BARODA CRICKET ASSOCIATION,,VADODARA vs. THE DY. CIT, (EXEMPTION), CIRCLE-2,, AHMEDABAD

PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-9, Ahmedabad dated 19.04.2017 pertaining to A.Y. 2013-14 and have taken following grounds of appeal:

ITA No. 1435/Ahd/2015 2 . A.Y. 2013-14 1. The learned Commissioner of Income Tax (Appeals) - 9, Ahmedabad ["the CIT(A)"] erred in fact and in law in confirming the action of the Deputy Commissioner of Income Tax (Exemptions), Circle - 2, Ahmedabad ("the AO"), in holding that the activities carried out by the Appellant are not in the nature of "charitable activities" and thereby disallowing exemption u/s. 11 of the Income Tax Act, 1961 ("the Act"). 2.The learned CIT(A) erred in fact and in law in confirming the action of the AO, in considering the activities carried out by the Appellant are in nature of trade, commerce and business and therefore covered by the proviso to section 2(15) of the Act. 3.The learned CIT(A) erred in fact and in law in confirming the action of the AO in applying the proviso to section 2(15) r.w.s. 13(8) of the Act and thereby taxing the entire income of the Appellant. 4.Without prejudice to the above the learned CIT(A) erred in fact and in law in confirming the action of the AO in taxing the income of the Appellant despite the fact that the receipts on account of sale of tickets, sponsorship income did not exceed the statutory limit of Rs. 25,00,0007- as specified in the second proviso to section 2(15). 5.The learned CIT(A) erred in fact and in law in confirming the action of the AO in holding the activities of promoting the game of cricket as business income u/s. 28 without establishing that the said activities are in nature of business, trade or commerce. 6. The learned CIT(A) erred in fact and in law in confirming the action of the AO in taxing the net surplus of Rs. 20,62,53,049 as per income and expenditure account of the Appellant. 7. The learned CIT(A) erred in fact and in law in confirming the action of the AO in not allowing the benefit of section ll(l)(a) of the Act and treating the amount of Rs.5,14,46,438/- as income of the Appellant. 8. The learned CIT(A) erred in fact and in law in confirming the action of the AO in disallowing benefit of section 11(2) and thereby treating the amount of Rs. 15,48,06,61 II-as income of the Appellant. 9. The learned CIT(A) erred in fact and in law in confirming the action of the AO in taxing the subsidy of Rs.22,95,90,081 despite the fact that the amounts received as subsidy are not taxable for the current assessment year as per section 2(24)(xviii) of the Act. 10. The learned CIT(A) erred in fact and in law in confirming the action of the AO in charging interest u/s 234B of the Act.

ITA No. 1435/Ahd/2015 3 . A.Y. 2013-14 11. The learned C1T(A) erred in fact and in law in confirming the action of the AO in initiating penalty proceedings u/s 271(l)(c).

ITA No. 1435/Ahd/2015 4 . A.Y. 2013-14 (b) To arrange and promote the establishment of Cricket clubs within its jurisdiction. (c) To directly control and manage all cricket activities within its jurisdiction. (d) To pay special attention and care to the development of cricket at all levels within its jurisdiction.. (e) To arrange for good cricket ground and maintain the pitch for practice and matches arranged by the Association. (f) To popularize the game of cricket within its jurisdiction/by organizing and for conducting and or controlling tournaments and matches. (g) To select teams to represent the Association in any tournament Championship or fixture local or otherwise. (h) To start or sponsor and/or to subscribe to funds or to stage a match for the benefit of cricketers or persons who have rendered services to the game of cricket or for their families or to a sporting cause or institution. (i) To borrow or raise money which may be required for the purpose of the Association. (j) To collect funds and to utilize the same in such manner as may be considered fit for the fulfillment of the objects of the Association. (k) To invest moneys and funds of the Association in such manner as may be decided upon from time to time. (l) To tram umpire and to form a panel of umpires. (m) To collect all the cricket statistics of different players and, clubs so as to give guidance in the selection of players for important matches. (n)To do any other acts in furtherance of the above objects not inconsistent there with. (ii) From the above, your kind office will appreciate the Assessee has been focusing on development and promotion of cricket and identifying new talents who can represent cricket at the national and international levels. There has been a constant endeavor to encourage the upcoming and budding cricketers and provide them opportunity to participate in competitive form of cricket by adding the new tournaments. With a view to sharpen the skills of players specialized coaches are invited to impart training across all age groups. In order to ensure the fitness and. skills of the players, teams of juniors and seniors are sent to outstation ' tournaments. We have witnessed many players in past who are from Vadodara and have represented cricket at International Level, This has Happened only due to the contribution of BCA. The BCA also facilitates the present and past cricketers who represent Baroda in Ranji trophy giving them the cash rewards for their achievement. It is also not out of place to mention that many players have been, engaged but the BCA and given employment by BCA. These players provide training and facilitate other

