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TMI Blog2019 (3) TMI 1585X X X X Extracts X X X X X X X X Extracts X X X X ..... on 22/03/2013, granting exemption to the assessee needs to be revised. Such a reopening is not permissible under law. Whether the proviso to Section 2(15) of the Act, can be applied in the facts and circumstances of the case? - AO came to a conclusion that the assessee is carrying on commercial activity in the nature of trade, commerce or business as the assessee has received amounts from BCCI on account of IPL Subvention, TV rights subsidy from BCCI, Instedia Advertisement etc. - HELD THAT:- In our considered opinion, these 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. These issues have come up in the case Gujarat Cricket Associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawal, Advocate For the Respondent : Shri Indrajeet Singh, CIT, D/R ORDER Per J. Sudhakar Reddy, AM :- All these appeals are filed by the assessee and are directed against separate but identical orders of the Learned Commissioner of Income Tax (Appeals) - Jamshedpur, (ld. CIT(A)) passed u/s. 250 of the Income Tax Act, 1961, (the Act ), for the Assessment Years 2010-11, 2012-13, 2013-14 2014-15. 2. As the issues arising in all these appeals are common, for the sake of convenience they are heard together and being disposed off by way of this common order. 3. The assessee, M/s. Jharkhand State Cricket Association, is a society registered under the Societies Registration Act, in the state of Jharkhand vide Registration Number-107 of 2003-04. The assessee is also registered u/s 12A/12AA of the Act, by the Commissioner of Income Tax-Jamshedpur vide F.No. Technical/JSR/VIII-69/03- 04/1275-78 dt. 31/03/2004. 4. The ld. Counsel for the assessee, before us filed a detailed written submission, which is extracted for ready reference:- 1. The appellant i.e. Jharkhand State Cricket Association (hereinafter re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, players and officials. (m) To do all such acts and things as shall be deemed by the Association to be lawful, incidental or conducive to the carrying out of the objects of the Association. 3. From the perusal of the aforesaid objects of the appellant society, as appearing in its Memorandum of Association, it is evident that the objects of the appellant society seeks to promote, encourage, organize and control the game of cricket, to arrange, organize and regulate representative matches in the State, to foster a spirit of sportsmanship and co-operation among the members, officials and players, to advance and safeguard the interest of the game of cricket etc. It is also empowered to implement the Laws of the game of Cricket and Rules and Regulations formulated by the Board of Control for Cricket in India, to publish cricket journals, magazines and literature on cricket, to spread the game of cricket throughout the State, to promote, encourage, organize and develop the game of cricket in schools and colleges in the State, to maintain a panel of approved umpires and also to encourage the formation of District Associations for the control of the game of cricket. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, appellant was filing its return of income, and till AY 2012-13, exemption claimed u/s 11/12 of the Act was duly allowed to the appellant. However, for the first time, in the assessment year 2012-13, learned AO in the order of assessment arbitrarily took a view that the appellant is engaged in the business of cricket and disallowed the exemption claimed u/s 11/12 of the Act. Similarly for the AY 2013-14 same view was taken. Further, for the AY 2010-11, proceedings were initiated u/s 147 of the Act, and exemption claimed u/s 147 of the Act was disallowed. It is relevant to state here that subsequent to the passing off the order for the AY 2010-11 and 2013-14, assessment for the AY 2014-15 was passed on 05.12.2016, wherein again revenue has accepted that appellants activities are charitable in nature and exemption claimed u/s 11/12 of the Act was allowed (see page 374-375 of PB). 8 It is submitted that in all the three assessment years i.e. AY 2010-11, 2012-13 and 2013-14, the basis of disallowance of exemption was that assessee was in receipt of IPL Subvention, TV rights subsidy from the BCCI and also instedia advertisement. Since the income generated through conduct o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular stand on an issue on similar/identical facts in the case of the assessee, for the sake of consistency the same view should continue to prevail in the case of assessee unless there is material difference in the facts. The appellant seeks to place further reliance on the following cases, where it has been held that the revenue should follow the rule of consistency: i. State of Andhra Pradesh v. A.P. Jaiswal (2001) 1SCC 748 ii. CIT v. Berger Paints 266 ITR 99 (SC) iii. Radha Saomi Satsang v CIT 193 ITR 321 (SC) iv. CIT v. Neo Poly Pack 245 ITR 492 (Del) v. Commissioner of Wealth Tax Vs. R.K.K.R International 145 Taxman 322(Delhi) vi. CIT v. Shri Ram Memorial Foundation 158 ITR 3 (Del) vii. DhansiRam Aggarwalla v. CIT 217 ITR 4 (Gau) viii. CIT v. Godavari Corporation Ltd. 156 ITR 835 (MP) ix. UOI v Kuomidini Narayan Dalal and Another 249 ITR 219 (SC) x. UOI v Satish Panna Lal Shah 249 ITR 221 (SC) 10. It is submitted that admittedly and undisputedly, appellant is engaged in the promotion of sports and organizing sport and such activity of the appellant is in the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any trade, commerce or business, for a cess or fee or any other consideration, then even in respect of advancement of any other object of general public utility, will be charitable and benefit of section 11 and section 12 cannot be denied. For the applicability of proviso to Section 2(15), the activities of the society should be carried out on commercial lines with intention to make profit. Where the society is carrying out its activities on non-commercial lines with no motive to earn profits, for fulfilment of its aims and objectives, which are charitable in nature, the same would not be hit by proviso to section 2(15). The aims and objects of the assessee-trust are admittedly charitable in nature. 11.1 It is submitted that the term objects of general public utility had been defined, to meant that where the objects of an institution cover the public at large or a section of public the objects are to be held to the objects of general public utility as meant in Section 2(15) of the Act. In fact, in the case of CIT v. Gujarat Maritime Board [2007] 295 ITR 561 (SC), Hon ble Apex Court has observed as under: '... in Section 2(15), namely, any other objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities 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. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Circular No.11 of 2008 is to the said effect and does not promote contrary interpretation. The said circular clearly stipulates that the object of general public utility should not be a mask or a device to hide the true purpose, which is trade, commerce or business or rendering any service in relation to trade, commerce or business. Director General (Exemption) has not interpreted the first proviso in this manner in this case. Even in the case of Bureau of Indian Standards (supra) no such contention was raised. 7th proviso to Section 10(23C) of the Act supports our interpretation and the legislature has not omitted or suitably amended the said proviso to support the contrary interpretation. Even otherwise, the beneficiaries of GS1 system are not confined or restricted to persons from trade, commerce or business. The beneficiaries are present everywhere and the advantages are permeating and universal and would include consumers, government, beneficiaries of PDS etc. 32. The second proviso, which refers to the aggregate value of receipt of activities of ₹ 10 lacs (now enhanced ₹ 25 lacs vide Finance Act 2011 with effect from 1.4.2012) or less in a previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 It is submitted that since the objects of the appellant are in the nature of general public utility, and it does not involves the carrying on of 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, as such, in view of the aforesaid judicial pronouncements, exemption claimed by the appellant is not hit by the proviso to section 2(15) of the Act and hence exemption denied by the learned AO is unsustainable in law. 13 It is submitted that admittedly and undisputedly, appellant is engaged in the activity of promotion of sports and conducting of sport of cricket, and aforesaid objects of the appellant is in the nature of general public utility falling under section 2(15) of the Act. Further, since the activities of the appellant has not been carried with an object of profit, as such same would not be hit by the proviso to section 2(15) of the Act. In the case of Rajasthan Cricket Association v. Additional Commissioner of Income-tax reported in [2017] 164 ITD 212 (Jaipur - Trib.), it has been held that where in case of assessee association registered under section 12A, pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inference that activity is commercial cannot be drawn. It was observed by the Hon'ble High Court, that the basis of the decision of the Tribunal was on irrelevant consideration. It was held that these considerations are not germane in considering the question whether the activities are genuine or carried on with the object of the association. It is also noteworthy that as per section 11(4A) substituted by the Finance Act, 1983 with effect from 1/4/1984 sub-section 1 or sub-section 2 or sub-section 3 or subsection 3A shall not apply in relation to any income of a trust or an institution, being profit and gains of business, unless the business is incidental to the attainment