9911796707
TMI Blog2017 (7) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, submitted that the assessee-society was established for promoting sports in the State of Tamil Nadu and Pondicherry. The assessee-society was affiliated to Board of Control for Cricket in India. The assessee derives income from subscription, rent for hiring cricket ground, sponsorship, fee for providing service to IPL, income from advertisement, subsidy / subvention from BCCI, sale of tickets for conducting matches, restaurant and catering income, etc. The Ld. D.R. further submitted that the assessee-society was registered under Section 12AA of the Act. The registration continued during the year under consideration also. The Assessing Officer disallowed the claim of the assessee mainly on the ground that activity of the assessee is commercial in nature. This Tribunal, according to the Ld. D.R., examined the activities of the assessee on identical set of facts for assessment years 2008-09 to 2010-11 and found that the assessee is eligible for exemption. 4. We have heard Shri V. Ravichandran, the Ld. representative for the assessee also. The Assessing Officer disallowed the claim of the assessee under Section 11 of the Act on the ground that the activity of the assessee is comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or business, the same shall not be treated as charitable purpose. The question arises for consideration is whether the assessee involves itself in any activity in the nature of trade, commerce or business or its activity would amount to rendering any service in relation to trade, commerce or business. We have carefully gone through the object of the assessee-society, a copy of which is available at pages 62 to 65 of the paper-book. For the purpose of convenience, we are reproducing the object:- (a) To take over on registration under the Societies Registration Act XXI of 1860 and assume the affairs and activities of the Madras Cricket Association, as subsequently appellated as Tamil Nadu Cricket Association and continue and take over the dues to and assets, liabilities, commitments and undertakings of the said Madras Cricket Association. (b) To maintain a general control of the game of cricket in the State and the Union Territory of Pondicherry and give Its decision on all matters concerning the same either when referred to or suo moto. The activities would be confined to India. (c) To spread the game throughout the State by organizing tournaments, including Inter-University, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... develop and foster a healthy spirit of sportsmanship and a broad and generous outlook devoid of all prejudices and to mould the character of citizen through the medium of sports in general and cricket in particular. (j) To impart physical education through the medium of cricket and take all steps to assist the citizens to develop their physique and have a healthy mind and healthy body. (k) To spread the ideals of cricket and all that it stands for throughout the length and breadth of its area by arranging schools for coaching, lectures, tournaments and run international matches between India and other leading foreign countries so as to develop mutual goodwill and better understanding between India and other countries. (l) ....... .... ..... ..... ..... ..... ..... ..... ..... .... time to run such matches for the achievement of the objects of the Association and to utilize the net proceeds thereof towards the implementation of the objects set out herein and to educat the public, the school boys, college students, clubs and cricketers, in cricket and all the ideals it stands for. (m) To have as many classes of members with such rights as the General Body decide. (n) To in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e committee capable of being conveniently carried out in connection with and in conformity to the objects of the Association and which is connected directly or indirectly to enhance the value of or render more profitable any of the objects, rights or properties of the Association. (y) To maintain a panel of approved cricket umpires and to do such acts as may be necessary for this purpose including holding of prescribed periodical tests with a view to enable them to qualify themselves as first class umpires. (z) To add, delete, alter, maintain and enforce rules and regulations for the control and governance of the game in the State of Tamil Nadu and the union Territory of Pondicherry and to maintain discipline amongst players, officials, clubs and affiliated institutions. The object of the assessee-society is to control game of cricket in the State of Tamil Nadu and in the Union Territory of Puducherry and also to organize tournaments, including inter-university, inter-school and inter-association matches, to educate young sportsmen in the game generally and also in the field of physical culture and the spirit of sportsmanship. Therefore, the sole object of the assessee-societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee is also not providing any service to any trade, commerce or industry. In those circumstances, this Tribunal is of the considered opinion that proviso to Section 2(15) of the Act is not applicable to the assessee. In view of the above discussion, the assessee is eligible for exemption under Section 11 of the Act for all the assessment years under consideration. Accordingly, the orders of the lower authorities for assessment years 2009-10 and 2010-11are set aside and the Assessing Officer is directed to grant exemption under Section 11 of the Act. The Assessing Officer is also directed to grant exemption under Section 11 of the Act for the assessment year 2008-09 also. " 5. In view of the above, this Tribunal is of the considered opinion that the assessee is entitled for exemption under Section 11 of the Act. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to grant exemption under Section 11 of the Act. 6. Now coming to the cross-objections of the assessee, the only issue raised by the assessee is depreciation in respect of the assets, the cost of which was already allowed as application of income under Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be restricted to fifty per cent. of the amount calculated at the percentage prescribed for an asset under clause (i) 6or clause (ii) or clause (iia), as the case may be: Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999, and is put to use before the 1st day of April, 1999, for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be prescribed. Explanation - For the purposes of this proviso,-- (a) the expression "commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle" and "medium passenger motor vehicle" but does not include "maxi cab", "motor-cab", "tractor" and "road-roller" ; (b) the expressions "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle", "medium passenger motor vehicle", "maxi-cab", "motor-cab", "tractor" and "road-roller" shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpressions "assets" shall mean-- (a) tangible assets, being buildings, machinery, plant or furniture ; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature. Explanation - 4. For the purposes of this sub-section, the expression "know-how" means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil-well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto) ; Explanation - 5. For the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income ; (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent. of the actual cost of such machinery or plant shall be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is 8an Indian company or in a scheme of amalgamation of a banking company, as referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), with a banking institution as referred to in sub-section (15) of section 45 of the said Act, sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of that Act, of any asset by the banking company to the banking institution. (2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. The question has been reconsidered by the Board and the correct legal position is explained below. 2. Section 11(1) provides that subject to the provisions of sections 60 to 63 "the following income shall not be included in the total income of the previous year . . . ". The reference in sub-section (a) is invariably to "income" and not to "total income". The expression "total income" has been specifically defined in section 2(45) of the Act as "the total amount of income . . . computed in the manner laid down in this Act". It would accordingly be incorrect to assign to the word "income" used in section 11(1)(a), the same meaning as has been specifically assigned to the expression "total income" vide section 2(45). 3. In the case of a business undertaking held under trust, its "income" will be the income as shown in the accounts of the undertaking. Under section 11(4), any income of the business undertaking determined by the Income-tax Officer in accordance with the provisions of the Act, which is in excess of the income as shown in its accounts, is to be deemed to have been applied to purposes other than charitable or religious, and hence it will be charged to tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for charitable purposes." Further Hon'ble Calcutta High Court has held in the case DCIT VS. Girdharilal Shewnarain Tantia Trust reported in [1993] 199 ITR 15(Cal.) that "The "income" contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable. Respectfully following the decision of the Hon'ble Kerala High Court and taking cue from the decision of the Hon'ble Calcutta High Court, we do not find any hesitation to confirm the order of the Ld. CIT(A) and also the views expressed by him in his order. Accordingly this appeal is held in favour of the Revenue." 12. Apart from that, when the assessee claims the cost of the capital expenditure as exemption under Section 11 of the Act, then the cost of the capital asset becomes NIL. Admittedly, depreciation under Section 32 of the Act has to be allowed only on written down value of the asset. When the written down value of the asset becomes NIL since the entire cost was allowed as application of income under Section 11 of the Act, this Tribunal is of the considered opinion that there cannot be any further claim for deduction under Section 32 of the Act. In view of the above, this Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that the customary way of computing income or the commercial principle of computing income cannot override the specific provision of Income-tax Act. The Income-tax Act does not provide for allowing depreciation other than the asset which was used for business or profession. There is no other provision in the Income-tax Act other than Section 32 of the Act for allowing depreciation. Therefore, the claim of the assessee that the depreciation has to be allowed on commercial principle or customary principle of computation of income is contrary to the specific provision, namely, Section 32 of the Act. 10. The next question arises for consideration is when there is a conflict between customary practice, commercial principle and provisions of Section 32, which one will prevail? The obvious answer to this question is the statutory provision, namely, Section 32 of the Act will prevail over the customary practice and commercial principle. Therefore, even on customary practice or commercial principle whereby the assessee claims depreciation while computing the income, Section 32 of the Act is a specific provision under Income-tax Act, which is contrary to commercial principle or cus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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