9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 1585 - AT - Income TaxValidity of reopening of assessment u/s 147 - Charitable Activity or not? - receipts from BCCI - Exemption u/s 11 denied - no tangible material based on which the re-opening of assessment was made - HELD THAT - A perusal of these reasons demonstrate that no new tangible material came into the possession of the Assessing Officer, based on which he formed a belief that income subject to tax has escaped assessment The entire reasons are based on a perusal of the return of income, income and expenditure statement and computation of income as evident from para 2 of the reasons recorded. The reopening is done merely on a change of opinion that too, it is not based on any tangible material coming into the possession of the Assessing Officer, after completion of the original assessment u/s 143(3) of the Act on 22/03/2013. AO after passing the assessment order for the Assessment Year 2012-13, based on his conclusions drawn therein, came to a conclusion that the assessment order for the earlier Assessment Year 2010-11, passed u/s 143(3) of the Act on 22/03/2013, granting exemption to the assessee needs to be revised. Such a reopening is not permissible under law. Whether the proviso to Section 2(15) of the Act, can be applied in the facts and circumstances of the case? - AO came to a conclusion that the assessee is carrying on commercial activity in the nature of trade, commerce or business as the assessee has received amounts from BCCI on account of IPL Subvention, TV rights subsidy from BCCI, Instedia Advertisement etc. - HELD THAT - In our considered opinion, these receipts from BCCI cannot be considered as income received from activities in the nature of trade, commerce or business. The pith and substance of the argument of the ld. D/R is that the nature of receipt in the hands of BCCI is business or commercial receipts on account of IPL Subvention, T.V. Rights etc. and where these receipts are shared with the state association on an 30 70 ratio basis, the nature of receipt does not change and it would be business receipts in the hands of the State Associations also. The allegation of revenue is that these receipts are couched in the form of subsidies. These issues have come up in the case Gujarat Cricket Association vs. JCIT (Exemptions) 2019 (1) TMI 1522 - ITAT AHMEDABAD has not agreed with the arguments of the revenue that BCCI with its affiliates have to be viewed together in unison and not separately. It also rejected the contention that, receiving substantial revenue sharing amounts in the nature of - 1) IPL Subvention, 2) T.V. Broadcasting rights 3) Sponsorship Rights, are in the nature of commercial receipts and are couched in the shape of subsidies. The contention that the nature of the income has not changed even after the receipt of such amounts in the hands of the affiliate as the source of the amounts and activities remain the same, has not been accepted. The Tribunal has taken the view that what is distributed is appropriation of profits. We come to a conclusion that the proviso to Section 2(15) of the Act has been wrongly invoked. The assessee is eligible for exemption u/s 11 12 of the Act Nature of receipt - infrastructural subsidy received from BCCI - revenue receipt or a capital receipt - HELD THAT - This issue was also considered by the Ahmedabad D Bench of the Tribunal 2019 (1) TMI 1522 - ITAT AHMEDABAD and it was adjudicated that the receipts in question are in the capital field. Consistent with the view taken therein, we allow this ground of the assessee. Revision u/s 263 by CIT - HELD THAT - Order of the ld. CIT u/s 263 of the Act, has to be necessarily vacated. The Assessing Officer has passed a detailed and reasoned order u/s 143(3) of the Act, granting exemption to the assessee u/s 11 12 of the Act. This is not a case of non-application of mind by the Assessing Officer. The view taken is a plausible view. The ld. CIT in his order u/s 263 of the Act, has not pointed out, as to the error committed by the Assessing Officer which cause prejudice to the interest of the revenue. As the main issue as to whether the provision to Section 2(15) of the Act is applicable to the facts of this case in favour of the assessee. Consistent with the view taken therein, we have to necessarily cancel the order of the ld. CIT passed u/s 263 of the Act. - Assessee's appeal allowed.
Issues Involved:
1. Validity of reopening of assessment for AY 2010-11. 2. Applicability of proviso to Section 2(15) of the Income Tax Act. 3. Nature of infrastructural subsidy received from BCCI. 4. Validity of the order passed u/s 263 of the Act for AY 2014-15. Detailed Analysis: 1. Validity of Reopening of Assessment for AY 2010-11: The reopening of the assessment was challenged on the grounds that it was based on a change of opinion and not on any new tangible material. The reasons for reopening were based on the perusal of the return of income, income and expenditure statement, and computation of income. The Tribunal found that there was no new tangible material that came into the possession of the Assessing Officer after the original assessment was completed u/s 143(3). The reopening was deemed to be merely a change of opinion, which is not permissible under law. The Tribunal cited the Supreme Court's ruling in TechSpan India (P.) Ltd. to support this conclusion. Thus, the reopening was held to be bad in law. 2. Applicability of Proviso to Section 2(15) of the Income Tax Act: The core issue was whether the activities of the assessee, Jharkhand State Cricket Association (JSCA), fell under the proviso to Section 2(15), which pertains to activities in the nature of trade, commerce, or business. The Tribunal noted that the primary objective of JSCA is to promote cricket, which falls under "object of general public utility." The Tribunal held that the receipts from BCCI, including IPL Subvention, TV rights subsidy, and Instadia advertisement, could not be considered as income from activities in the nature of trade, commerce, or business. The Tribunal referenced the Ahmedabad Bench's decision in Gujarat Cricket Association vs. JCIT, which held that such receipts are appropriations of profits and do not convert the charitable activity into a commercial one. The Tribunal also cited the Delhi Bench's decision in Delhi & District Cricket Association vs. DIT (Exemption), which held that similar receipts do not constitute business activities. Thus, the proviso to Section 2(15) was deemed inapplicable, and the assessee was entitled to exemption under Sections 11 and 12. 3. Nature of Infrastructural Subsidy Received from BCCI: The Tribunal addressed whether the infrastructural subsidy received from BCCI is a revenue receipt or a capital receipt. Consistent with the view taken by the Ahmedabad Bench in Gujarat Cricket Association, the Tribunal held that the infrastructural subsidy is in the capital field. Thus, it should not be treated as revenue income. 4. Validity of the Order Passed u/s 263 of the Act for AY 2014-15: The Tribunal examined the order passed u/s 263 of the Act by the CIT, which revised the assessment order for AY 2014-15. The Tribunal found that the Assessing Officer had passed a detailed and reasoned order u/s 143(3), granting exemption to the assessee under Sections 11 and 12. The CIT had not pointed out any specific error in the assessment order that caused prejudice to the revenue. Given the Tribunal's decision that the proviso to Section 2(15) was inapplicable, the order u/s 263 was also deemed unsustainable. The Tribunal vacated the CIT's order, thereby allowing the appeal for AY 2014-15. Conclusion: The Tribunal allowed all the appeals of the assessee, ruling that the reopening of assessment for AY 2010-11 was invalid, the proviso to Section 2(15) was inapplicable, the infrastructural subsidy from BCCI was a capital receipt, and the order passed u/s 263 for AY 2014-15 was unsustainable.
|
