2019 (5) TMI 1134 - AT - Income Tax

Exemption u/s 11 - Grant of registration u/s.12AA rejected - promotion of Cricket - charitable activity u/s 2(15) or not? - assessee are in receipts from the Board of Control for Cricket in India (BCCI) every year and these are in nature of trade, commerce or business as per proviso to section 2(15) of the Act and therefore, the assessee is not carrying out any charitable activities - HELD THAT - The assessee is receiving money from BCCI as subsidy for providing services in the IPL matches, for conducting Cricket matches for hiring ground only to promote the Cricket and encouraging new talent in the field of Cricket and objects of all the other Cricket associations of any other state are similar in nature. Therefore, the assessee has not provided any services to any trade, commerce or industry as defined in the proviso to section 2(15) of the Act. The Hon ble Apex Court in the case of CIT Vs. Gujarat Maritime Board reported 2007 (12) TMI 7 - SUPREME COURT has held that if the primary purpose and the predominant object is for welfare of general public then the purpose would be charitable in nature. The assessee is not hit by the proviso to section 2(15) of the Act since it does not conduct any service or activities which are in the nature of trade, commerce or business. All the facts being examined vis- -vis taking into consideration of judicial pronouncements placed before us and examining object of the assessee s society provides that it is for charitable purpose for advancement of any other object of general public utility. As in the case of Ahmedabad Rana Caste Association Vs. Commissioner of Income Tax 1971 (9) TMI 8 - SUPREME COURT wherein it has been held that the object of the trust may be charitable in nature and an object beneficial to a section of public is an object of general public utility. The section of public must be definite and identifiable and it is not necessary that the object should benefit the whole mankind. In the case of the assessee, since it is for promotion of Cricket, it may not be benefiting the entire mankind but those being benefited are definitely identifiable and they are sections of public. The work of the assessee society is to promote Cricket so as to bring forth new talents and provide opportunity to the people for representing the State as well as the Country. Therefore, the object of the assessee is for charitable purpose and nothing else - thus we set aside the order of the Ld.CIT(Exemption) and direct the Ld.CIT(Exemption) to grant registration u/s.12AA of the Act to the assessee society. - Decided in favour of assessee.

Summary

Issues Involved:
1. Rejection of application for registration under section 12AA of the Income Tax Act, 1961.
2. Determination of whether the activities of the assessee society qualify as charitable under section 2(15) of the Act.
3. Applicability of the proviso to section 2(15) regarding activities in the nature of trade, commerce, or business.

Issue-wise Detailed Analysis:

1. Rejection of Application for Registration under Section 12AA:
The primary grievance of the assessee was the rejection of its application for registration under section 12AA by the Commissioner of Income Tax (Exemption). The assessee had applied for registration on 18.04.2017, providing all necessary details, explanations, and financials to support its claim of carrying out charitable activities. The Commissioner rejected the application, citing that the assessee received funds from the Board of Control for Cricket in India (BCCI), which were deemed to be in the nature of trade, commerce, or business as per the proviso to section 2(15) of the Act.

2. Determination of Charitable Activities under Section 2(15):
The assessee argued that its main object was the promotion of cricket in Chhattisgarh, including organizing coaching, conducting matches, and providing facilities for young and talented sportsmen. It was emphasized that the assessee did not charge fees from players or teams and funded its activities through grants from BCCI. The Tribunal noted that the primary purpose of the assessee was to promote cricket, which falls under the definition of "advancement of any other object of general public utility" as per section 2(15) of the Act.

3. Applicability of the Proviso to Section 2(15):
The Tribunal examined whether the assessee's activities could be considered commercial under the proviso to section 2(15). It was noted that the assessee's involvement in IPL matches was limited to maintenance and security arrangements, with no right to sell tickets or receive sponsorships. The Tribunal referred to similar cases, including Jharkhand State Cricket vs. DCIT and Deputy Commissioner of Income Tax vs. Tamil Nadu Cricket Association, where it was held that such activities did not constitute trade, commerce, or business. The Tribunal concluded that the assessee's activities were not commercial and thus not hit by the proviso to section 2(15).

Conclusion:
The Tribunal found that the objects of the assessee society were charitable in nature, focusing on the promotion of cricket. It was determined that the assessee's activities did not involve trade, commerce, or business, and therefore, the proviso to section 2(15) was not applicable. The Tribunal directed the Commissioner to grant registration under section 12AA to the assessee, allowing the appeal in favor of the assessee.

Order Pronounced:
The appeal of the assessee was allowed, and the order was pronounced on the 15th day of May, 2019.