of the objectives of the trust or, as the case may be institutions and separate Books of account are maintained by such trust or institution in respect of such business. Now, coming to the allegation of the Assessing Officer that the major source of income are TV subsidy, sale of advertisement surplus from ODI between India and Pakistan income from RCA Cricket academy and interest income. It is not in dispute that TV subsidy, sale on advertisement surplus from ODI between India and Pakistan income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein it has been held that encouragement of sports and games, is clearly a charitable object in terms of section 2(15) of the Income Tax Act and has been so held in the following cases: (i) Surat City Gymkhana vs. ACIT (2001) 19 DTC 5 (Ahd.-Trib) (ii) South Indian Athletic Association Ltd. vs. CIT (1977) 107 ITR 108 (Mad.) (iii) CIT vs. Ootacamund Gymkhana Club (1977) 110 ITR 392(Mad.) (iv) CIT vs. Andhra Pradesh Riding Club (1987) 168 ITR 393 (AP). (v) Board s Circular No. 395, dated 24.09.1984 (1984) 150 ITR 74. (vi) Tamil Nadu Cricket Association v. DIT (E) [2014] 360 ITR 633 (Mad HC) (vii) LD. CIT(A) v. Delhi Golf Club Ltd. (IT Appeal No.1757 of 2010, order dated 30.03.2011) (viii) ITO (Exemptions) v. Chembur Gymkhana [2017] 164 ITD 279 (Mum.-Trib) (ix) Bombay Presidency Golf Club Ltd. v. DIT(E) [2012] 52 SOT 149 (Mum.) (x) Delhi District Cricket Association v. DIT(E) [2015] 69 SOT 101 (Delhi- Trib) (xi) Tamil Nadu Cricket Association v. Dy. DIT(Exemptions) [2015] 70 SOT 242/60 taxmann.com 287 (Chennai-Trib) (xii) Dy. DIT(E) v. All India Football Federati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business is incidental to the attainment of main objects and separate books of accounts are maintained in respect of such business activity, the exemption of income under Section 11 will be available in respect of profits from such an activity. It is however submitted that this disability clause, however, does not affect the incomes which may be taxable under a head of income other than the profits and gains from business or profession. The fall out of the aforesaid discussion is that if a trust or institution is carrying out any activity which are charitable in the nature, even if there is some surplus from that activity, exemption under section 11 of the Act cannot be denied. 18 It is submitted with respect that even after the substitution of the subsection 2(15) by the Finance Act, 2008, if the activity of the trust does not involves the carrying on of 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, then even in respect of advancement of any other object of general public utility, will be charitable and benefit of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public at large and imparting some kind of knowledge through it. The fact that some of the beneficiaries pay for the benefits they get from the institution would not be fatal to the charitable character of the institution. Accordingly, where an association, which was in charge of a nursing home and hospital, charged its patients for the services rendered, it was held it would not cease to be charitable. In IRC v. Peebleshire Nursing Assn. 11 TC 335 (HL), it was held that where a hospital runs a private ward where patients pay in full for the services rendered to them, it would not make the hospital inconsistent with its charitable objects. Likewise, the petitioner's providing medical facilities on wholly charitable, or partly subsidized basis to some patients and charging others at rates par with other institutions per se cannot debar it from the benefit of being treated as charitable. The dominant purpose test presupposes that as long as the activity answers the description of charity and conforms to the objects of the trust or society, that profits or surpluses are generated, incidentally cannot rob it of the benefits. If the profits from business feed charitable objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be a game changer in terms of scales of operations and revenue generation which is quite reflected from the wide ranging revenue augmenting activities that has become predominantly the main feature, and due to which the Apex Body and its affiliates, the State Cricket Associations ( SCAs) are geared up to run and conduct events of T20 matches purely on commercial lines, and which present to be the main stay feature of Cricket World in India. The effect of this exponential growth has been such that Cricket watching continues to be slipping out of the hands of a common man. A person having an avid interest in cricket may have been resigned to watch cricket at home TV. However, the mammoth scale of operations in the ever changing cricketing arena, the commercial considerations outweighs the considerations of providing opportunity to the common man, as the huge earnings from the sale of TV Broadcasting Rights by BCCI amply shows that it is driven by pure commercial