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TMI Blog2017 (4) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also brought to our notice that in the international one day match between south Africa and India, the association suffered deficits of ₹ 1.6 crores. RCA has also incurred in various other expenses with a view to promote the game of Cricket viz. on coaching camps of ₹ 20,40,360/-, state cricket activities of ₹ 1,08,60,566/-, Ground expense of ₹ 33,97,435/- and international tournament expenses of ₹ 2,09,16,911/-. These facts go to demonstrate that the assessee has been predominantly engaged into the activity of promoting cricket match. Case of Institute of Chartered Accountant vs Director General of Income Tax [2013 (7) TMI 205 - DELHI HIGH COURT] held that even though fee are charged by the petitioner Institute for providing coaching classes and holding interviews with respect of campus placement, the said activity cannot be stated to be rendering of service in relation to any trade, commerce or business as such activities are undertaken by the petitioner institute in furtherance of its main object which has held earlier are not trade, commerce or business. In the present case also the main activity of the assessee is conducting of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditions and disallowances made in the order u/s 143(3) dated 29/12/2010 are bad in law and on acts of the case, or want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. The ld. CIT(A) erred in law as well as on the facts of the case in confirming the denial of exemption u/s 11 of the Act by the AO. Such denial and confirmation being totally contrary to the provisions of law and facts, the exemption so withdrawn be restored back. 3. The Ld. AO erred in law as well as on the acts of the case in recording findings of fact which are contrary perverse to the record by wrongly holding that there was sustentative changes made in the main objects and also erred in wrongly holding that it was mandatory on the part o the appellant to have intimated the same to the registering authority and further erred thereby, in withdrawing the exemption u/s 11 of the Act. Such findings and conclusion deserves to be quashed and the exemption so withdrawn be restored back. 4. The ld. CIT(A) further erred in law as well as on the facts o the case in confirming the taxation of the appellant in the status o AOP without allowing exemptions u/s11(1) and 11(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied exemption claimed under section 11 for want of fresh registration , thereby the assessing officer computed net income of ₹ 4,07,58,505/-. The assessing Officer treated the gross receipts as income from business. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submission partly allowed the appeal. However, he sustained the income computed by the Assessing Officer at ₹ 4,07,58,505/-. 2. Aggrieved by this the assessee is in further appeal before this Tribunal. At the time, the ld. Counsel for the assessee stated that he does not wish to press ground no. 1. The ld. CIT(DR) has no objection. The ground no. 1 of the assessee s appeal is dismissed as not pressed. 3. Ground nos. 2 to 8 are against denial of exemptions and computation of income as business income since the ground nos. 2 to 8 inter-related are taken up together for the disposal. The ld. Counsel for the assessee reiterated the submissions as made in the written submissions. The submissions of the ld. Counsel for the assessee are reproduced as under: Brief facts of the case are that assessee is an association registered under Rajasthan Sports (Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decide matter afresh. Ld. CIT, vide order 28.03.2013 again withdrew registration u/s 12A primarily relying upon observations of AO. Assessee filed appeal against order of CIT, which was decided by Hon ble ITAT vide order dated 09.06.2016. Vide said order, Hon ble ITAT at page 16 para 5, decided the appeal in favour of assessee by observing as under: We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that the assessee was granted registration u/s 12A on 25.11.1988, which has been withdrawn twice by the Ld. CIT. The issue has been set aside by the Coordinate Bench to reconsider the withdrawn of registration, which was also challenged by the revenue before the Hon ble Rajasthan High Court, who has allowed the assessee s prayer and directed to consider the application afresh without influencing any of the observation made by the appellate authority. The assessee has been provided reasonable opportunity of being heard by the Ld. CIT. The assessee trust made it clear that this amendment in object of memorandum in 2005 was due to change made in the Rajasthan Sports (registration, Recognition and Regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 13. Assessee s Ground of Appeal No. 1: Not pressed. Assessee s ground of Appeal No. 2 to 5 7: In grounds of appeal no.2 to 5, assessee has challenged the action of Ld. CIT(A) in confirming the action of Ld. AO in denying exemption u/s 11 and assessing the assessee in the status of AOP by applying maximum marginal rate whereas in ground of appeal no.7 assessee has challenged the action of AO in denying exemption on the allegation that activities of assessee are being run on commercial basis. All the grounds being related are being dealt herewith together for the sake of convenience: In this regard, at the outset it is submitted that all the grounds of appeal relate to denial of exemption u/s 11. Further, for claiming exemption u/s 11, pre conditions are that: (i) assessee holds a valid registration u/s 12A (ii) income is