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TMI Blog2018 (12) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... uli, Advocate ORDER PER L.P. SAHU, A.M.: These two appeals have been directed by the Revenue against two orders passed by the ld. CIT (As) 36 and 40 for the assessment years 2010-11 and 2012-13 dated 09.06.2016 and 23.01.2017 respectively on the following ground of appeals : Grounds raised in appeal No.4755/Del/2016 (A.Y. 2010-11): 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee ignoring the fact that the assessee has not obtained approval u/s. 11(1)(c) from the CBDT to incur the expenditure outside India for a charitable purpose which tends to promote international welfare in which India is interested to the extent to which such income is applied to such purpose outside India. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the receipts are on account of sponsorship fee and royalty are in the nature of business income within the meaning of provisions of sub-section 4A of section 11 of the I.T. Act. The assessee failed to maintain separate books of accounts as per sub section 4A of the Section 11 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee. He further observed from the income and expenditure account of the assessee that the assessee debited a sum of ₹ 1,18,72,543/- for international championship expenses and incurred outside India. In this regard the assessee was asked to justify and issued show cause notice regarding the expenditure incurred outside India for the championship of sports as per Section 11 (1) ( c ) of the Income Tax Act. In response to show cause notice, the assessee filed reply dated 01.03. 2013 and 18/03/2013. In the reply the assessee submitted that as per Foreign Exchange Management (Currency Account Transactions) Rules, 2000, international/national/state-level sports bodies are not required to take permission of this ministry or Reserve Bank of India for remittance of prize money/sponsorship of sports activity and he also referred to Schedule II of the Foreign Exchange Management (Currency Account Transactions) Rules, 2000, which clearly says that prior approval of Central government is not required in case of remittance of prize money/sponsorship of sports activity abroad International/national/state-level sports bodies. The assessee is an organisation of national level. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o meet out the expenditure on their stay outside India and for lodging and boarding during the tournaments. As per the Foreign Exchange Management (Currency Account Transactions) Rules, 2000, International/National/Statelevel sports bodies are not required to take permission of Ministry or Reserve Bank of India for remittance of prize money / sponsorship of sports activity outside India. The expenses incurred in foreign exchange during international events are not the expenses of WFI as WFI receive the grant-in-aid from the Government of India towards the boarding / lodging etc. for the team members who participate in the international events. The assessee has followed the guidelines of the Ministry, therefore, Section 11 (1) ( c ) will not apply. The Ld. CIT (A) is justified to delete the additions made by the Assessing Officer. In addition to the above the Ld. AR also filed paper book containing 98 pages in which he has submitted a written synopsis and relying some case laws as under : - (2015) 372 ITR 699 (SC) QUEEN S EDUCATIONAL SOCIET VS CIT - (2015) 43 ITR 656 ( TRIB) DELHI DIT (EXEMPTION) VS ALL INDIA FOOTBALL FEDERATION . - (2018) 403 ITR 49 ( DELHI) DIT (E) VS DEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions of the sanction, Foreign currency is disbursed in India to the specific participant/team member by M/S New Found Land Enterprises Pvt. Ltd. who raises their invoice in 'WFI, in respect of currency disbursed by them to the 'India Team Members' and WFI in-turn makes payment/reimbursement in India Rupees to M/S New Found Land Enterprises Pvt. Ltd. During the course of assessment proceedings it was submitted and demonstrated that on this account, the entire payment was made in India, in Indian rupees and no amount was ever spent/incurred by WFI outside India. However, the AO without appreciating the facts of the case, invoked Section l1(l)(c). Regarding disallowance of telephone exp. ₹ 42,480 out of ₹ 91,947 claimed by the assessee, it was explained that expenses related to Sh. G.G Mander, President of WFI but the actual user of the said Telephone connection is the Premises of the Federation Office. The assessee relied on a number of case laws, mainly on the decision in case of All India Football Federation (2015), 43 ITR 656. 8. I have gone through the Assessment order submissions made by the assessee the case laws quoted. The main objective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Rifle Association of India, the ITAT in its order dated 25.04.2016 adjudicated as under: 6. Applying the ratio laid down in the above cases to the facts of the present case, we have no demur to hold that the objects of the Respondent assessee are aimed at improving Shooting being the national game and aiming at building of world class teams having international standards. The question of private gain or profit motive cannot be attributed to the assessee being association which promotes Shooting with Sports Authority of India. Respectfully following the above decisions of the Hon'ble Apex Court as well as the Tribunal, we are inclined to hold that the handling charge and the 'sponsorship fees are received which are incidental for the fulfilment of the objects of the society and as such, there is no justification for the additions made by the AO and accordingly, the same are deleted. Accordingly, ground raised by the Revenue stands dismissed. 9. It is evident that the assessee is not involved in any business activity as there is no apparent motive to earn profit. The royalty and sponsorship fees which are received are incidental for the fulfillment of the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by expression in Section 11 (1) (c) of the Act. 11. The contention of the assessee that no meeting or championship events etc. was organized /held by the assessee outside India, is acceptable as the money was spent only on the players who were representing India in the international arenas. Thus, it is for promoting the interest of the country internationally and promoting sport of wrestling both nationally and internationally. Hence, it cannot be held to be applied to such purposes outside India. The addition made on this account may therefore be deleted specially since it is not for the welfare of the assessee but for participation of India players in wrestling. Considering the above discussion made by the ld. CIT(A), we do not find any infirmity in the order of the CIT (A). The assessee has received royalty and sponsorship fee towards organizing of the sports activity it is not a regular business activity of the society which has been spent for the object of the Society. The ld. CIT(A) has given cogent reasoning for holding that provision to section 2(15) would not apply in the facts of the present case, against which there is nothing on record from the side of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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