considerations for deriving maximum profits in the competition in a market economy. In the above backdrop, it becomes important to know the revenue sharing basis which is employed by the Apex Body i.e., BCCI wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. (2013-14) TV Rights subsidy 18,63,99,133/- 8,14,53,834/- 12,86,99,200/- In respect of revenue from sale of media rights i.e., TV Broadcasting Rights, the arrangement has been evolved overtime. Until 1991-92, the income from the sale of Media Right was meagre. With the growth of income from media rights, it became necessary to optimise the arrangement of sale of media rights. It was found that if each state association were to negotiate the sale of right to events in centre, its negotiating strength would be low. It was therefore agreed that BCCI would negotiate the sale of media rights for the inter country to optimise the income under the head. It was further decided that out of the receipts from the sale of media rights, 70% of the gross revenue less production cost would belong to the state association. In this regard, it may be stated that such an activity of BCCI for the generation of income/ revenue from TV Broadcasting Rights is quite dependent upon the activities which are performed by any affiliate entity i.e., JSCA in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , amply shows the true nature of the income which is parked with the BCCI and further distributed by BCCI amongst its affiliates like JSCA. It may be mentioned here that IPL subvention amounts to almost over 60% of receipts of assessee. It may be observed that the scale of operations as put up in IPL T20 matches both by BCCI and SCAs are nothing short of Entertainment Extravaganza, where the commercial stakes of the Corporate Houses, the Franchise Holders had led to sporting entertainment of highest commercial order. The very scheme of IPL is recognised by the BCCI as a commercial venture, where the affiliates like JSCA are partners with full stakes. Thus, unmistakeably, it may be appreciated that the very nature of holding of cricket matches and the transactions entered into by the BCCI are commercial in their true essence, as with the affiliate entities like JSCA. Infrastructure Subsidy : AY A.Y. (2010-11) A.Y. (2012-13) Received during the year A.Y. (2013-14) As on 31.03.2013 AY 2014-15 As on 31.03.2014 Infrastr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the judgment of the Hon ble Supreme Court in the case of Raymond Woollen Mills Ltd. vs. ITO [1999] 236 ITR 34 (SC), for the proposition that, what is to be seen is as to whether there was some prima facie material on the basis of which the department could reopen the case and that as far the issue of correctness of a material is not a thing to be considered at that stage. 6.2. In his rejoinder, the ld. Counsel for the assessee argued that, the ld. D/R has not pointed out any material that had come into the possession of the Assessing Officer based on which the reopening was made. He reiterated that the reasons of reopening were merely a change of opinion, on the same set of facts and material before the department. 7. For the Assessment Year 2014-15, the ld. Counsel for the assessee disputed the order passed u/s 263 of the Act. He submitted that a cryptic notice was given by the ld. CIT and the detailed reply given by the assessee was not considered. He pointed out that the Assessing Officer has passed an elaborate order u/s 143(3) of the Act, taking a possible view that the assessee is entitled to exemption u/s 11 12 of the Act and that the ld. CIT was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Expenditure during the year has been ₹ 2,59,25,660/-. 3. The assessee had filed its in RoI in ITR-7. The assessee had claimed exemption u/s 11 and u/s 12 of the Act. Perusal of the Computation of Income reveals that the assessee had claimed Capital Expenditure of ₹ 7,76,24,006/-, Exemption u/s 11(1)(a) of ₹ 4,52,08,589/- and Exemption u/s 11(2) of ₹ 15,30,00,000/- 4. The total expense of the assessee is 7.49% of its total receipts during the year. 5. The assessee is engaged in objects of general public utility as stated in section 2(15) of the Act. The assessee is not involved in any educational activity within the meaning of the terms education as held by the Hon ble Apex Court in the case of Sole Trustee Loka Shikhsana trust vs. CIT [1975] 101 ITR 134 (SC). Therefore the proviso to section 2(15) as inserted by the Finance Act 2008, w.e.f 01-04-2009 is squarely is squarely applicable to the assessee. Section 2(15) of the Act as in force today is reproduced below: charitable purpose includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le ITAT, Panaji Bench, in the case of Entertainment Society of Goa [34 taxman.com 214] wherein it was held that proviso to section 2(15) would be attracted if activity carried on by institutions are similar to trade, commerce or business; for this purpose use or application or retention of consideration received is not relevant at all. 11. In view of the above, I, have no reason to believe, within the meaning of section 147 of the Income-tax Act, that income chargeable to tax has escaped assessment. The total income chargeable to tax that has escaped assessment is ₹ 31,99,34,935/-. 