applied in accordance with the provisions of section11 and (iii) there is no violation in terms with section 13. In the instant case, so far as registration u/s 12A is concerned, the same is restored by Hon ble ITAT, thus assessee can claim exemption u/s 11 subject to the fulfillment of conditions prescribed u/s 11 r.w.s.13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese are: (i) any part of income from property held under trust for private religious purposes , which does not result into benefit of the public. (ii) any income of trust or institution created or established for the benefit of any particular religious community or caste. (iii) if any part of income directly/ indirectly benefits author/ founder/ trustee/ manager or such other person specified u/s 13(3) (iv) funds remain invested in modes other than 11(5) (v) Income of charitable institution engaged in the advancement of any other object of general public utility if it involves carrying on of any trade, commerce or business activity. Apart from above, the most relevant provision is section 2(15), wherein the word charitable purpose is defined as to include: (a) relief of the poor, (b) education, (c) medical relief, and (d) advancement of any other object of general public utility. However, with effect from 01.04.2009 (i.e., from assessment year 2009-10 onwards), section 2(15) has been amended to the extent that, the advancement of any other object of general public utility shall not qualify as a charitable purpose if the same involves the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , thus withdrawal of exemption on the grounds of commerciality for the year under consideration is bad in law. It is thus prayed that exemption claimed by assessee may please be allowed. However, without prejudice to this, our submission on merits is as under: Ld. AO by observing huge surplus concluded that activities of the assessee were profit oriented and assessee was carrying its activities on commercial basis. It is noteworthy here that the term any other activity in the nature of trade, commerce or business is not defined and thus the same has to be understood in common parlance, and accordingly expression trade, commerce or business has to be understood as a regular and systematic activity with the primary motive to earn profit, whereas the Association never acted as a professional advertiser, TV producer etc. No matches of any game other than cricket or no other events are organized to attract audience rather only cricket matches are being organized whether the same result into profit or loss. Further, all the cricket matches do not attract audience, e.g. matches between India v/s South Africa and India v/s New-Zealand could not even reach upto 70-80% of the collection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. It is pertinent to note here that subsidies are a form of financial aid granted for promoting a specific cause, which is ultimately for the benefit of overall or a section of public but never for the benefit of an individual organization. The subsidy received was utilized in the promotion and development of sport of cricket in state at each level, i.e. from mufasils areas to big cities like Jaipur. Also, renting out premises by RCA has been viewed adversely for which it is respectfully submitted that RCA has been formed with a sole objective of promoting cricket and with the view to achieve the desired objective the resting of premises as done is wholly and exclusively for the purpose of cricket and no other activity of whatsoever nature has been carried out and neither it is engaged in the systematic activity as hotelier, thus the said act of association is fully in the direction of achieving its basic object of promoting Cricket and cannot be viewed adversely. It is also to be noted that RCA is run by a Committee, which consists of members from different walks of the Society and such members are not professional managers or businessmen. Agreement with the players is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee was merely incidental to the main object, i.e. promotion of sport of cricket and in no way by running business of cricket as has been alleged by AO. At this juncture, it would be relevant to resort to the decision of Delhi High Court in the case of The Institue Of Chartered ... vs The Director General Of Income Tax ... on 4 July, 2013 defining the term business in relation to charitable institutions, post the amendment carried out in section 2(15) relevant extracts of which are as under: 57. After discussing various decisions with regard to the scope of the words trade, commerce business, this court in The Institute of Chartered Accountant of India v. Director General of Income- tax (Exemption) (supra) held that while construing the term business for the purpose of Section 2(15) of the Act the object and purpose of the Section must be kept in mind and a broad and extended definition of business would not be applicable for the purpose of interpreting and applying the first proviso to Section 2(15) of the Act. The relevant extract of the said judgment is as under:- Section 2(15) defines the term charitable purpose . Therefore, while construing the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered as business, there must be a course of dealings either actually continued or contemplated to be continued with the motive to earn profit and not for sport or pleasure. 