL NATURE. HE ALSO OBSERVED THAT THE ASSESSEE HAS BEE N CARRYING ITS ACTIVITIES WITH A COMMERCIAL MOTIVE. HE HAS DECIDED THE ISSUE ON THIS BASIS THAT AS PER THE AMENDED PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT, 1961, ASSESSEE IS NOT ENTITLED FOR REGISTRATION U/S 12A O F THE INCOME TAX ACT, 1961. IN THE CASE OF VIDARBHA CRICKET ASSOCIATION (SUPRA) ALSO, REGISTRATION WAS CANCELLED U/S 12AA(3) OF THE ACT O N THE BASIS OF AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT AND UNDER THESE FACTS, THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. THE RELEVANT PARA IS PARA 7, 8 & 9 OF THE TRIBUNAL DECI SION WHICH ARE REPRODUCED BELOW: 7. IN THIS VIEW OF THE MATTE, WE MAY NOW EXAMINE T HE REASONS PUT-FORTH BY THE COMMISSIONER IN THIS CASE TO CANCE L REGISTRATION ALREADY GRANTED TO THE ASSESSEE UNDER SECTION 12A O F THE ACT. IN THIS DIRECTION, WE HAVE CAREFULLY PERUSED THE IMPUG NED ORDER, WHEREIN THE COMMISSIONER HAS PRIMARILY EXAMINED THE APPLICATION OF REVISED DEFINITION OF CHARITABLE PURPOSE UNDER S ECTION 2(15) AS AMENDED BY THE FINANCE ACT, 2008 WITH EFFECT FROM 1 .4.2009. THE I.T.A.NO. 93 /AHD/2011 3 ULTIMATE CONCLUSION OF THE COMMISSIONER IN PARAGRAP H 17 OF THE IMPUGNED ORDER IS PERTINENT, WHICH IS REPRODUCED AS UNDER: 17. IN VIEW OF THE AMENDED PROVISIONS OF SEC.2(15) , I IS SEEN THAT ASSESSEES ACTIVITIES CAN NO LONGER BE RE GARDED AS CHARITABLE ACTIVITIES. ESPECIALLY THE PROVISO TO S EC. 2(15) IS VIOLATED BY ASSESSEE AND HENCE, IT CANNOT BE REGARD ED AS A CHARITABLE SOCIETY ENGAGED IN CHARITABLE PURPOSES. I HAVE DULY CONSIDERED THE NATURE OF ACTIVITIES, THE SOURC ES OF INCOME, THE ACTIVITIES ON WHICH EXPENDITURE WAS MAD E, SURPLUS GENERATED EXISTENCE OF PROFIT MOTIVE, COMME RCIAL EXPLOITATION OF ASSETS, FEES AND CHARGES COLLECTED, NATURE OF OTHER INCOME AND OTHER ACTIVITIES AND CASE LAW BEFO RE COMING TO A FINAL CONCLUSION, THE ASSESSEE VIDARBHA CRICKET ASSOCIATION CANNOT BE HELD TO BE AN ORGANIZATION ME ANT FOR CHARITABLE PURPOSES IN VIEW OF THE ABOVE FINDINGS. 18. IN THE RESULT, THE DEEMED REGISTRATION BENEFIT UNDER SECTION 12AA AS CLAIMED AND ENJOYED BY THE ASSESSEE IS HEREBY WITHDRAWN/ CANCELLED FROM ASSESSMENT YEAR 20 09-10 ONWARDS. 8. ON A PERUSAL OF THE AFORESAID, IT IS CLEARLY EST ABLISHED THAT AS PER THE COMMISSIONER, THE ACTIVITIES OF THE ASSESSE E DO NOT QUALIFY TO FALL WITHIN THE MEANING OF CHARITABLE PURPOSE AS PER PROVISO TO SECTION 2(15) INSERTED WITH EFFECT FROM 1.4.2009. QUITE CLEARLY, AS WE HAVE OBSERVED EARLIER, SUCH AN OBJECTION CANNOT BE THE BASIS OF INVOKE SECTION 12AA(3) SO AS TO CANCEL THE REGISTRA TION ALREADY GRANTED TO THE ASSESSEE UNDER SECTION 12A OF THE AC T. IN OUR CONSIDERED OPINION REGISTRATION ALREADY GRANTED TO THE ASSESSEE COULD NOT HAVE BEEN RE-VISITED BY THE COMMISSIONER ON THE BASIS OF THE REASONING AFORESAID, SINCE HIS POWER TO CANCEL REGISTRATION UNDER SECTION 12AA(3) WAS CONFINED TO THE EXAMINATI ON AS TO WHETHER THE ACTIVITIES OF THE ASSESSEE SOCIETY/ASSO CIATION ARE GENUINE OR THAT THE SAME ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE STATED OBJECTS. IN THE LIGHT OF THE DISC USSION EMERGING FORM THE ORDER OF THE COMMISSIONER IN OUR