ITA No. 1435/Ahd/2015 5 . A.Y. 2013-14 activities of BCA. It has started with many initiatives to spread the game to the grass root level by introducing the game to the remotest areas of the state such as Navsari, Bilimora and. Mehsana. It may also be noted that BCA not only promotes the game of cricket but also spreads it awareness in the schools and encourages children to take up the game. BCA organizes school tournaments which inculcates a sportsman spirit in a child and. at the same tune promotes the game of cricket. Activities during the year: iii.) During the year in question, it is submitted that BCA has undertaken various activities starting from identifying the new talent from the remote villages of Vadodara vis a vis focused on providing specialized, training, through modem, equipments and. coaches. BCA also organized various matches including Ranji matches and training sessions for all these players. Also to improve the skill of umpire and to meet the shortage of professional and skilled umpire in India, various sessions and training programs have been undertaken by BCA. In order to encourage all the players and in order to ensure fitness and skill of players at optimum, level, teams of seniors and juniors have been sent to outstations for participation in tournaments. This is to ensure that, the players can perform in all situation and all conditions. iv.) During the year. BCA has organized various programs which are summarized as under; a.) Various initiatives to spread cricket to grass root level has been achieved with, the games being taken to the remotest comers of the state, i.e. Nav-sari, Billimora. Mehsana etc. BCA ensured that boys/girls from these pans of the state are attending the regular nets at district centers. Conscious efforts have been made by BCA to develop infrastructure in these pan of the state. As a result of the above, during the year 12 players have represented the BCA in BCCI various age group tournaments during the seasons. b.) During the year, BCA introduced for the first time U-12 (Under 12) Inter School Knock Out Invitation Tournaments. Total 18 schools participated in these tournaments. c.) With a view to sharpen the skill of players, the specialized coaches, Mr. T A She/car (Fast Bowler Coach) and Mr. R. Shridhar (Fielding Coach), were invited to impart training across all the age group. d.) During the year, the senior team participated in. Shaft Darashah (KSCA) Tournament and Buchi Babu Tournaments. L/-25 participated in. J.P.AAray Memorial Cricket Tournament at Chandigarh. Tour of LI-19 team was organized for playing practice matches at Hyderabad and Bangalore. U-16 Three Day Invitation Tournament was also organized, where four states teams

