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2020 (12) TMI 27 - AT - Income TaxExemption u/s 11 and 10(23C)(iv) - income applied for charitable purposes exceeded 85% - AO held that the assessee is not eligible for exemption u/s 11 of the act on the reason that the assessee is engaged in commercial activities - HELD THAT - Respectfully following the decisions of the Hon ble ITAT, Visakhapatnam in the assessee s own case for A.Ys.2010-11 to 2012-13 A.Ys 2013-14 to 2015-16 2017 (11) TMI 673 - ITAT VISAKHAPATNAM , 2019 (1) TMI 1066 - ITAT VISAKHAPATNAM it is held that the activities of the assessee are not in the nature of trade, commerce or business or rendering of any service in relation to any trade, commerce or business and the proviso to sec.2(15), therefore has no application to the assessee s case. Consequently, it is held that the assessee is eligible for exemption u/s 11 as well as u/s 10(23C)(iv) of the Act. - Decided in favour of assessee. Difference in gross receipts declared by the assessee in Form 26AS - CIT(A) after examining the revised Form 26AS allowed the appeal of the assessee and deleted the addition - HELD THAT - There was no difference in the receipts declared by the assessee and the receipts as per Form 26AS in respect of BCCI. The Ld.CIT(A) also given a finding that even infrastructure subsidy amounting to ₹ 5,16,67,017/- received from BCCI which was taken to balance sheet is treated as income of the assessee, the amount applied for charitable purposes is higher than the income of the assessee and allowable for exemption u/s 11 of the Act. Form 26AS is a statement which is also available to the AO. Further the assessee filed rectification petition before the AO during the pendency of the appeal proceedings. Instead of examining the correctness of 154 petition, it is seen that the AO rejected the petition on the plea of pendency of appeal before the CIT(A). When there is prima facie mistake, it is the obligation of the AO to rectify the mistake, even though the appeal is pending before the appellate authorities and submit the copy of rectification order for further action of Ld.CIT(A). Instead, the AO rejected the rectification petition, hence, AO should not have any grievance for further opportunity. Ld.CIT(A) is empowered to verify the corrections and decide the issue. Since the Ld.CIT(A) has examined the issue and found that there was no short admission of receipts, we find no reason to interfere with the order of the Ld.CIT(A) accordingly, ground No.(iii) of the revenue is dismissed. Contravention to Rule 46A of the IT Rules - HELD THAT - With regard to reconciliation of gross receipts declared by the assessee and as per Form 26AS, we have already discussed in the earlier paragraphs that the assessee has filed 154 petition furnishing the complete details, which, the AO has rejected for the reason that the appeal was pending. Since the issue was already placed before the AO and the AO has rejected the assessee s petition for rectification we, find no infirmity in the order of the Ld.CIT(A) and accordingly ground No.(iv) is dismissed.
Issues Involved:
1. Denial of exemption under Section 11 of the Income Tax Act. 2. Addition of ?12,52,61,694 due to alleged short admission of receipts from BCCI. 3. Consideration of revised Form 26AS in contravention of Rule 46A of the IT Rules. Detailed Analysis: 1. Denial of Exemption under Section 11 of the Income Tax Act: The primary issue was whether the assessee's activities qualified as charitable under Section 2(15) of the Income Tax Act, thus entitling it to exemption under Section 11. The Assessing Officer (AO) argued that the assessee was engaged in commercial activities, citing substantial income from various sources like BCCI reimbursements and grants, income from investments, match receipts, and rentals. The AO concluded that these activities were commercial in nature, thereby disqualifying the assessee from being considered charitable. The Commissioner of Income Tax (Appeals) [CIT(A)] and the Income Tax Appellate Tribunal (ITAT) disagreed with the AO, relying on precedents in the assessee's own case for earlier assessment years. They found that the assessee's primary objective was the promotion and development of cricket, which is a charitable activity. The ITAT cited previous rulings which established that activities like hosting matches and receiving grants from BCCI were incidental to the main charitable purpose of promoting cricket. The ITAT upheld the CIT(A)’s decision to allow the exemption under Section 11, noting that the AO had not substantiated claims that the activities were commercial. 2. Addition of ?12,52,61,694 Due to Alleged Short Admission of Receipts from BCCI: The AO added ?12,52,61,694 to the assessee's income, citing discrepancies between the receipts declared by the assessee and those reflected in Form 26AS. The CIT(A) found that the AO had made this addition without giving the assessee an opportunity to explain the discrepancies. The assessee later reconciled the differences, showing that the amounts in Form 26AS included infrastructure subsidies taken directly to the Balance Sheet, which were not reflected in the Income & Expenditure account. The CIT(A) accepted the revised Form 26AS submitted by the assessee, which corrected the discrepancies. It was found that the total receipts declared by the assessee, including those taken to the Balance Sheet, matched the revised Form 26AS. The CIT(A) concluded there was no short admission of receipts and deleted the addition. The ITAT upheld this decision, noting that the AO should have considered the rectification petition filed by the assessee. 3. Consideration of Revised Form 26AS in Contravention of Rule 46A of the IT Rules: The department argued that the CIT(A) erred in considering the revised Form 26AS, which was not available during the assessment proceedings, thus violating Rule 46A of the IT Rules. The ITAT found that the assessee had filed a rectification petition with the AO, which was rejected on procedural grounds rather than on the merits. Since the CIT(A) had examined the revised Form 26AS and found no discrepancies, the ITAT held that there was no contravention of Rule 46A. The ITAT emphasized that the AO should have addressed the rectification petition substantively. Conclusion: The ITAT dismissed the revenue's appeal, upholding the CIT(A)’s order that granted the exemption under Section 11 and deleted the addition of ?12,52,61,694. The ITAT found that the assessee's activities were charitable in nature and that there were no discrepancies in the receipts declared. The ITAT also ruled that the CIT(A) was correct in considering the revised Form 26AS, as the AO had not addressed the rectification petition properly.
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