12. In the case of the assessee the assessment order for the A.Y. 2010-11 was passed u/s 143(3) on 22-03-2013 assessing total income at Rs. NIL. The provisions of section 151(1) are applicable to the instant A.Y. The provisions are reproduced as under: (1) In a case where an assessment under sub- section (3) of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner, unless the Deputy Commissioner is satisfied on the reasons recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer to re-open assessments on the basis of mere change of opinion , which cannot be per se reason to re-open. 6. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. 7. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.' 12. Before interfering with the proposed re-opening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, was based on nothing but a change of opinion on the same facts and circumstances which were already in his knowledge even during the original assessment proceedings. 10.1. The decision of the Hon ble Supreme Court in the case of Raymond Woollen Mills Ltd. (supra), is not applicable to the facts of the case. In this case there is no tangible material based on which the re-opening of assessment was made. The reopening has been made on a change of opinion. The Assessing Officer has no power of review. Hence we have no hesitation in holding that the reopening is bad in law. 11. The argument of the ld. Counsel for the assessee that the objections to the reopening, made by the assessee was not disposed off by the Assessing Officer and hence the reassessment is bad in law, need not be gone into, as it would merely be an academic exercise, as our decision is that, the reopening is bad in law. 12. We now take up the issue as to whether the proviso to Section 2(15) of the Act, can be applied in the facts and circumstances of the case. Admittedly, the main and predominant object of the assessee company is to promote the game of cricket. There is no dispute b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the impact of this commercialization has not left Indian cricket intact. The Indian Premier League and the rules of the game being governed by the dictates of commercial considerations may seem to be one such example of commercialization of Indian cricket. The difficulty for the case of the revenue before us, however, is that these matches are not being organized by the local cricket associations. We are told that the matches are being organized by the Board of Cricket Control of India, but then, if we are to accept this claim and invoke the proviso to Section 2(15) for this reason, it will amount to a situation in which proviso to Section 2(15) is being invoked on account of activities of an entity other than the assessees- something which law does not permit. We are not really concerned, at this stage, whether the allegations about commercialization of cricket by the BCCI are correct or not, because that aspect of the matter would be relevant only for the purpose of proviso to Section 2(15) being invoked in the hands of the BCCI. We donot wish to deal with that aspect of the matter or to make any observations which would prejudge the case of the BCCI. Suffice to say that the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of 'charitable activities' in the hands of the cricket associations before us- particularly as learned Commissioner has not been able to point out a single object of the assessee cricket associations which is in the nature of trade, commerce or business, and, as it is not even in dispute that the objects being pursued by the assessee cricket associations are objects of general public utility under section 2(15). All the objects of the assessee cricket associations, as reproduced earlier in this order, unambiguously seek to promote the cricket, and this object, as has been all along accepted by the CBDT itself, an object of general public utility. 36. Cricket is indeed an immensely popular game in this part of the world, and anything to do with cricket results in mass involvement of public at large. The sheer strength of these numbers results in higher visibility of cricketing activities and the scale of operations on which the work for development of cricket is to be carried out. These facts, by itself, and without the assessees before us deviating from their objects or venturing into trade, commerce or business, cannot require the activities to be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not really necessary to adjudicate on this plea. We leave the question open for adjudication in a fit case. Conclusions on this issue: 42. For the detailed reasons set out above, we are of the considered view that the authorities below were in error in invoking the proviso to Section 2(15) and thus in declining the benefit of Section 11 and 12 to the appellant cricket associations. To this extent, plea of the appellants must be upheld. We uphold the plea. Individual appeals 43. Let us now take up each appeal and each ground of appeal individually. ITA No 1257/ Ahd/ 2013 44. This appeal is directed against the order dated 5th March 2013 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2009-10. 45. In ground nos. 1 and 2, the grievances raised by the appellant are as follows: The learned CIT(A) has erred in law and on facts in denying the applicability of Sec. 11 including 11(1)(b) and holding that the assessee is not carrying on charitable activity. (a) The learned CIT(A) has erred in law and on facts in not accepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered under the Societies Registration Act 1860, and is engaged in promotion of cricket in specified areas of Gujarat State. In the course of the reassessment proceedings, the Assessing Officer noted that assessee has received a sum of ₹ 1,58,00,000 from the Board of Cricket Control of India (BCCI, in short) as towards the TV rights. When he probed the matter further, it was explained by the assessee that nomenclature of the receipt apart, what has been received by the assessee is a corpus donation and the assessee did not have any right to get the said money from the BCCI, under a contract or otherwise. It was also explained that similar amounts received in the earlier years have been treated all along as corpus donations, and, therefore, the corpus donation received by the assessee, though termed as TV Rights, is not taxable. The Assessing Officer noted this contention as also the fact that under section 11(1)(d), what cannot be included as total income of the assessee is income by way of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or the institution . The Assessing Officer was of the view that what has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the BCCI resolution no 5 dated 29th September 2001 which specifically states that the TV subsidies should henceforth be sent to the Member Associations towards corpus funds . There is no dispute that the TV subsidy in question is sent under this resolution. On these facts, and in the light of the provisions of Section 11(1)(d) which only require the income to be by way of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or the institution , we are of the considered view that any payments made by the BCCI, without a legal obligation and with a specific direction that it shall be for corpus fund- as admittedly the present receipt is, is required to be treated as corpus donation not includible in total income. We are unable to find any legal support for learned CIT(A)'s stand that each donation must be accompanied by a separate written document. The contribution has to be voluntary and it has to be with specific direction that it will form corpus of the trust'. These conditions are clearly satisfied. Any payment which the assessee is not under an obligation to make, whatever be the mode of its computation, is a v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch documents or information from the trust or institution in order to satisfy himself about the genuineness of activities of the trust or institution. The section further empowers the CIT to make such enquiry as he deems necessary in this regard. Once the CIT is satisfied himself about the objects of the trust or institution and the genuineness of the activities of the trust, he has to pass an order in writing registering the trust or institution; if he is not so satisfied, he has to pass an order in writing refusing to register the trust or institution. 30. Sec. 12AA(3) of the Act inserted w.e.f. 1st Oct., 2004, under the Finance (No. 2) Act, 2004, and the amendment inserted by the Finance Act, 2010, w.e.f. 1st June, 2010, therein empowering the CIT to cancel the registration granted under the stated circumstances, reads as under : Provision inserted under the Finance Act, 2004 : '12AA. (3) Where a trust or an institution has been granted registration under cl. (b) of sub-s. (1) and subsequently the CIT is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, Revenue does not allege anything against the genuineness of the objects of the assessee or its activities. It rests its order only on the ground of the assessee receiving income from holding of matches which according to the assessee were not held by it. Thus, as regards the question as to whether the particular income qualified under s. 11 of the Act or not is not the same as activity being genuine or not. In the circumstances, we do not agree with the view of the Tribunal that the order passed by the Director of IT (Exemption) was in accordance with the provisions of the IT Act, 1961. He viewed that the