ITA No. 1435/Ahd/2015 6 . A.Y. 2013-14 i.e. Ha.ma.chal Pradesh, Gujarat, Madhya Pradesh and Maharashtra participated along with 2 BCA teams'. e.) In order to encourage the upcoming local and distinct cricketers and to provide them with opportunity to participate in competitive form oj cricket, enhanced number of matches mere organized, to provide good, platform. One of such initiative being that during the year BCA has added new tournament in the form of Challenger Trophy for sessions and U-19 age group. This has tremendously improved the confidence levels of all the players. f). Various initiative and orientation programs were undertaken by Head Coach, seniors from BCC1 and other professions from this field to educate the players, support staff were undertaken to provide knowledge and briefed about the Arid-Doping and Anti-Corruption code of BCCl which elaborates Dos and DONTs. The pocket guide was circulated to all the players, support staff, physios. g.) During the year, BCA team represented Vadodara at various tournaments whereby various talents have been identified. Many players performed exceptionally well scored century and many took wickets. These are future stars which will be contributed by BCA. The following BCCI matches have been undertaken and played by BCA team: 1. Ranji Trophy Inter State Tournament (Vijay Hazare Trophy) 2. Sued Mustaq AH Trophy (T 20 Matches) 3. U-25 Col. C.K. Nayudu Trophy 4. Li-1 9 Cooch Behar Trophy 5. U-l 9 Vinod Mankad Trophy (One Day Matches) 6. U-16 Vij ay Marchanl Trophy 7. U-l-l West Zone Tournament. . 8. Senior Women One Day Inter State Matches 9. Senior Women T 20 Inter State Matches 10. Under 19 Women One Day Inter State Matches i.) During the year BCA has provided employment {Part time/Full time) or regular monetary emoluments to various ex-crickets for various segments such as Manager Cricket Operator (MCO), Coaches, Assistant Coach for various segment of categories of . team. Trainers, Chairman Selector, Bowling Coach, Fielding Coach etc. ....... j) During the year, BCA organized following educational programs for improvement of the skill and awareness of the players such as Umpire Seminar, Scorer Seminar, Fast Bowling Camp, Fielding Camp, Open Trial for Bowler- Third leg, Level "B" for coaches, Level "O" for trainers and Level-1 Trainers' course, Level-1 Cricket specific course, Level B Refresher course for Coaches, Level C Refresher course for Coaches, Curator Certification curse and Video Analyst Seminar ivhich were guided by various seniors and professional players.

ITA No. 1435/Ahd/2015 7 . A.Y. 2013-14 v.) From the above, it may be noted that the activities of BCA focuses on achieving high standards of Cricket and at the same time developing and. promoting the sports in every comer of the state. BCA is involved in providing a platform to the youth for developing their skills related to the sport of cricket and benefits public at large. Thus the Assessee is a. charitable institution, s Section 2(15): vi) Your kind office in the notice has mentioned that the activities of the Assessee should not be covered by the first and second proviso to section 2(15). Without admitting we submit that no material is brought on record, by your kind office to state that the activities carried out by the Assessee are in the nature of business activities. In view of the same we submit that no adverse view may please he taken. However, we submit that the proviso is not applicable and as of now on this issue direct, decisions are available. We rely on: a. In the case of Delhi & District Cricket Association v. DIT (E) IT A No. 3095/Del/201J2 decision dated 13-1-2015 the registration u/s. 12A was cancelled on the ground that the income of the Trust included. income from ground booking charges, health club charges, income from corporate boxes, lawn booking income, league entry fees, playing card, receipts, sponsorship money, sale of tickets, advertisement, souvenirs, IPL matches etc. It was held that the core activity of the. assessee was undisputedly charitable in nature. Hence it. is not the case of revenue that the assessee was carrying on "trade, commerce or business''' under the garb of the activity being "general public utility'". As regard the nature of various receipts it was held that it do not result in the assessee being held as undertaking activities in the nature of "trade, commerce or business'", 'Hie receipts were intrinsically related, interconnected and. interwoven with the charitable activity and cannot he viewed separately. The activities resulting in the said receipts are also charitable activities and not ''trade, commerce or business" activities. DIT (Exemption) v. Tamilnadu Cricket Association (2013) 40 taxmann.com 250 (Madras) "Section 12AA, read with sections 2(15), 11.12,12A and 13, of the Income- tax Act, 1961 - Charitable or religious trust -Registration procedure /Cancellation of registration) - Assessee, a cricket association, applied for grant of registration under section 12AA - Commissioner after satisfying! himself about genuineness of objects of assessee granted registration to it under section 12AA on 28-3-2003 Later on 19-7-2011 Commissioner examined income and expenditure statement of assessee and held that assessee was receiving income from holding of matches, which ivas in nature of trade or commerce or business and hit by proviso to section 2(15) - He further held that

