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TMI Blog2024 (7) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... of broadcast rights as well as the arrangement with respect to state associations (either in the form of master documents, resolutions or individual agreements with state associations) have to be examined. It goes without saying that there need not be an exact correlation or a proportionate division between the receipt and the actual expenditure. This is in line with the principle that what is an adequate consideration for something which is agreed upon by parties is a matter best left to them. Therefore, the issue is restored to the files of CIT(A) to decide afresh in the light of the Judgment of the Hon ble Supreme Court in the case of ACIT vs. Ahmedabad Urban Development Authority (supra). - Shri G.S. Pannu, Hon ble Vice President And Shri Anubhav Sharma, Judicial Member For the Assessee : None For the Revenue : Ms. Sapna Bhatia, CIT-DR ORDER PER ANUBHAV SHARMA, JM: This is appeal preferred by the Revenue against the order dated 08.08.2019 of the Commissioner of Income Tax (Appeals)-II, Kanpur (hereinafter referred to as the Ld. First Appellate Authority or in short Ld. FAA ) in appeal No.CIT(A)-II/DCIT-6/10700/2016-17 arising out of the appeal before it against the order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been looked into carefully but have no leg to stand in view of the provisions of Section 13(8) which read as under:- Nothing contained in section 11 or section 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year. 3. In appeal, the ld.CIT(A) allowed the grounds of the assessee and deleted the addition made by the AO. 4. Aggrieved by the order of the ld.CIT(A), The Revenue is in appeal before us raising the following grounds:- 1. The ld.CIT(A) has erred in law and facts in deleting addition of Rs. 25,73,17,761/- by the AO without appreciating the fact that the activities of the Association are not charitable in nature. 2. The ld.CIT(A) has erred in law and facts in allowing the appeal of the assessee without appreciating the fact that the action of the AO denying exemption u/s 11 12 of the IT Act was rightly taken in light of the facts that the Association was found to be involved in business activities. 3. The order of the ld.CIT(A) be cancelled and the order of the AO be rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U category, if it is to make a case for tax exemption. 226. BCCI is the body which regulates cricket and represents the country. Within the country it organizes and conducts the Ranji Trophy, the Irani Trophy, the Duleep Singh Trophy, the Deodar Trophy and the NKP Salve Challenge Trophy. These are domestic events, yet only those who are members of the Board and/or recognized by it can take part in these events. The members of the Board (entitled to vote in its election) are the state cricket associations.154 The BCCI is the country-level cricket regulator both off and on the fields, and its functions include selection of players and umpires. The International Cricket Council (of which BCCI, as the representative body of the country, is a member) possesses and exercises all the powers to regulate international competitive cricket. It also exercises disciplinary power in case of violation of the rules, a country member or the player may be derecognized. The ICC exercises a monopoly over the sports at the international level whereas BCCI does so at the country level. BCCI recognizes bodies which are entitled to participate in the nominated tournaments. Players and umpires also are to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om media rights. 229. These media, or broadcasting rights, are in the nature of intellectual property rights: under Section 37 to 40 of the Copyrights Act, 1957. These rights- especially television and digital rights enable the licensee or the successful bidder to exploit the telecast or broadcast commercially, by carrying advertisements of various products and services, in the media. Given that (i) BCCI does not own the stadia, and uses the entire physical infrastructure of the state associations (ii) expressly negotiates on their behalf for the sale of such rights (which appear to be purely commercial contracts), the associations assertions that they only received subsidy from BCCI, needed closer examination. 230. The income and expenditure account for the year ending on 31.03.2009 shows that the total income of the GCA was ₹ 4,03,98,736.81. Of these sponsorship money was ₹ 20,00,000/-; bank interest was ₹ 2,21,88,527.05 and as against the head India v. South Africa test match , the sum of ₹ 1,51,97,741/- has been shown. Of the total of ₹ 2,21,02,441.45 shown as income, ₹ 32,24,591.25 is shown as expenditure, only a fraction appears to have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hes they host. Many such matches are not at national level and are under-16 or under-18 matches at the regional level. However, these activities are not to be seen in isolation but are to be regarded as part of the overall scheme, and ecosystem in which the game of cricket is organized in India. Talent is spotted, at local levels and dependent on the promise shown, given appropriate exposure. 235. On a close scrutiny of the expenses borne, having regard to the nature of receipts, the expenditure incurred by Cricket Associations does not disclose that any significant proportion is expended towards sustained or organized coaching camps or academies. Therefore, in the opinion of this court, the ITAT fell into error in not considering the nature of receipts flowing from the BCCI into the corpus of GCA and SCA as well as other associations that are before this court- to determine their true character. The ITAT appears to have been swayed by the submission that the amount given by the BCCI were towards capital subsidy. 236. To determine whether a given receipt is to be characterized as falling in the revenue or capital stream, the objective for which it is given as well as the manner in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne and see the pattern of receipts and expenditure. Whilst doing so, the nature of rights conveyed by the BCCI to the successful bidders, in other words, the content of broadcast rights as well as the arrangement with respect to state associations (either in the form of master documents, resolutions or individual agreements with state associations) have to be examined. It goes without saying that there need not be an exact correlation or a proportionate division between the receipt and the actual expenditure. This is in line with the principle that what is an adequate consideration for something which is agreed upon by parties is a matter best left to them. These observations are not however, to be treated as final; the parties contentions in this regard are to be considered on their merit. 6. In the light of the aforesaid determination of the issue in favour of Revenue, by the Hon ble Supreme Court, the order of the ld.CIT(A) which was based on the following judgements cannot be sustained:- (i) DCIT (Exem) vs. Maharashtra Cricket Association (2018) 407 ITR 9 (Bom); and (ii) Chattisgarh State Cricket Sangh vs. DCIT (Exem) (2019) 178 DTR (Raipur) 369 7. Therefore, the issue is resto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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