9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 1825 - AT - Income TaxExemption u/s 11 denied - charitable activities u/s 2(15) - action of the AO in holding the activities of promoting the game of cricket as business income u/s. 28 - receipts on account of sale of tickets, sponsorship income - HELD THAT - Whatever we decide in the case of Gujarat Cricket Association 2019 (1) TMI 1522 - ITAT AHMEDABAD the same will equally apply in this case as well. We, therefore, uphold the plea of the assessee and allow these grounds of appeal to that extent in principle. There is, however, a rider. In this case, there is also a reference to the assessee organizing a one day international match, on commercial scale, for fund raising. That issue is dealt with in a separate ground of appeal. In case, it is held that the said one day international match is in the nature of commercial adventure, it will have the impact on section 2(15) being invoked. That ground is separately being remitted to the file of the CIT(A) for fresh adjudication, and the eventual decision on the same will also have the impact on these issues. We, therefore, remit the matter to the file of the CITI(A) for fresh adjudication in the light of our observations in the case of Gujarat Cricket Association (supra) and the findings on the said aspect of the matter. Withdrawing exemption u/s 11(1)(d) as sum received in the form of Corpus donation - TV subsidies receipts - HELD THAT - There is no dispute that the TV subsidy in question is sent under this resolution. On these facts, and in the light of the provisions of Section 11(1)(d) which only require the income to be by way of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or the institution , we are of the considered view that any payments made by the BCCI, without a legal obligation and with a specific direction that it shall be for corpus fund- as admittedly the present receipt is, is required to be treated as corpus donation not includible in total income. We are unable to find any legal support for learned CIT(A) s stand that each donation must be accompanied by a separate written document. The contribution has to be voluntary and it has to be with specific direction that it will form corpus of the trust . These conditions are clearly satisfied. Any payment which the assessee is not under an obligation to make, whatever be the mode of its computation, is a voluntary payment, and, any payment which is with a specific direction that it for corpus fund is a corpus donation. In our considered view, even without the two specific confirmations filed by the assessee, in the light of the BCCI resolution under which the payment is made and in the light of the payment not being under any legal obligation, the conditions under section 11(1)(d) are satisfied. We, therefore, uphold the plea of the assessee. The Assessing Officer is accordingly directed to delete this addition Corpus donation in form of Infrastructure Subsidy- As long as the subsidy is relatable to a capital asset created by the assessee on his own or by an eligible district cricket association, as the present subsidy undisputedly is, it is outside the ambit of revenue receipt and taxable income. The very foundation of the stand of the Assessing Officer is thus devoid of legally sustainable merits. As such, there can hardly be an occasion, in principle, to hold such a subsidy as a revenue receipt or taxable income. There is not even a whisper of a discussion by the Assessing Officer to the effect that infrastructure subsidy is revenue in nature. As a matter of fact, the claim is made for the subsidy only after the expenditure having been incurred. The authorities below have simply brushed aside the case and the submissions of the assessee and proceeded to hold it as an income. Looking to the nature of the subsidy, which is clearly relatable to the capital assets generated, we are unable to hold this receipt in the revenue field. We, therefore, uphold the plea of the assessee on this point as well and delete the addition. Income from hosting of One Day International match ( ODI ) - We find that though there are findings to the above effect in the order of the Assessing Officer, the CIT(A) has dealt with the same in a very causal manner and without specific and categorical discussions on the same. We, therefore, deem it fit and proper to remit the matter to the file of the CIT(A) on this issue. We order so. As we do so, and for the detailed reasons set out earlier while dealing with Gujarat Cricket Associations case 2019 (1) TMI 1522 - ITAT AHMEDABAD we make it clear that it is only in the event of this event being organized by the appellant cricket association on its own, rather than under arrangements and planning by the BCCI, that this could be put against the assessee as an adventure in the nature of trade, commerce or business. Thus we allow the appeal of the assessee.
