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TMI Blog2020 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in Form 26AS - CIT(A) after examining the revised Form 26AS allowed the appeal of the assessee and deleted the addition - HELD THAT:- There was no difference in the receipts declared by the assessee and the receipts as per Form 26AS in respect of BCCI. The Ld.CIT(A) also given a finding that even infrastructure subsidy amounting to 5,16,67,017/- received from BCCI which was taken to balance sheet is treated as income of the assessee, the amount applied for charitable purposes is higher than the income of the assessee and allowable for exemption u/s 11 of the Act. Form 26AS is a statement which is also available to the AO. Further the assessee filed rectification petition before the AO during the pendency of the appeal proceedings. Instead of examining the correctness of 154 petition, it is seen that the AO rejected the petition on the plea of pendency of appeal before the CIT(A). When there is prima facie mistake, it is the obligation of the AO to rectify the mistake, even though the appeal is pending before the appellate authorities and submit the copy of rectification order for further action of Ld.CIT(A). Instead, the AO rejected the rectification petition, hence, AO s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO invoked the provisions of section 2(15) and held that the assessee does not qualify to be charitable within the meaning of section 2(15) of the Act. 2.1. The AO verified the Form 26AS and from the form 26AS, the AO found that the assessee has received the sum of ₹ 50,26,78,635/- and admitted the receipts of ₹ 37,74,16,941/- thus, there was a difference of ₹ 12,52,61,694/- on which the assessee has claimed the credit for TDS u/s 194C for whole amount of ₹ 1,00,90,251/-. Since, there was a difference in gross receipts and the admitted receipts the AO made the addition of ₹ 12,52,61,694/- on account of short admission of receipts from BCCI. The AO has assessed the taxable income of the assessee at ₹ 26,71,55,964/- as under : Excess of income over expenditure as discussed in para 6.1. Less : Depreciation allowed as discussed in Para 6.3. 19,14,77,837/- (-) 4,95,83,567/- 14,18,94,270/- (2) Short admission of Reimbursements & grants received from BCCI as discussed in Para 7 12,52,61,694/- Assessed Income 26,71,55,964/- 3. The assessee went on appeal before the CIT(A) and the Ld.CIT(A) found that the assessee was denied exemption by the AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of expenses of ₹ 5,57,27,299/-. It was observed that the assessee society is a full-fledged member of BCCI as per the Memorandum and Rules & Regulations of BCCI and the MOA of the assessee. The assessee conducts representative matches allotted by the BCCI and the expenditure incurred by the assessee for conducting the matches is reimbursed by BCCI. In response to a specific query raised during the assessment proceedings regarding the existence of any agreement between BCCI and the assessee with regard to the financial support extended to the assessee by BCCI by way of grants & reimbursement's, it was stated by the assessee that there is no specific agreement/ MOA with the BCCI and that the grants & reimbursements are given to the, assessee as per the policies of BCCI. In the absence of any agreement / MOU, it was inferred by the AO that there is a significant understanding between the assessee and BCCI by which the telecasting rights are assumed by the BCCI and the match expenses are reimbursed to the assessee by BCCI. 11. It was observed by the AO that the income of ₹ 2,50,08,563/- shown from the India-Srilanka T20 match comprised of income from advertisement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conciliation statement submitted by the assessee, the Ld.CIT(A) found that there was no difference or short admission of receipts and accordingly deleted the addition made by the AO. 4. Against which the department has filed appeal before this Tribunal and raised following grounds of appeal : i. The Ld.CIT(A) erred in allowing the appeal of the assessee. ii. The Ld.CIT(A) erred in deleting the addition made by the AO amounting to ₹ 14,18,94,270/- towards income from business by allowing the exemption u/s 11 of the Act. iii. The Ld.CIT(A) erred in law in deleting the addition made by the AO amounting to ₹ 12,52,61,694/- towards short admission of receipts from BCCI holding that the same was made without affording any opportunity to the assessee when the same was as per the Form 26AS. iv. The Ld.CIT(A) erred in considering the revised Form 26AS filed by the assessee after the assessment proceedings in contravention to Rule 46A of the IT Rules which were not available before the Assessing Officer at the time of assessment proceedings. v. Any other ground(s) that may be urged at the time of hearing of the case. 5. Ground No.(i) and (v) are general in nature whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business activities. The relevant part of the decision of the Hon'ble Tribunal is reproduced as under : 18. In this context, it is necessary to examine what are the receipts of the assessee and how assessee has been incurred towards the objects. The assessee is receiving grants from BCCI partly as reimbursements for various tournaments conducted by the assessee. The assessee has already constructed a stadium at Visakhapatnam suitable for conducting "test matches‟. During the year under consideration, the assessee has also commenced construction of stadiums at various places like Mangalagiri, Kurnool & Kadapa. During the year, it has also acquired land at Nellore for the purpose of constructing a stadium. The assessee has admitted the incomes under the major heads such as BCCI reimbursements of ₹ 20,64,17,339/- and interest of ₹ 1,26,10,435/- on FDR‟s & SB accounts. Out of these receipts, the assessee incurred expenditure towards conducting various tournaments, grants to District associations for conducting league tournaments and development of game and other heads such as Administrative & Maintenance. From the above, it is very clear that the receipts rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue is dismissed. 22. Further it is noticed that the Hon'ble ITAT, Visakhapatnam once again held in the assessee's own case for A.Ys 2013-14 to 2015-16 in ITA Nos. 279, 280 & 368/Viz/2018 vide order dated 18.01.2019 that the dominant object of the assessee is to develop the game of cricket and conducting of International matches on behalf of BCCI is incidental to the main activities carried on by the assessee. It was held that the activities carried on by the assessee cannot be considered as commercial in nature so as to attract the provisions of sec.2(15) of the Act. It was held that the assessee did not carry on any activity in the nature of trade, commerce or business and the proviso to sec.2(15) has no application to the facts of the assessee's case. It was accordingly held that the assessee is entitled to the claim of exemption u/s 11 as well as sec.10(23C)(iv) of the Act. The relevant portion of the decision of the Hon'ble Tribunal is reproduced as under : 13. We have heard both the sides, perused the material available on record and orders of the authorities below. 14. The assessee is a Andhra Cricket Association and has been granted registration under section 12A w.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not entitled for his income as exempt under section 11 as well as 10(23C) of the Act. We find that the assessee owned a cricket stadium which is constructed for the purpose of development of sport of cricket. The assessee being a Member of BCCI, hosting matches which are conducted by BCCI, expenditure for conducting the matches claimed by the assessee as reimbursement from the BCCI. The assessee is selling the tickets on behalf of the BCCI, therefore, selling of tickets by the assessee cannot be considered as commercial activity. The main intention of the assessee is to develop the game of the cricket. Sometimes, the matches sponsored by the BCCI, conducted in the assessee's stadium and for that purpose tickets are sold and expenses incurred collected as reimbursement. The selling of the tickets by the assessee is only on behalf of the BCCI. The Assessing Officer has also pointed out that in respect of selling of tickets of the cricket match, BCCI paid service tax. Therefore, BCCI is similar to the assessee therefore assessee's activity cannot be treated as charitable activity. We find that international matches hosted by the assessee in its stadium on behalf of the BCCI and for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose, if it 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, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year. A bare reading of the above proviso, it is clear that if the assessee involves in carrying on 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 proviso to section 2(15) shall attract. In the present case, the assessee is a charitable association carrying with the object of development of game of cricket and not involved in any ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble. ITAT, Chennai held in the case of Tamilnadu Cricket Association Vs. DDIT(Exemption) (2015) 60 taxmann.com 287 (Chennai-Trib) that the activity of conducting one day matches, T20 matches and IPL matches does not amount to doing business or trade since the said matches are organised and conducted by the BCCI and the State Cricket Association only hosts the matches which are conducted by the BCCI by providing the stadium for conducting the matches, It was he'd that it cannot be said that the State Cricket Association is conducting any business activity of providing any servicer in the nature of trade, commerce or business. It was held that the proviso to sec: 2(15) is therefore not applicable and the State Cricket Association is eligible for exemption u/s. 11 of the Act. 24. Similarly, its seen that Hon'ble ITAT, Cochin held in the case of KetaIa Cricket Association in ITA No.78/Coch/2015 for AX. 2016-11 vide order dated 18.12.2017 that the receipts of the State Cricket Association from BCCI are not in the nature of receipts derived from carrying on activities in the nature of trade, commerce or business. It was held that the International T20 matches and IPL matches a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is ground. 8. Ground No.(iii) is related to deleting the addition of ₹ 12,52,61,694/-, difference being the receipts admitted by the assessee and the receipts as per Form 26AS. 9. We have heard both the parties and perused the material placed on record. We observe from the order of the AO that the AO made the addition, since there was difference in Form 26AS and the receipts admitted by the assessee, without giving any opportunity to the assessee. Before the Ld.CIT(A), the assessee filed written submissions reconciling the difference. From the order of the Ld.CIT(A), we observe that subsequent to the completion of assessment, the assessee has taken up the issue to the notice of the BCCI with regard to mistakes in the payments shown to have been made by BCCI to the assessee in Form 26AS. The BCCI has made necessary corrections and the assessee has down loaded the revised Form 26AS, wherein, the receipts in BCCI were reported at ₹ 41,54,08,993/- against the receipts shown in Form 26AS at ₹ 50,56,78,635/-. The assessee filed rectification petition before the AO explaining that there was no short admission of receipts from the BCCI, since ₹ 37,74,16,941/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, it, is held that the revised, Form 26AS is required to be taken into - consideration for the purpose of ascertaining whether there is any short admission of receipts from BCCI. 38. As against the receipts of ₹ 41,54,08,99.34 reflected in the revised Form 26AS in respect of BCCI, it is noticed that the assessee credited BCCI reimbursements and grants of ₹ 37,74,16,941/- to the Income & Expenditure account and credited Infrastructure subsidy from BCCI of ₹ 5,16,67,017/- to the Infrastructure subsidy account in the balance sheet. Thus, it is seen that the receipts from BCCI credited by the assessee in its books of account aggregated to ₹ 42,90,83,958/- as against ₹ 41,54;08,993/- reflected in the revised Form 26AS, Thus, it is seen that there is no short admission of receipts from BCCI and consequently, it is held the addition of ₹ 12,52,61,694/- made in the assessment order towards the short admission of receipts is not sustainable. 39. As regards the treatment given by the assessee in respect of the Infrastructure subsidy of ₹ 5,16,67,017/- received from BCCI, it is seen that the assessee treated the same as a capital receipt and cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When there is prima facie mistake, it is the obligation of the AO to rectify the mistake, even though the appeal is pending before the appellate authorities and submit the copy of rectification order for further action of Ld.CIT(A). Instead, the AO rejected the rectification petition, hence, AO should not have any grievance for further opportunity. Ld.CIT(A) is empowered to verify the corrections and decide the issue. Since the Ld.CIT(A) has examined the issue and found that there was no short admission of receipts, we find no reason to interfere with the order of the Ld.CIT(A) accordingly, ground No.(iii) of the revenue is dismissed. 10. Ground No.(iv) is related to contravention to Rule 46A of the IT Rules. With regard to reconciliation of gross receipts declared by the assessee and as per Form 26AS, we have already discussed in the earlier paragraphs that the assessee has filed 154 petition furnishing the complete details, which, the AO has rejected for the reason that the appeal was pending. Since the issue was already placed before the AO and the AO has rejected the assessee's petition for rectification we, find no infirmity in the order of the Ld.CIT(A) and accordingly gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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