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2018 (3) TMI 939 - AT - Income TaxExemption u/s 11 eligibility - cricket association - applicability of proviso to Section 2(15) - assessee association was not considered a charitable organization - Held that - As decided in Tamil Nadu Cricket Association 2013 (12) TMI 833 - MADRAS HIGH COURT after considering the proviso to Section 2(15) of the Act for assessment year 2010-11, held that the benefit of Section 11 of the Act cannot be denied. Hon ble High Court has considered the proviso to Section 2(15) of the Act taking into consideration the object of the institution which fits into the definition of charitable purpose defined under Section 2(15) and subsequent substitution of the Section itself with effect from 1st April, 2009. Although the decision of Hon ble Madras High Court is in respect of grant of registration u/s 12AA but the relevant observations reproduced above are very much relevant to the issue before us - Decided in favour of assessee.
Issues Involved:
1. Applicability of exemption under Section 11 of the Income-tax Act, 1961. 2. Relevance of proviso to Section 2(15) of the Income-tax Act, 1961. 3. Whether the activities of the assessee can be considered as charitable. 4. Impact of similar cases and precedents on the current case. Detailed Analysis: 1. Applicability of exemption under Section 11 of the Income-tax Act, 1961: The primary issue revolves around whether the assessee, a cricket association, is entitled to exemption under Section 11 of the Income-tax Act, 1961. The assessee claimed exemption under Section 11, asserting that its activities are charitable and aimed at the development of cricket. The Assessing Officer (AO) denied this exemption, arguing that the assessee's activities were commercial in nature and thus did not qualify for exemption under Section 11. 2. Relevance of proviso to Section 2(15) of the Income-tax Act, 1961: The AO contended that the assessee's activities fell under the proviso to Section 2(15) of the Act, which excludes entities involved in trade, commerce, or business from being considered as charitable. The AO highlighted that the assessee was engaged in activities like hosting international matches and earning substantial income from BCCI tournaments, ticket sales, and other sources, which indicated a profit motive. 3. Whether the activities of the assessee can be considered as charitable: The CIT(A) and the Tribunal examined whether the activities of the assessee could be classified as charitable. The CIT(A) relied on the decision of the ITAT, Chennai Bench in the case of Tamil Nadu Cricket Association, which held that conducting cricket matches and related activities did not amount to business or trade. The CIT(A) noted that the assessee's activities were similar to those of other cricket associations across India and were aimed at promoting cricket, which is considered an object of general public utility. 4. Impact of similar cases and precedents on the current case: The CIT(A) and the Tribunal also considered precedents from similar cases. The Tribunal referred to the decision of the Hon'ble Madras High Court in the case of Tamil Nadu Cricket Association, which emphasized that the volume of receipts should not be the sole factor in determining whether an activity is commercial. The Tribunal also noted that the Hon'ble Bombay High Court had previously upheld the exemption under Section 11 for the assessee for earlier assessment years. Conclusion: The Tribunal concluded that the assessee's activities were charitable and aimed at promoting cricket, which is an object of general public utility. The Tribunal held that the proviso to Section 2(15) was not applicable to the assessee's case, and the benefit of Section 11 could not be denied. The appeals of the Revenue were dismissed, and the order of the CIT(A) allowing the exemption under Section 11 was upheld.
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