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TMI Blog2022 (9) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of exemption u/s 11 has given various observations as to why the assessee is not entitled to the exemption, we find the learned CIT (A), in a very cryptic order, has directed the AO to allow the exemption u/s 11 of the Act, merely on the basis of Registration u/s 12AA available to the assessee. A perusal of the order of the learned CIT (A), which have already been reproduced in the preceding paragraph shows that the CIT (A) has not addressed the various observations made by the Assessing Officer while denying the claim of exemption u/s 11. A perusal of the same would show that the Tribunal has categorically held that the receipt of income from activities are subject matter of assessment and has nothing to do with the genuineness of the activities or the activities not in conformity with the objects of the Trust - CIT (A) without properly understanding the directions of the Tribunal while granting registration u/s 12AA of the Act was carried away by the arguments advanced by the assessee and has directed the AO to allow exemption u/s 11 of the I.T.Act, which, in our opinion, is not correct. We, therefore, deem it proper to restore the issue to the file of the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 between the assessee and Visaka Industries Ltd, the Company agreed to pay Rs. 6.5 crores to the assessee for naming the stadium as Visaka International Cricket Stadium and granting advertisement, publicity and display rights and certain privileges/amenities. Likewise, the assessee entered into an agreement with another company M/s GMR Hyderabad International Airport Limited on 27.09.2007 by which the company agreed to pay Rs.3.5 crores for advertising rights and allotment of corporate boxes amongst other amenities. The assessee has entered into another agreement with M/s Bharathi Cement Corporation Ltd on 14.02.2011 by which the company agreed to pay Rs.2.5 crores for having the Western stand named after it, with advertising rights and allotment of corporate boxes amongst other amenities. These agreements are valid for a period of 15 years or 10 international matches whichever is later with the effective date reckoned from the first international match played at the stadium after entering into the licensing agreements. 4. The Assessing Officer noted that considering the facts emerging from the documents impounded and post investigation in this matter, the DIT(E), Hyderabad p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ague T20 2,98,38,052 I.P.L. 1,32,49,000 Domestic Matches 2,01,50,701 India vs. Sri Lanka ODI Match 2,01,50,701 Membership Subscription 1,87,621 Interest and other income 34,24,725 7. The Assessing Officer noted that the assessee is a fullfledged member of the BCCI as per Memorandum and Rules Regulations of BCCI and also as per Memorandum of Association of the assessee. Further, the sponsorship received in respect of corporate boxes cannot constitute charity. The Assessing Officer held that the sum of Rs.20.00 lakhs received by the assessee in respect of conduct of matches of the celebrity cricket league are in the nature of trade or commerce or business and hit by the proviso to section 2(15) of the I.T. Act, 1961. He held that the IPL matches conducted by the assessee are purely on commercial basis. In view of the above the Assessing Officer held that the assessee is not entitled to the benefit of exemption u/s 11 of the I.T. Act and treated the net surplus a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise once the income has to be computed u/s 11 to 13 of the I.T. Act, 1961. Therefore, Assessing Officer is further directed to delete the addition of Rs.1,28,55,646/- made u/s 40A(3) of the I.T Act, 1961 . 11. Aggrieved with such order of the learned CIT (A), the revenue is in appeal before the Tribunal by raising the following grounds of appeal: 1. The Ld. CIT(A) erred in allowing the appeal of the assessee. 2. The Ld.CIT(A) erred in directing the Assessing Officer to allow exemption u/s 11 to the assessee, without considering that the nature of activities carried out by the assessee is trade, commerce or business for a cess or fee or any other consideration ass brought out by the Assessing Officer in the Assessment order which is in violation to the 1st Proviso to Section 2(15) of the Income Tax Act, 1961. 3. The Ld.CIT(A) erred in directing the Assessing Officer to allow exemption u/s 11 to the assessee without considering that the receipts of the assessee from the activities exceeds twenty-five lakh rupees which clearly attracts the first proviso of Section 2(15) which are violated by the assessee. 4. The Ld.CT(A) erred in not adjudicating all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pending with the Assessing Officer after the matter was set aside to the file of the Assessing Officer. Relying on various decisions, he submitted that under identical circumstances, the Coordinate Benches of the Tribunal have allowed the claim of exemption u/s 11 of the I.T. Act to the respective cricket association. He accordingly submitted that since the aims and objectives of the association are for the promotion of organizing, management and conducting of the game of cricket and the assessee has fulfilled its objectives, the benefit of exemption u/s 11 as allowed by the CIT (A) should be upheld and the grounds raised by the revenue should be dismissed. 15. So far as addition under section 40A(3) is concerned, he submitted that since the income is exempt, whatever addition made will automatically get exempted. He accordingly submitted the grounds raised by the revenue should be dismissed. 16. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the objects of the trust. As rightly pointed out by learned Senior counsel appearing for the assessee, as is evident from the reading of Circular No.11 of 2008 dated 19.12.2008, the object of the insertion of first proviso to Section 2(15) of the Act was only to curtail institution, which under the garb of 'general public utility', carry on business or commercial activity only to escape the liability under the Act thereby gain unmerited exemption under Section 11 of the Act. 17. Thus, a perusal of the same would show that the Tribunal has categorically held that the receipt of income from activities are subject matter of assessment and has nothing to do with the genuineness of the activities or the activities not in conformity with the objects of the Trust. Thus, the learned CIT (A) without properly understanding the directions of the Tribunal while granting registration u/s 12AA of the Act was carried away by the arguments advanced by the assessee and has directed the AO to allow exemption u/s 11 of the I.T.Act, which, in our opinion, is not correct. We, therefore, deem it proper to restore the issue to the file of the learned CIT (A) with a direction to decide the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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