conduct of test matches and ODI are in the nature of commerce or business. Though the assessee claimed their activities for promotion of sports, he held that the dominant feature is evident from the huge profits received and hence the amount received from BCCI as subsidy is commercial. As regards conducting of IPL matches, he pointed out that though no services are rendered by the assessee for conducting the matches, the ground where the matches are played are given for rent which is a commercial venture. The subsidy received from BCCI included mainly TV advertisemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal and the Revenue to come to the conclusion that the activities are commercial and hence by s. 2(15) proviso to the Act, the receipt from BCCI could not be called as subsidy. As for the observation of the Tribunal that the twin conditions stood satisfied is concerned, it is not denied by the Revenue that at the time of granting registration, the CIT had satisfied himself about the objects of the trust and the genuineness of the activities as falling within the meaning of 'charitable purpose', as it stood in 2003. The Revenue does not deny as a matter of fact that the objects remain as it were in 2003 and there is no change in its content to call the assessee's object as not genuine. There are no materials to indicate that the grant of registration was not based on materials indicating objects of general public utility. 56. The assessee is a member of Board of Control for 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 associations which organise the matches in their stadia. The franchisees conduct match ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities of Tamil Nadu Cricket Association and hence the case law applies on all fours. 10.4 From a reading of the above case law, the following propositions emerge : (a) For the cancellation of registration under s. 12AA(3), the CIT should record a satisfaction that the activities of the trust or institution are not genuine or that the activities are not being carried on in accordance with the objects of the trust. In the absence of such a finding, registration granted under s. 12A or under s. 12AA cannot be cancelled. Cancellation of registration of a charitable trust, in a given case, is permissible only under the circumstances stated under s. 12AA(3) of the Act. (b) For an assessee to be classified as charitable under the residuary category i.e. advancement of any other object of general public utility under s. 2(15) of the Act, the following four factors have to be satisfied : (i) Activity should be for advancement of 'general public utility'. (ii) Activity should not involve any activity in the nature of trade, commerce and business. (iii) Activity should not involve rendering of services in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... economic status of the beneficiaries who pay, commercial values in comparison to the fee, purpose and object behind the fee, etc. are several factors which decide seminal question, is it business ? (j) The Revenue cannot take a contradictory stand that the assessee carries on charitable activity under the residuary head general public utility , but, simultaneously record the said activity as business. (k) There is no statutory mandate that a charitable institution falling under the residuary clauses, should be wholly, substantially or in part be funded by voluntary contributions. (l) A pragmatic view is required when we examine the data, which should be analysed objectively. A narrow and coloured view will be counterproductive and contrary to s. 2(15) of the Act. (m) Accumulation of money/funds over a period of two to three years may not be relevant in determining the nature and character of activity and whether the same should be treated indicative of profit motive i.e. desire or intention to carry on business or commerce. (n) The so-called business activities, when intrinsically woven into and is part of the charitable activity u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is undisputedly, charitable in nature. Hence, it is not the case of the Revenue that the assessee is carrying on trade, commerce or business under the. garb of the activity being general public utility . As regards the various receipts of the assessee, we find that in the case of Tamil Nadu Cricket Association (supra), the receipts were from :- 1. Subscription 2. Renting for hiring cricket ground rooms and premises 3. Fee for providing services for IPL 4. Income from advertisement 5. Subsidy from BCCI 6. Sale of tickets for conducting the matches and 7. Restaurant and catering income. Such receipts of money by the Tamil Nadu Cricket Association were not considered by the Hon'ble Madras High Court, as activities in the nature of trade, commerce or business . There is no contrary decision cited by the Revenue. Thus none of the above streams of income, when received by the assessee would constitute business activity for the assessee. 