67. The expressions trade , commerce and business as occurring in the first proviso to section (15) of the Act must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organised manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The purport of the first proviso to section 2(15) of the Act is not to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee. The object of introducing the first proviso is to exclude organizations which are carrying on regular business from the scope of charitable purpose . The purpose of introducing the proviso to Section 2(15) of the Act can be understood from the Budget Speech of the Finance Minister while introducing the Finance Bill 2008. The relevant extract to the Speech is as under:- ...... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in reference has been made to Circular No.11 of 2008 of CBDT dated 19.12.2008, held that question of rejection of registration under section 12AA(3) would arise only in those cases where an entity uses this status of charitable with a charitable object of general public utility as a mask or a device to hide the true purpose and that object is nothing other than trade, commerce or business. Thus revenue has to substantiate absence of genuineness. Mere conducting matches or earning income from incidental activities would not entail cancellation of registration. Hon ble Delhi Bench of ITAT in the case of Delhi District Cricket Association vs DIT(E) has observed as under: (relevant extracts) 10.7. Even otherwise the main and predominant object and activity of the assessee is to promote, regulate and control the game of cricket in and around Delhi. The undisputed fact is that over the years this activity has been recognized by the Income Tax Dept. as a charitable activity and registration u/s 12A was granted to the assessee. A number of assessment orders u/s 143(3) were passed, wherein the assessee was held as eligible for exemption u/s 11/12 of the Act. Hence this fact of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of the assessee is that it should be appreciated that, for any organization to run and survive it is essential that it should augment some funds to meet the cost/expenditure, as required to be incurred, to carry out the activities meant to achieve its object. We agree with the submissions of the assessee. 11.2. The assessee has to perform many activities and for this purpose it has to enter into transactions with various types of persons. These persons can be commercial or non-commercial organizations, professionals, vendors of goods, vendor of services and so forth and so on. Merely entering into such agreement does not tantamount to the assessee being a business entity. The question is whether the activity done by assessee, would tantamount to business activity or not. This has to be viewed, from view point of the assessee. The other person with whom the assessee has an agreement, may have its own object and reason for doing transaction and accordingly, the nature of transaction and the resultant activity would be determined in the other persons hands. However, that by itself, should not have any bearing at all on the nature of the transaction, as well as resultant activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his eatery. The basic fact is that this canteen has direct and inextricable link with one of the core activities of DDCA i.e. maintaining such a huge cricket stadium and promoting the game of cricket. The Revenue, in this case is trying to project that the assessee as a liquor dealer. This is not correct. Internationally, when facilities are provided to players, liquor is part of the menu. This is just incidental to providing food and beverages. When the Ld.DIT(E) does not find anything wrong in the assessee supplying food and beverages in the canteen to the members, we cannot find fault with liquor being part of the menu card and being served as per international customs and requirements. 11.5. Hence to meet global standards these facilities are required and these are not independent of the activity of providing food and refreshments ITA No. 3095/Del/2012 Delhi District Cricket Association, New Delhi to Members and Associated Persons. Running of a canteen is an incidental and necessary activity as is in every organization. This cannot be termed as business activity. It is part and parcel of the charitable activity and the receipt in question cannot be termed as exempt from activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, during the year, partake the character of business income, is ill founded. In this regard we have submitted in detail that this apprehension is misplaced on account of various submissions as per details given below. 1. The entire receipts have been received for the promotion of game of cricket. 2. The assessee is not free to use it as per its convenience for any purpose other than for promotion of cricket. Thus, the amounts received in this manner cannot be characterized as business receipts. The amount has been received as the voluntary contribution on discretion of the contributor (for e.g. BCCI). These have been received for raising the funds for meeting its costs and expenses. 4. In none of the cases there is any quid pro quo. The ultimate beneficiary is either the cricketer or the game of the cricket. 5. The assessee is not charging any fees or revenue from the cricketer who is ultimate beneficiary. Thus, there is no quid pro quo relationship with the cricketer. The assessee is promoting cricket on charitable basis as far as real beneficiary is concerned. 6. Whenever the revenue is earned these are not earned on commercial lines and these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as part of the infrastructure, for conducting the activities of the assessee. 