CONSIDERE D OPINION, ACTION TAKEN BY THE COMMISSIONER DOES NOT FALL WITH IN THE PARAMETERS OF SECTION 12AA(3) OF THE ACT AND, THERE FORE, THE IMPUGNED ORDER IS BAD IN LAW. I.T.A.NO. 93 /AHD/2011 4 9. AT THIS STAGE, WE MAY HASTEN TO ADD THAT WE ARE NOT COMMENTING ON THE MERITS OF THE ISSUE AS TO WHETHER THE ACTIVITIES OF THE ASSESSEE FALL WITHIN THE MEANING OF EXPRESSI ON CHARITABLE PURPOSE PER SECTION 2(15) AS AMENDED WITH EFFECT FO RM 1.4.2009. THE ONLY POINT DECIDED IN THE APPEAL IS TO THE EFFE CT THAT IT WAS NOT WITHIN THE SCOPE AND AMBIT OF SECTION 12AA(3) FOR T HE COMMISSIONER TO HAVE EXAMINED THE APPLICABILITY OF THE AMENDED SECTION 2(15) OF THE PURPOSES OF INVOKING HIS POWER S OF CANCELLATION PROVIDED IN SECTION 12AA(3) OF THE ACT . AT THIS STAGE, WE MAY ALSO STATE THAT THE ISSUES RAISED BY THE COM MISSIONER IN THE IMPUGNED ORDER ARE NOT BEYOND THE POWERS OF THE REV ENUE TO EXAMINE, SO HOWEVER, THE SAME CAN ONLY BE EXAMINED IN THE APPROPRIATE PROCEEDINGS, SUCH AS ASSESSMENT PROCEED INGS IN THE PRESENT CASE. OUR DECISION IS RESTING ONLY ON THE FOUNDATION THAT THE IMPUGNED ORDER P[ASSED BY THE COMMISSIONER IS N OT PERMISSIBLE IN VIEW OF THE LIMITED POWERS AVAILABLE TO HIM UNDER SECTION 12AA(3) OF THE ACT. HOWEVER IT WOULD BE OP EN FOR THE A.O. TO CONSIDER THE ISSUES RAISED IN THE IMPUGNED ORDER, IF SO ADVISED, IN THE COURSE OF THE RELEVANT ASSESSMENT P ROCEEDINGS. 5. SINCE IN THE PRESENT CASE ALSO, REGISTRATION HAS BEEN CANCELLED BY DIT(E) ON THE BASIS OF AMENDED PROVISIONS OF SECTIO N 2(15) OF THE INCOME TAX ACT, 1961, WE ARE OF THE CONSIDERED OPIN ION THAT THE ACTION TAKEN BY DIT(E) DOES NOT FALL WITHIN THE PERMISSIBL E LIMITS OF SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 AND THEREFORE, THE IMPUGNED ORDER IS BAD IN LAW. WE ALSO ADD THAT WE ARE NOT COMMENT ING ON THE MERITS OF THE ISSUE AS TO WHETHER THE ACTIVITIES OF THE ASSES SEE FALLS WITHIN THE MEANING OF CHARITABLE PURPOSE AS PER SECTION 2(15) OF THE INCOME TAX ACT, 1961 AS AMENDED AND WE ARE ONLY DECIDING THIS ASPEC T OF MATTER THAT THE ORDER PASSED BY THE DIT(E) U/S 12AA(3) IS BAD IN LA W. THIS ISSUE RAISED BY THE DIT(E) CAN BE EXAMINED IN APPROPRIATE PROCEE DINGS SUCH AS ASSESSMENT PROCEEDINGS IN THE PRESENT CASE AND OUR DECISION IS RESTING ONLY ON THE FINDING THAT THE IMPUGNED ORDER PASSED BY DIT(E) IS NOT PERMISSIBLE IN VIEW OF THE LIMITED POWERS AVAILABLE TO HIM U/S 12AA(3) OF I.T.A.NO. 93 /AHD/2011 5 THE INCOME TAX ACT, 1961. HOWEVER, IT WOULD BE OPE N FOR THE A.O. TO CONSIDER ALL THE ISSUES RAISED IN THE IMPUGNED ORDE R, IF SO ADVISED, IN THE COURSE OF RELEVANT ASSESSMENT PROCEEDINGS. 6. IN VIEW OF OUR DISCUSSION IN THE ABOVE PARA, WE SET ASIDE THE ORDER OF DIT(E) U/S 12AA(3) OF THE INCOME TAX ACT, 1961 A ND RESTORE THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE INCOME TAX ACT, 1961. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 30/1 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30/1.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 31/1 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.31/1 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31/01/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .