2021 (4) TMI 359 - HC - Income Tax

Exemption under section 11 - subsidy received from BCCI - Benefit of Section 11 and 12 to the appellant cricket associations - Charitable activities u/s 2(15) - HELD THAT - Revenue submitted that the similar issues have been decided against the Revenue by this Court in the case of Director of Income Tax V/s. Gujarat Cricket Association 2019 (11) TMI 35 - GUJARAT HIGH COURT ultimate beneficiary is either the cricketer or the game of cricket. The assessee is not charging any fees or revenue from the cricketer who is the ultimate beneficiary. Thus there is no quid pro quo relationship with the cricketer. The assessee is promoting cricket on the charitable basis as far as real beneficiary is concerned. Whenever the revenue is earned, the same is not on commercial lines and the same could be said to be earned without any commercial attributes. The revenue is generated for recovering the cost, at least partly if not in full In the aforesaid view of the matter, we are not convinced with the case put up by the Revenue. It is not the case of the Revenue that the objects of the Trust are not charitable, but the case of the Revenue is that the activities undertaken by the Association are not charitable in nature. Irrespective of the nature of the activities of the BCCI (commercial or charitable), what is pertinent for the purpose of determining the nature of the activities of the assessees, is the object and the activities of the assessees and not that of the BCCI. The nature of the activities of the assessee cannot take its colour from the nature of the activities of the donor. - Decided in favour of assessee

Summary

Issues involved:
Appeal under Section 260A of the Income Tax Act, 1961 for the Assessment Year 2013-14 regarding exemptions under sections 11 & 12, applicability of proviso to section 2(15) r.w.s. 13(8) of the Act, remittance of addition made on account of infrastructure subsidy, and benefit of exemptions under various sections.

Analysis:
1. The Revenue appealed under Section 260A of the Income Tax Act, 1961 for the Assessment Year 2013-14, questioning the Order passed by the Income Tax Appellate Tribunal, Ahmedabad, Bench 'C'. The substantial questions of law raised included the justification of allowing exemptions under sections 11 & 12 without considering the commercial nature of the assessee's activities covered under section 2(15) r.w.s. 13(8) of the Act.

2. The Revenue argued against the Tribunal's decision to allow exemption under section 11 on the net surplus and subsidy received from BCCI, contending that the proviso to section 2(15) r.w.s. 13(8) of the Act was applicable, making the assessee ineligible for such exemptions.

3. Another issue raised was the remittance of the addition made on account of infrastructure subsidy to the file of the Assessing Officer, which the Revenue opposed, stating that once the provisions of section 2(15) r.w.s. 13(8) applied, the assessee was not entitled to claim under section 11(1)(d) of the Act.

4. The Tribunal's decision to allow the benefit of exemptions under various sections was challenged by the Revenue, highlighting the applicability of section 2(15) r.w.s. 13(8) of the Act to the assessee's activities, which, according to the Revenue, rendered the assessee ineligible for such benefits.

5. In response, the Court referred to a similar case involving the Gujarat Cricket Association, where it was held that the associations involved were not engaged in commercial activities but rather in promoting and developing cricket. The Court emphasized that the nature of the activities of the associations should be considered independently of the apex body's activities, and the associations were entitled to exemptions under Section 11.

6. Based on the precedent set in the case of the Gujarat Cricket Association, the Court concluded that the Tribunal had taken a reasonable view of the matter in the present case. Therefore, the Tax Appeal was dismissed, the substantial questions of law were answered in favor of the assessee, and against the Revenue.