11.12. On consideration of all the facts and circumstances of the case and when viewed in totality, we have to come to a conclusion that the assessee is not carrying of the activities with any profit motive or with any self interest. The contribution received by way of sponsorship, advertisement, sale of tickets etc. and user charges on the facts of this case, do not convert the charitable activity into trade, commerce or business activity 11.13. In view of the above discussion and in view of the binding judgements cited above, we have to necessarily quash the impugned order passed by the DIT(E) u/s 12AA(3) r.w.s. 12 of the Act, as it is bad in law. DDIT vs. All India Football Federation [2015] 62 taxmann.com 362 (Delhi-Trib.). S. 2(15) Activity of Society to promote football The main objective of the assessee was to promote the game of football in India which certainly amounts to charitable purpose, being covered under the limb the advancement of any other object of general public utility as contained in section 2(15). The receipt of fees from the sponsorship rights and telecasting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal, assessee has challenged the action of ld. CIT(A) in confirming disallowance of expenses of ₹ 6,15,32,225/- incurred on acquisition of capital asset, being in the nature of application of income u/s 11. In this regard, it is submitted that it is a well settled law that where income is applied for purchase of a capital asset, it would still be application of income to the charitable purpose. If the assessee invests in construction of a building, which is a permissible investment under section 11(5) of the Income-tax Act, so as to augment its resources for fulfilling the objectives of the institution, there is no doubt that such capital outlay would qualify as income applied for charitable purposes. Further, no doubt has been raised by AO that investment is not applied for the purposes of business. Thus, in view of our above submission regarding eligibility of exemption u/s 11, this ground is completely consequential in nature. It is thus prayed that sum of ₹ 6,15,32,225/-be allowed as Application of income in consonance of provisions of section 11. Ground of Appeal No. 8 9: In ground of appeal no.8 , assessee has challenged the action of Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the objectives of the institution also does not remain as Charitable and accordingly Withdrawal of registration, in our considered view, was not justified. 10. On similar facts, in the case of Gujarat Cricket Association, (supra), the Tribunal by passing a detailed order has held that registration cancelled by DIT(E) on the basisn of amended provisions of section 2(15) of the Act was not justified as amended provisions does not fall within the permissible limit of section 12AA(3) of the Act and accordingly the order of DIT(E) was considered bad in law and the appeal of the Institution was allowed. In the case of Cane Development Council(supra) similar view has been epressed does not fall under the provisions of section 2(15) and therefore, the assessee was entitled to registration u/s 12AA of the Act. In view of the discussion of ours and in view of the decision of Tribunal, we are of the view that ld. CIT was not correct in withdrawing registration already granted by the order of the Tribunal to the Institution. If in any year, the gross receipts of the institution exceeds ₹ 10 lakhs or ₹ 25 lakhs, as the case may be, then in that year, the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponsorship and media rights with BCCI as well as match revenue for conducting various cricket matches. It may be seen that in A.Y. 2008-09(Table at Pg 14 of assessment order), the assessee has earned surplus of ₹ 5.88 crores out o receipts in the shape of advertisement, canteen Tickets of ₹ 7.81 crores, which amounts to supernormal profit. 9. Therefore, income of assessee from subsidy is nothing but a percentage of fee gathered from public for matches and percentage of advertisement receipts while conducting matches. 10. Once provisos to 2(15) are attracted, assessee loses benefit of exemption u/s 11 as per s. 13(8) and entire income becomes taxable. Kindly see PB 16 of assessee s paper book of A.Y. 2008-09 where match receipts are shown. SNo. 11 12 show sale of tickets for as high as ₹ 30,000 ₹ 1,00,000/-. According to Wikipedia, Trade/Commerce involves transfer of goods and/ or services from one person or entity to another, often in exchange for money. The nature of receipts in the hands of the assessee certainly would all under Trade Commerce as understood in common parlance. Once the receipts are commercial in nature and such recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15) of the Income-Tax Act, 1961 Charitable purpose [ Registration of] Assessment year 2009-10 Main activity of assesee-trust was to organize and host international film festivals and to build multiplexes, cinema halls, media centers, screening rooms, auditoriums, comprehensive infrastructure facilities ,etc., for holding such events All services provided by it were for consideration Whether amounts received by assessee by way of sponsorship, administrative charges, listing of hotels on their website, conducting film appreciation course clearing represented receipts from activity of rendering services in relation to trade, commerce or business and after insertion of proviso in section 2(15), assessee could not be regarded to have been established for charitable purpose- Held, yes Since the receipts of the assessee are similar in nature, these would fall under the category of commercial receipts. The case of the assesee is distinguishable from the case of ICAI cited by the assessee since receipts of ICAI are basically from members ( and not public as in case of assessee) and do not exploit any commercial/advertisement /TV rights as in the case of assessee. One test of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered, the rival contentions, perused the material available records. The only issue to be examined under the facts of the present case is whether the Assessing Officer was justified in declining the claim of the deduction u/s 11 of the Act. The Assessing Officer however observed that a perusal of the financial figures reveals that the applicant has generally accumulated surplus u/s 11(2) of the Act in last 4 or 5 years, which indicate that the assessee is earning huge surplus from the activities carried out by it. The Assessing Officer further observed that the assessee s investment is increasing, this shows that the assessee is converting the surplus into investment which in turn has strengthened its capacity to earn more. Therefore, he concluded that the assessee exist for purpose of earning profit and the applicant is not promoting sports on non-profit basis. The assessing Officer further observed that that the assessee had built a premises in the name of Rajasthan Cricket Academy, which has been given on rent to a service provider on a monthly rent of ₹ 75,000/-. The agreement executed with the service provider states that booking for 28 rooms will be made through se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of use or application, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year:] The Revenue has heavily relied upon the aforementioned provision. It is stated that the activity of the assessee trust falls within the category of general public utility. Therefore, the proviso to section 2(15) would come into play. It is submitted that the looking to the quantum volume and nature of receipt goes to demonstrate that the assessee is engaged into commercial activity and for the purposes of making profit. Per contra it is contended that the assessee is an association registered under Rajasthan Sports (Registration, Recognition and Regulation of Association) Act, 2005 and formed with objective of promoting of sport of cricket within the state of Rajasthan. RCA, under a memorandum of understanding with Rajasthan State Council has exclusive use and possession of Swai Mansingh Stadium for the purpose of organizing national and international matches. The main object of the association is to control, supervise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asthan. It is submitted that the Assessing Officer observed that the association was involving into commercial activities and the society had accumulated of surplus increase in the investment, control over the players by observing this however, he failed to appreciate that normally the surplus was the result of subsidies only and not from the conducting of tournament on commercial basis. The subsidies are a form of financial aid granted for promoting a specific cause, which is ultimately for the benefit of overall section of public but never or the benefit of an individual organization. It is contended that the subsidy received by the RCA is utilized in the promotion and development of sports of cricket in state at each level, i.e. from mufasils areas to big cities like Jaipur. It is also contended that renting out by premise by RCA has been viewed adversely in the context it was submitted that RCA is formed with a sole objective of promoting cricket and with the view to achieve the desired objective the renting of premises as done is wholly and exclusively for the purpose of cricket and no other activity of whatsoever nature has been carried out neither it is engaged in the system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant of registration was not based on material indicating object of general public utility. The assessee is a member of Board of Control of Cricket in India (BCCI), which in turn is a member of ICC (International Cricket Council). BCCI allots test matches with visiting foreign team and one day international matches to various member cricket association which organize the matches in their stadia. The franchisees conduct matches in the Stadia belonging to the State Cricket Association. The State Association is entitled to all in-stadia sponsorship advertisement and beverage revenue and it incurs expenses for the conduct o the matches. BCCI earns revenue by way of sponsorship and media right as well as franchisee revenue for IPL and it distributes 70% of the revenue to the member cricket association. Thus the assessee is also the recipient of the revenue. Thus, for invoking Section 12AA read with section 2(15) of the Act, Revenue has to show that the activities are not fitting with the objects of the Association and that the dominant activities are in the nature of trade, commerce and business. We do not think that by the volume of receipt one can draw the inference that the activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person in course of his activity. The characteristic of volume, frequency to continuity and regularity of the activity accompanied by profit motive. On the part of the assessee have been held to indicate an intention to continue the activity as business. In this back-drop of allegation we need to examine whether the allegation of the Assessing Officer is in consonance with the statutory provision governing the issue and judicial pronouncement made in this respect. The revenue has not doubted that the assessee has conducted matches of the Cricket. The only suspicion with regard to the activity is that during the one-day international played between India and Pakistan, there was huge surplus