Issues Involved:
1. Charitable nature of activities under Section 2(15) of the Income Tax Act, 1961. 2. Applicability of the proviso to Section 2(15) regarding trade, commerce, or business. 3. Taxation of income under Section 11 and Section 13(8) of the Act. 4. Exceeding statutory limit of ?25,00,000 for receipts. 5. Classification of income from promoting cricket as business income under Section 28. 6. Taxation of net surplus income. 7. Non-allowance of benefit under Section 11(1)(a). 8. Disallowance of benefit under Section 11(2). 9. Taxation of subsidy under Section 2(24)(xviii). 10. Charging of interest under Section 234B. 11. Initiation of penalty proceedings under Section 271(1)(c). Detailed Analysis: 1. Charitable Nature of Activities: The primary issue was whether the activities of the Baroda Cricket Association (BCA) qualify as "charitable activities" under Section 2(15) of the Income Tax Act, 1961. The Tribunal noted that BCA’s activities focused on promoting cricket and identifying new talents, which align with the definition of "advancement of objects of general public utility." However, the Assessing Officer (AO) argued that these activities were in the nature of trade, commerce, or business, given the significant income generated from ticket sales, sponsorships, and subsidies. 2. Applicability of Proviso to Section 2(15): The AO applied the proviso to Section 2(15), which states that if any entity engages in trade, commerce, or business activities and the aggregate receipts exceed ?25 lakhs, it cannot be considered as pursuing charitable purposes. The Tribunal examined the income sources and concluded that the activities of BCA, including hosting cricket matches and receiving subsidies, were indeed in the nature of business activities. 3. Taxation of Income under Sections 11 and 13(8): The AO disallowed the exemption claimed under Sections 11 and 12, arguing that BCA’s activities were not charitable. The Tribunal referred to previous decisions, including those involving the Gujarat Cricket Association, where similar activities were considered charitable. It was concluded that BCA’s activities should not be classified as business income, and the exemption under Section 11 should be allowed. 4. Exceeding Statutory Limit of ?25,00,000: The AO noted that BCA’s receipts from ticket sales, sponsorships, and other sources exceeded the statutory limit of ?25 lakhs, thus invoking the second proviso to Section 2(15). The Tribunal found that the receipts were intrinsically linked to BCA’s charitable activities and should not be viewed separately. 5. Classification of Income from Promoting Cricket as Business Income: The AO classified the income from promoting cricket as business income under Section 28, arguing that BCA’s activities were commercial. The Tribunal disagreed, stating that the core activity of promoting cricket was charitable, and the income generated was incidental to the charitable purpose. 6. Taxation of Net Surplus Income: The AO taxed the net surplus of ?20,62,53,049 as per BCA’s income and expenditure account. The Tribunal held that the surplus was a result of charitable activities and should not be taxed as business income. 7. Non-Allowance of Benefit under Section 11(1)(a): The AO did not allow the benefit of Section 11(1)(a), treating ?5,14,46,438 as income. The Tribunal found that this amount should be considered as part of the charitable activities and allowed the benefit under Section 11(1)(a). 8. Disallowance of Benefit under Section 11(2): The AO disallowed the benefit of Section 11(2), treating ?15,48,06,611 as income. The Tribunal ruled that the amount was part of BCA’s charitable activities and should be exempt under Section 11(2). 9. Taxation of Subsidy under Section 2(24)(xviii): The AO taxed the subsidy of ?22,95,90,081, arguing it was not exempt. The Tribunal referred to the case of Gujarat Cricket Association, where similar subsidies were treated as corpus donations and exempt under Section 11(1)(d). 10. Charging of Interest under Section 234B: The AO charged interest under Section 234B for non-payment of advance tax. The Tribunal ruled that since the income was exempt under Sections 11 and 12, the interest under Section 234B should not be charged. 11. Initiation of Penalty Proceedings under Section 271(1)(c): The AO initiated penalty proceedings under Section 271(1)(c) for concealment of income. The Tribunal held that since the income was exempt, there was no basis for penalty proceedings. Conclusion: The Tribunal allowed the appeal filed by the Assessee, granting relief on multiple grounds, including the charitable nature of activities, exemption under Sections 11 and 12, and non-applicability of the proviso to Section 2(15). The decision emphasized that the income generated from promoting cricket was incidental to the charitable purpose and should not be classified as business income. The appeal was allowed in favor of the Assessee.
|