10.9 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of the transaction, as well as resultant activity in the hands of assessee. To carry out a transaction in an organized manner and to ensure that the transaction would help the assessee in achieving its charitable object, it is imperative that the terms and conditions of the transactions are clearly defined, to avoid any confusion or chaos. It will be further good, if these terms and conditions are reproduced in writing, in the form of an agreement. Merely because an activity is performed in an organized manner, that alone will not make these activities as business/commercial activity. Profit motive is one essential ingredient, which is apparently missing in this case. In carrying out an activity, one may earn profit, or one may incur loss. But for making it as business activity, the presence of profit motive is a sin qua non i.e. condition precedent at the time of entering into transaction. In this case the facts demonstrate that despite the receipt of amount from sponsorship and subsidy from BCCI, there was deficit, which was met by the assessee. Thus this adjustment resulted in subsidizing the cost of the assessee and hence there is no profit motto. This cannot be termed as b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as exempt (sicarising) from activity which is in the nature of trade, commerce or business . 11.6 On advertising and contractual receipts the same explanation as was given by the assessee, as in the case of sponsorship money. Consistent with the view expressed by us, when we were dealing with sponsorship money, we hold that these contractual receipts go to reduce part of the cost incurred by the assessee for its charitable activity and hence, cannot be termed as business or that the assessee has undertaken activity in the nature of trade, commerce or business . 11.7 On receipts from IPL an elaborate Explanation was given, the pith and substance is that expenditure has to be incurred by the DDCA on various items, as co-ordination has to be done and the aggregate of expenditure incurred for the same is ₹ 238 lakhs. It was submitted that the DDCA initially meets this expenditure out of its own sources and thereafter the BCCI and legal franchisee contribute and compensate part of this expenses. The same arguments as were advanced by the assessee in the cases where sponsorship money received, were made here also. The summary of the submissions are as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned. 6. Whenever the revenue is earned these are not earned on commercial lines and these are earned without any commercial attributes. The revenue is generated for recovering the cost, at least partly if not fully. 7. The assessee has not entered any transaction with any person on profit motive. The other person may be an entrepreneur or may be doing business but the assessee has entered (into) the transaction only for the sole and dedicated purpose i.e. for the promotion of cricket. 8. These facts are worth noting that (a) the assessee has not diverted its funds for any purpose other than promotion of cricket; (b) the assessee has not done any activity or transaction with profit motive; (c) the assessee has not done any activity beyond and outside its objects; and (d) there is no change in facts so as to deviate from the stand taken by learned AO in all the past years accepting the claim of the assessee all along on facts as well as on law. 11.8 In view of our decision of sponsorship and such other receipts, we agree with the arguments made by the assessee. Regarding sale of tickets, the assessee explained that no tickets are sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) Income from advertisement 5) Subsidy from BCCI 6) Sale of tickets for conducting the matches and 7) Restaurant and catering income and has come to a conclusion that the proviso to Section 2(15) of the Act, cannot be invoked on the ground that these receipts are in the nature of trade, commerce and business. 14. The argument of the ld. D/R which is brought out above has been considered in this above referred decision and the issue under adjudication was in favour of the assessee. Consistent with the view taken by the Ahmedabad and Delhi Benches of the ITAT, under similar circumstances, we come to a conclusion that the proviso to Section 2(15) of the Act has been wrongly invoked. The assessee is eligible for exemption u/s 11 12 of the Act. The grounds are allowed accordingly. 15. The next issue that comes for our adjudication is whether the infrastructural subsidy received from BCCI is a revenue receipt or a capital receipt. This issue was also considered by the Ahmedabad D Bench of the Tribunal and it was adjudicated that the receipts in question are in the capital field. Consistent with the view taken therein, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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