and the assessee had rented out rooms to belonging to the society at a very higher rate. Therefore, it can be inferred that the Assessing Officer is swayed by the volume of receipts. These identical facts, were also before the Hon ble Madras High Court in the case of Tamil Nadu Cricket V. The Director of Income Tax(E)(supra) wherein the Hon ble Court opined that by the volume of receipt inference that activity is commercial cannot be drawn. It was observed by the Hon ble High Court, that the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ape of advertisement, canteen, and tickets of ₹ 7.81 crores which amounts to super normally profit. The other hand, contention of the assessee is that the argument of the revenue is misplaced as the authorities below failed to appreciate the facts that expression trade, commerce or business is to be understood as a regular and systematic activity with the prime motive to earn profit. Whereas the association never acted as a professional advertiser, TV producer etc. No matches or any game other than Cricket or no other events are organized to attract audience rather only cricket matches are being organized whether the same result into profit or loss. It is contented that all Cricket Matches do not attract audience but due to historical background in the case of match between India and Pakistan audience for such match remains abnormally high. Therefore, under these peculiarity of fact it making inference that the assessee is engaged into commercial activities is not justified. 7. We have given our thoughtful consideration to the rival submissions of the parties. If volume of receipts and constant increase into surplus is considered, this necessity gives impression of commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess . The objection of the Assessing Officer is that, that the other activities have predominated the main activity. This reasoning of the assessing officer is based upon the receipts of the assessee from the other activity. But it is undisputed fact that these all activities are dependent upon conducting of the match. The allegation is that the matches are conducted totally on commercial lines. For this reasoning the assessing officer is again considered the quantum of amounts received from BCCI as TV subsidies and subsidy from Cricket Tournament from the records. It is the contention of the assessee that the main source of receipt was the match conducted between India vs. Pakistan. This fact is not refuted by the revenue by placing any contrary material. The Coordinate Bench of this Tribunal in the case of District Cricket Association vs. DIT, wherein the Co- ordinate Bench has decided the issue in para 10.9 of the order as under: Thus respectfully following the decision of Hon ble Madras High Court in the case of Tamil Nadu Cricket Association (supra), we have to hold that the amounts received by the assessee from a) ground booking charge, b) health club charges, c) income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce s case (supra), while considering the expression object of general public utility as used in Section 4 (3) of the Income Tax Act, 1922, the Hon ble Supreme Court observed: The Expression object of general public utility in s.4(3) would prima facie include all objects which promote the welfare of the general public. It cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served thereby if it includes the taking of steps to urge or oppose legislation affecting trade, commerce or manufacture. If the primary purpose be advancement o objects of general public utility, if would remain charitable even I an incidental entry into the political domain for achieving that purpose e.g. promotion of or opposition to legislation concerning that purpose, I contemplated. (emphasis added) 20. In sole Trustee, Lok Shikshana Trust vs. CIT, (1975) 101 ITR, 254, the Hon ble Supreme Court observed: If the profit must necessarily feed a charitable purpose under the terms of the trust, the mere facts that the activities o the trust yield profit will not alter the charitable character of the trust. The restrictive condition that purpose sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any object of benefit to the public or a section of the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose ( CIT v. Ahmedabad Rana Caste Association [(183) 140 ITR 1 (SC)]. The said expression would prima facie include all objects which promote the welfare of the general public. If cannot be said that a purpose would cease to be charitable purpose. When an object is to promote or protect the interest of a particular trade or industry that object becomes an object of public utility, but not so, if it seeks to promote the interest of those who conduct the said trade or industry ( CIT v. Andhra Chamber of Commerce[1965] 55 ITR 722 (SC)]. If the primary or predominant object of any institution is charitable, any other object which might not be charitable but which is ancillary or incidental to the dominant purpose, would not prevent the institution from being a valid charity ( Addl. CIT v. Surat Art silk Cloth manufacturers Association [1980] 121 ITR 1 (SC). The present case in our view is squarely covered by the judgment of this court in the case of CIT v. Andhra Pradesh State Road Transport Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available under section 11. The intention of the trustees and the manner in which the activities of the charitable trust institution are undertaking are highly relevant to decided the issue of applicability of proviso to section 2 (15). 