ITA No. 1435/Ahd/2015 8 . A.Y. 2013-14 activities of assessee not being charitable as per section 2(15), same could not be held to be genuine and assessee was not a chcmiahle institution - He, Therefore, cancelled registration granted to assessee - whether since objects remained as they were in year 2003, Commissioner had erred in cancelling registration of assessee-association - Held, yes. ... c.)Also see recent decision of 1TAT. Chennai in Tamilnadu Cricket Association v. Deputy Director of Income Tax (Exemptions) dated 14-8- 2016. Copy attached as Annexure – 6. 4.3 The above submissions given by the assessee is carefully considered but not acceptable for following reasons. 4.3.1 The assessee is admittedly involved in promotion of cricket as game. On perusal of the income and expenditure statement of the assessee. it is evident that the assessee has a total income of Rs. 34,02,66,305/- which includes tournament and other receipt, of Rs. 23,05,52,093/- and other-income of Rs. 10,97,14,212/-. It is noticed that, assessee has received TV subsidy of Rs. 10,08,90,881 and I PL subsidy at Rs 12,86,99,200/- totaling to Rs. 22,95,90,081/-, Apart from this assessee has also received an amount of Rs.7.10,000/- as sale of ticket from ODI Matches. It is stated by the assessee,s representative that I PL subsidy have been received by them from BCCI. 4.3.2 Whenever a foreign team visits India, the international matches such as Test arid ODI are allotted by BCCI to the state cricket associations by a rotation policy. The matches are conducted and managed by the respective state associations. It is not possible for BCCI to conduct all these matches with its own limited personnel. It is dependent on the state associations, their office- bearers, their employees and their network and resources at the local center to conduct the matches. The association manages the entire match right from provision of security to players, spectators in co-ordination \vith respective state police personnel taking other security measures like fire prevention etc. The association incurs a good chunk of expenditure in conducting an international Test/ODI/T20/IPL/CL T20 matches. In ordcr io have fair and equitable sharing of the revenues, arrangements have evolved over time, about the respective responsibilities, rights, share of revenue etc. of BCCI and the State associations. The state association is entitled to the ticket revenue and ground sponsorship revenues. Expenses on account of security for players and spectators, temporary stands, operation of floodlights, score boards, management of crowd, Insurance for the match, electricity charges, catering etc. are met by the State associations. On the other hand expenditure on transportation of players and the match officials, boarding and lodging, expenses on food for players and officials, tour fee, match fee, etc. are met by BCCI and revenues from sponsorship belong to BCCI. In respect of revenues

ITA No. 1435/Ahd/2015 9 . A.Y. 2013-14 'from sale of media rights, an arrangement has evolved over time. Until 1991- 92, the-income from media rights was meager. With the' growth in income from media rights, it became necessary to optimize the arrangement for sale of media rights. For a Test series or ODI series conducted in multiple centers and organized by BCCI and multiple state associations, it was found that if each stare association were to negotiate the sale of rights to events in its center, it negotiating strength would be low. It was, therefore, agreed that BCCI would negotiate the sale of media rights for the entire country to optimize the income under this head. It was further decided that out. of the receipt from the sale of media rights 70% of the gross revenue less production cost would belong to the state association. Every year, BCCI has paid out. exactly 70% of its receipts from media rights(less production cost) to the state associations. This amount has been utilized by the respective association to build infrastructure and promote cricket, making the game more popular, nurturing and encouraging cricket talent, and leading to higher revenues from media right. 4.4 The assessee is thus, engaged in the business of entertainment of public at large by arranging/posting national and international cricket tournaments for a fee/cess, The nature of receipts as mentioned in the above table amply explains the nature of activity carried on by the a.ssessee. The above table demonstrates that the assessee is involved in profit generating activity. The assessee carries out the activity of hosting matches at national/international at regular intervals which is clear from its income & expenditure statement of the year under consideration and of the earlier years. Therefore, the submission oi the assessee that it is not carrying on any business activity is not; acceptable. The assessee has relied on various decisions to explain its stand that, the said activity of conducting cricket matches is not a business activity. The same have been considered and the facts of the instant case are quite different from the decisions cited by the assessee and are hence distinguishable. 4.5 In view of the above, the issue on hand is to decide whether the activities carried out by the assessee are charitable in nature. Hence, it is pertinent to examine the issue in the light of the provisions of Sec.2 (15) r.w. proviso (1) & (2) of the l.T Act. Charitable objects defined in the section 2(15) of the Act. 4,6.1 Section 2(15) of the Act defines 'charitable purposes'. First proviso, thereto with effect from assessment year 2009-10 laid down that, if any trust etc. (a) is engaged in pursuing objects of general public utility for other objects') and (b) carries on any activity in the nature of trade, business or commerce or provides any services in relation to the trade, commerce services or business and (c) aggregate receipts there from exceed Rs. 25 lacs, it shall be considered that advancement of other objects is not a charitable purpose. If so, such a

ITA No. 1435/Ahd/2015 10 . A.Y. 2013-14 trust is not eligible for the exemption inasmuch as the primary condition of being existing for charitable purpose-is not satisfied. 4.6.2 During the course of the assessment proceedings for the A.Y 2009-10 to 2012-13. the assessee's claim of exemption u/s 1 1 was not allowed as the assessee was held to be carrying on the activity of 'advancement of other objects of general public utility' as per the definition of Sec 2(15) of the Act. During the course of scrutiny assessment of A.Y 2009-10, A.Y.2010-11, 2011- 12 and A.Y. 2012-13, it was established that the assessee was not doing any 'charitable /educational activity' but it" was in the business oi entertainment of people at large by arranging/hosting national and international levels cricket tournaments for a fee/cess. Since the provisions of See 2(15) read with the proviso 1 & 2 are squarely applicable to the facts of the ease, the claim of exemption u/s 11 of the Act was disallowed by the AO for A.Y 2009-10 and A.Y. 2010-11. The C1T (A) has dismissed the appeal of the assessee for A.Y 2009-10, 2O1O-11 & 2011-12 and against the order of Ld. CIT (A), the assessee is in further appeal in Hon'ble 1TAT for A.Y. 2012-13 is pending with first appellate authority. 4.7 It is pertinent to mention that as per the CBDT Circular No. 395 dated 24/09/1984, it was held that promotion of sports and games is "advancement of objects of genera! public utility'. Thus, in the instant case, the assessee is clearly engaged in an activity that is to be treated as "advancement of objects of general public utility". Since the assessee is covered by the last, limb of the definition of Sec.2 (15), now it is to be seen whether the conditions in the proviso 1 of the Sec.2 (15) are applicable to the facts of the case. It is very clear from the audited accounts of the assessee- that the BCA earns income out of sale of tickets, sale of space, A/C Cabin Ticket sale etc. oxit of the cricket matches conducted at the grounds of BCA at Baroda which is nothing but a business activity carried out by the assessee. The same has been clearly discussed in para-4 above. Thus, it is clearly evident that the assessee is engaged in business activity, thereby satisfying the conditions prescribed in the proviso 1 to Sec.2 (15) of the I.T Act. Since the gross receipts of the assessee exceeds Rs. 25 lakhs, during the year under consideration, the provisions of the second proviso to Sec.2 (15) of the I.T Act arc also satisfied. Thus, the assessee is clearly covered by the provisions of Sec 2(15) read with the proviso 1 & 2 to the said section. 4.7.1 In this regard reliance is placed on the decision of the High Court of Calcutta in the case of Cricket Association of Bengal V/s CIT(37 1TR 277) wherein it was held that a club formed for the development of promotion of sports or games or entertainment is not a charitable institution. The head note of the decision is as under:-

ITA No. 1435/Ahd/2015 11 . A.Y. 2013-14 "Section 1 I of the Income-tax Act, 1961 (Corresponding to section 4(3)(i) of the Indian Income-tax Act, 1922) - Charitable or religious trust - Exemption of income from property held under - Assessment years 1950-51 to 1952-53 - Whether while promotion of games as a part of education of those who participate in them may be a charitable purpose, promotion of practice of game in general either for entertainment of public or for advancement of game itself could not be held to be charitable - Held, yes - Assessee was an association whose mam object, was to promote game of cricket - Another object: authorized assessee to cany out any other business or activity which might seem to assessee capable of being carried on in connection with above - Assessee rnerery held some demonstration or exhibition matches and did not provide any training in game of cricket to novices or any advanced training for persons who were already practiced players its activities outside holding matches was limited entirely to its own members and only contact it had with_ public was by way of having them as spectators, on payment of fee, of matches arranged by it - Whether income that was derived from fees charged for admission to games held under auspices of association could not be said to be income derived from any property - Held, yes - Whether further, there was no general public utility, so as to amount to charity, in arranging cricket matches which public could see on payment arid hence, assessee was not entitled to exemption conferred by sections 4(3)(i) and 4(3)(ia) of 1922 Act - Held, yes" 4.7.2 In this regard reliance is placed on the decision of the ITAT Chennai Bench 'B' In the case of Tamil Nadu Cricket Association [32 taxmann.com 5O] "The question is whether assessee is promoting and developing the cricket game as an activity of general public utility. This is the crucial question to be asked. 'Die physical play of cricket game is not the sole point which will decide as to whether the assessee is carrying on its activities as stated in its Memorandum of Association or the assessee's activities are genuine or not. It: is also necessary to examine whether the assessee has satisfied the conceptual requirements of its objectives. (Para 52] Regarding the physical aspect of the game, the assessee is carrying on what is stated in the objects. These activities are genuine. The genuineness of the activities carried on by the assessee stops with the physical aspects of the game. The matches conducted by the assessee do not go to the extent of 'advancement of any other object oi" general public utility1. The activities of the assessee did not come \vithin the conceptual framework of charity vis-a-vis activity of general public utility envisaged in section 2(15). As already stated, it has become an industry by itself. The pattern of the receipts accounted by the assessee, shows that the revenue is generated Irom advertisement and special events like I PL match, celebrity matches, etc. These are all commercial activities. Therefore, it is crystal clear that even though cricket matches are

ITA No. 1435/Ahd/2015 12 . A.Y. 2013-14 conducted by the assessee, they are not conducted in accordance with the objects as stated in its Memorandum of Association and those activities are not for 'advancement of any other object of general public utility1, as explained in the proviso to section 2(15). [Para 53 " • ....... -1.7.3 Further reliance 4.3.5 is placed on the decision of the Hon'ble ITAT, Panaji Bench, in the case of Entertainment Society of Goa [34 taxrnan.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. "The proviso clearly states that the advancement of any other object of general public utility shall not be charitable purpose and subsequent to that it gives certain conditions. If the institution fulfils those conditions as are stipulated in the proviso, the institution will not be regarded to have been engaged for the advancement of any other object of general public utility for the purpose of section 2(15) and will no longer remain to have been engaged in charitable purposes. In fact, this proviso puts an embargo on the institution that in case the institution falls within the proviso, it will not have been engaged for charitable purpose even if it is engaged in the advancement of any other object of general public utility. The embargo states that if the institution is engaged in carrying on of any activity in the nature of trade, commerce or business or any activity or rendering any service in relation to any trade, commerce or business for cess or fee or any other consideration, the institution shall not be regarded to have been involved in carrying on charitable purpose. This proviso in the last sentence further states that nature of use or application or retention of the income by the institution from such activity will not be relevant consideration. In view of this specific provision, one is not concerned to look into how an institution has used, applied or retained its income, if the same has been received by the institution from any activity carried out in the nature of trade, commerce or business or from any activity of rendering any service in relation to trade, commerce or business. The words used in the proviso are 'carrying on of any activity in the nature of trade, commerce or business' and not the words 'carrying on trade commerce or business'. Using of the words 'any activity in the nature of prior to 'trade, commerce or business1 has a specific meaning while interpreting the proviso. These words cannot be ignored. Tins mandates that the institution need not actually be carrying on trade, commerce or business but the activity carried on by it are to be similar to trade, commerce or business. The profit motive is required while an institution is carrying on trade, commerce or business. The use of words 'carrying on any activity in the nature of trade, commerce or business' will mean-that there need not be profit motive in

