2019 (9) TMI 624 - AT - Income Tax

Exemption u/s.11(1)(d) - Revenue contended that, CIT(A) deleted the additions on Infrastructure subsidy received from BCCI denying exemption u/s.11(1)(d) of the Income Tax Act, 1961 on corpus donation without any 'specific direction' for the purpose - whether CIT(A) has erred in deleting the disallowance of 'Bogus Donation' claimed on account of expenses relating to Tournament Trophy and Ranji Trophy without considering that the expenses could not be substantiated during the assessment proceedings . - HELD THAT - These issues are covered in favour of the assessee by the decision of the Ranchi Bench of the Tribunal in the case of M/s. Jharkhand State Cricket Association vs. DCIT(E), Ranchi 2019 (3) TMI 1585 - ITAT RANCHI as held that receipts from BCCI cannot be considered as income received from activities in the nature of trade, commerce or business. The pith and substance of the argument of the ld. D/R is that the nature of receipt in the hands of BCCI is business or commercial receipts on account of IPL Subvention, T.V. Rights etc. and where these receipts are shared with the state association on an 30 70 ratio basis, the nature of receipt does not change and it would be business receipts in the hands of the State Associations also. The allegation of revenue is that these receipts are couched in the form of subsidies. Disallowance u/ 69C - HELD THAT - Addition cannot be sustained as the amounts in question were recorded in the books of accounts and are part of the income and expenditure account and the source of the expenditure has been disclosed in the books of account. Assessing Officer made quantum disallowance exceeding more than what was debited to the income and expenditure account. AO has mixed up the disallowance due to non deduction of TDS. When application of income is considered u/s 11 of the Act, disallowance u/s 40(a)(ia) of the Act, cannot be made for the impugned Assessment Year. no infirmity in this order of the ld. CIT(A) as explanation (iii) to Section 11(1) of the Act, was introduced by the Finance Act, 2018 only w.e.f. 01/04/2019. Thus, we uphold the order of the ld. CIT(A) as stated above - Decided against revenue D elay in filing Form No. 10 for setting apart funds u/s 11(2) - HELD THAT - We find that this is not a case were a fresh claim has been made by the assessee. This is a case where there is a delay in filing intimation in Form No. 10, for the purpose of accumulation of funds. The Hon ble Supreme Court in the case of CIT vs. Nagpur Hotel Owners Association 2000 (12) TMI 99 - SUPREME COURT had held that Form No. 10 can be filed by the AO before the completion of assessment. - Decided against revenue

Summary

Issues Involved:
1. Deletion of additions on Infrastructure subsidy received from BCCI.
2. Deletion of disallowance of 'Bogus Donation' claimed on account of expenses.
3. Allowance of expenditure without establishing genuineness.
4. Allowance of administrative and establishment expenses as application of income.
5. Allowance of setting apart of funds u/s 11(2) despite delay in filing Form 10.
6. Allowance of enhanced claim by furnishing Form 10 before completion of assessment.

Detailed Analysis:

1. Deletion of Additions on Infrastructure Subsidy Received from BCCI:

The revenue challenged the deletion of ?54,84,00,000/- received as infrastructure subsidy from BCCI, arguing it should not be exempt under Section 11(1)(d) of the Income Tax Act, 1961, due to lack of 'specific direction'. The CIT(A) followed his own decision from AY 2012-13, where it was held that the amount was received with a specific direction for constructing a cricket stadium, thus qualifying for exemption. The Tribunal upheld this view, citing similar cases where such subsidies were considered corpus donations and not taxable.

2. Deletion of Disallowance of 'Bogus Donation' Claimed on Account of Expenses:

The revenue claimed that expenses related to Tournament & Trophy and Ranji Trophy were not substantiated during assessment proceedings. However, the Tribunal found no mention of 'bogus donations' in the assessment order and dismissed this ground as misconceived.

3. Allowance of Expenditure Without Establishing Genuineness:

The CIT(A) held that the disallowance under Section 69C was unsustainable as the expenses were recorded in the books of accounts. The Tribunal agreed, noting that the Assessing Officer had incorrectly mixed up disallowance due to non-deduction of TDS and that disallowance under Section 40(a)(ia) could not be made for the relevant assessment year as per the Finance Act, 2018.

4. Allowance of Administrative and Establishment Expenses as Application of Income:

The CIT(A) allowed these expenses, stating they were necessary and essential for the assessee's operations. The Tribunal upheld this view, referencing the decision in the case of Director of Income-tax (Exemption) v. Indraprastha Cancer Society, which allowed such expenses as application of income.

5. Allowance of Setting Apart of Funds u/s 11(2) Despite Delay in Filing Form 10:

The revenue argued that the delay in filing Form 10 should disqualify the setting apart of funds. However, the CIT(A) and the Tribunal relied on the Supreme Court's decision in CIT vs. Nagpur Hotel Owners’ Association, which allowed Form 10 to be filed before the completion of assessment. The Tribunal found no infirmity in this decision.

6. Allowance of Enhanced Claim by Furnishing Form 10 Before Completion of Assessment:

The revenue cited the Supreme Court's judgment in Goetze (India) Ltd vs. CIT, arguing no fresh claim could be made during assessment proceedings. The Tribunal clarified that this case involved a delay in filing Form 10, not a fresh claim, and upheld the CIT(A)'s decision to allow the enhanced claim.

Conclusion:

The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on all grounds, including the treatment of infrastructure subsidy as corpus donation, allowance of administrative expenses, and acceptance of delayed Form 10 filings.