26. Coming to the decision of Jammu Kashmir High Court in Jammu Development Authority s case (supra), relied upon by learned counsel for the Revenue, reveal that the appeal preferred by the Jammu Development Authority was dismissed by the court observing that there are findings of facts that the assessee-appellant has not been acting to advance any of the object concerning general public utility. Further while referring to first proviso to Section 2(15), the court has observed that we find that no substantial question of law much less a substantial question of law would emerge from the impugned order of Income Tax Appellate Tribunal warranting admission of the appeal. A bare perusal of the order reveal that the catena of decisions of the Hon ble Supreme Court referred to hereinabove, interpreting the effect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red Accountant vs Director General of Income Tax, wherein the Hon ble High Court held that even though fee are charged by the petitioner Institute for providing coaching classes and holding interviews with respect of campus placement, the said activity cannot be stated to be rendering of service in relation to any trade, commerce or business as such activities are undertaken by the petitioner institute in furtherance of its main object which has held earlier are not trade, commerce or business. In the present case also the main activity of the assessee is conducting of the cricket match which falls under the category of general public utility. This fact is not disputed by the Revenue. All these activities an ancillary to the main activity. Therefore, we are of the considered view that the Assessing Officer was not justified in declining the exemption. Ld. CIT (DR) vehemently urge that first proviso to clause (15), Section 2 of the Act, therefore, as per section 13(8) of the Act nothing contained in section 11 or Section 12 shall operate, so as to exclude of income of total income of previous year of the present. As we have held that in the light of the various judicial pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve challenged this decision, by filing separate appeals. 12.1 First ground of Revenue s appeal is against deletion of depreciation at the time of hearing the ld. Departmental Representatives fairly conceded that this issue is covered against the Revenue by the Judgment of Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax vs. Krishi Upaz Mandi Samiti 388 ITR 605(Raj) and also that this issue is decided against the revenue by the judgment of Hon ble Supreme Court in the judgment of R.K. synthetic vs. Union of India. Therefore, we do not see any reason to interfere into the order of the ld. CIT(A) same is hereby confirmed. Ground no. 1 of the Revenue s appeal is dismissed. 12.2 Ground no. 2 in the revenue s appeal in the deletion of addition made on account of non-deduction of deduction of tax at source. The ld. Departmental Representatives supported the orders of the Assessing Officer. 12.3 On the contrary, the ld. Counsel for the assessee supported the orders of the ld. CIT(A). 12.4 We have heard the rival contentions, we find that ld. CIT(A) has given a finding on facts by observing as under: I have considered facts of the case. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming the action of the AO while invoking proviso to Sec. 2(15) of the Act which being contrary to the provisions of the law and facts, it has to be held that the said proviso to sec. 2(15) of the Act is not applicable to the facts and circumstances of the present case hence, it may kindly be held so. 4.4 ₹ 1,50,00,000/-: The Ld. CIT(A) erred in law as well as on the facts of the case in confirming the addition of the donation to corpus fund of ₹ 1,50,00,000/-. The addition so made, being completely contrary to the provisions of law and facts on record and hence, the same be deleted in full. 4.5 The ld. CIT(A) also erred in law as well as on the facts of the case in confirming the action of the AO in charging the tax at the maximum marginal rate (MMR) which action is also being completely contrary to the provisions of law and facts on record and hence, kindly be quashed. 5. ₹ 50,00,000/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of ₹ 50,00,000/- relying on the allegation of the non-production/absence of the books of account. The disallowance so made, being completely contrary to the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business/occupation of selling or supplying goods. This being the position, it cannot be said that the trust carries on the business of selling and supplying goods so as to fall within the meaning of dealer under section 2(11) of the Act. No doubts, the definition of business given in section 2(5A) of the Act even without profit motive is wide enough to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and any transaction in connection with or incidental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. If the main activity is not business, then any transaction incidental or ancillary would not normally amount to business unless an independent intention to carry on business in the incidental or ancillary activity is established. In such cases, the onus of proof of an independent intention to carry on business connected with or incidental or ancillary sales will rest on the department. Thus, if the main activity of a person is not trade, commerce, etc., ordinarily incidental or ancillary activity may not come within the meaning of business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd commerce, by virue of first proviso to Section 2(15), their activity/object cannot be recognized as for charitable purpose so as to make them entitled for registration u/s 12A of the Act of 1961. 17. Section 2(15) of the Act of 1961 which defines charitable purposes reads as under: (15) charitable purpose includes relief of the poor, education, medical relief, preservation of environment ( including watersheds, forests and wildlife) and preservation of monuments o places or objects of artistic or historic interest, and the advancement of any other object of general public utility; Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on o any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; Provided further that the first proviso shall not apply I the aggregate value of the receipts from the activities referred to therein is twenty-five lakh ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot involve carrying on of any activity for profit and not its advancement or attainment. The court observed that what is inhibited by these last ten words is the linking of activity or profit with the object of general public utility and not its linking with the accomplishment or carrying out other object. Thus, so long as purpose does not involve carrying on or any activity for profit, the requirement of definition would be met and it is immaterial how the money s for achieving or implementing such purpose are found whether by carrying on an activity for profit or not. 22. In Andhra Pradesh Road Transport Corporation s case (supra), the Hon ble Supreme Court while relying upon the earlier decisions in the matter of additional CIT vs. Surat Art Silk cloth Manufactures Association , (19800 121 ITR 1 and CIT Vs. Bar Council of Maharashtra , (1981) 130 ITR 28 (SC), held that if predominant object is to carry out a charitable purpose and not earn profit, the purpose would not lose its charitable character merely because some profit arises from the activity. 23. In Gujarat Maritime Board s case (supra), the Hon be Supreme Court after due consideration of various earlier decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstance , in our view the judgment of this court in Andhra Pradesh State Road Transport Corporation [1986] 159 ITR 1 squarely applies to the facts of the present case . (emphasis added) 24. In Commissioner of Income Tax v. Krishi Upaj mandi Samiti, jaisalmer , (2011) 331 ITR 135 (Raj.), a Bench of this court while considering the entitlement of Krishi Upaj Mandi Samiti, a statutory body, constituted and established under the Rajasthan Agricultural Produce Market Act, 1961, observed that may be the income received by the Samiti by way of cess or mandi fees is not shown to be spent wholly for the purpose of relief of the poor, education, or medical relief, but under the scheme of the act, being the Rajasthan Agricultural Produce Markets Act, 1961, the entire amount received by the samiti is required to be spent for the purposes mentioned therein, which obviously include advancement of any other object of general public utility . 25. In Lukhnow Development Authority s case (supra), while examining the question regarding applicability o proviso to Section 2(15), Allahabad High Court observed: 29. For the applicability of proviso to Section 2(15), the activities of the tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessing Officer is swayed by the figures and volume of receipts. Admittedly, such receipts are intermittent and not regular and also is dependent on the conduct of cricket match. It is not other way round that the cricket matches are dependent upon such activities. The undisputed facts are that the assessee is registered under the Rajasthan Sports (registration, recognition and regulation) Act 2005 and formed with the objective of promoting the sports of cricket within the state of Rajasthan so main objective or activity of the assessee is promotion of the cricket. The association is organizing tournament like Ranji Trophy, Irani Trophy, Dilip Trophy, Maharan Bhagwat Singh Trophy, Salim Durrani Trophy etc. the Assessing Officer has not doubted about these activities of the association. It is also brought to our notice that in the international one day match between south Africa and India, the association suffered deficits of ₹ 1.6 crores. It is also brought to our notice that the RCA has also incurred in various other expenses with a view to promote the game of Cricket viz. on coaching camps of ₹ 20,40,360/-, state cricket activities of ₹ 1,08,60,566/-, Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled. Therefore, all types of voluntary contribution were treated as income under section 2(24). It is contended that once the registration is restored the authorities below ought to have allowed the claim. 15.4 On the contrary, the ld. Departmental Representatives supported the orders of the authorities below. 15.5 We have heard the rival contentions, perused the material available on records and gone through the order of the authorities below. We find that the Assessing Officer made addition to income on the basis that assessee is no longer eligible for benefit u/s 11 12 of the Act. Since, the registration has been restored we are of the view that this issue requires fresh consideration by the Assessing Officer. Therefore, the issue is restored to the file of AO for decision afresh. 15.6 Ground no. 5 is against confirmation of disallowance of ₹ 50 lakhs. Ld. Counsel for the assessee reiterated the submissions as made in the written brief and submitted that the addition was made by AO are bitterly without pointing out any specific expense to be claim excessively it was submitted before Assessing Officer with books on accounts of the assessee were duly audited b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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