ITA No. 1435/Ahd/2015 13 . A.Y. 2013-14 carrying on the activity by the institution. The legislature is fully aware of that an institution which is incorporated for charitable purpose cannot have profit motive." 4.8 In view of the above facts and legal provisions, the assessee is thus held to be carrying on the activity of "advancement of other objects of general public utility" and which is in the nature of business, trade, commerce and not "education" as claimed by the assessee. Therefore, the assessee is covered by the provisions of Sec 2(15) r.w. proviso 1 & 2 of the I.T. Act. 5. During the year, Rs.27.09,948/- was received by BCA from BCC! under the head corpus fund in the name of infrastructure subsidy. The assessee has treated the said receipt as 'corpus donation' and claimed it as exempt u/s 1 l(l)fd) of the Act. 5.1 In this regard, showcause dated 26.11.2015, the assessee was requested to showcause as to why said donation should not be treated as its income for the period under consideration. 5.2 In response to the above showcause letter dated 26.11,2015, a letter-dated 06,02.2016 received from the assessee is kept on record. The relevant portion of the above reply is reproduced as under. "Vide point no. (6) of the notice dated 26.! 1.2015, your kind office has referred subsidy of Rs. 27,09,948/- received from BCCJ. Your kind office has stated that we have failed to prove that this donation is towards corpus. Thus, we have been show caused as to why the donation should not he treated as income for the period under consideration. In this regard we would like to submit as under: We submit that we are affiliated body of BCCI which predominantly focuses on development of Cricket in Indict. BCCI is a national body which monitors and supervises the functioning of all the subordinates in pursuance of the object of the organization. BCCI being mother body is also responsible to give ail kind oj support each association need in order to develop and maintain the cricket and other functioning of the association. BCC! accordingly assists till the associations as per the requirements of sports. As per lire functioning of working committee on the BCCI. every year they monitor the technology development in the sports vi.s a vis functions of these associations and assess the requirement of Cricket kits accessories equipments etc. and accordingly allot equipment and other supports in the form of subsidy. Pursuant to above, during the year under consideration we have been aliened equipments under the Umpiring Assessment program from BCCI. This subsidy is not in the. form of cash receipts rather it is allotment of equipment from BCCI for usage only. Copy of intimation issued by BCCI and copies of hills

ITA No. 1435/Ahd/2015 14 . A.Y. 2013-14 appended therewith is enclosed herewith marked as Annexure-7. These instruments have been allotted so as to improve the skill and proficiency of Umpire so that not only quality umpiring facilities can he assured at all the national and Ranji level matches hut also to assure international standards when international matches are being played at Vadodara. Thus, your kind office will appreciate that the above allotment of equipment under the Umpiring Assessment Program is not income of the Assessee. It is subsidy in kind from BCCI" 5,3 The above reply received from the assessee is carefully considered bur not acceptable. , \ . The provisions of section ll(l)(d) of the J.T. Act exempts voluntary contributions with a specific direction that: the contribution be used as a corpus donation. However, in the instant case there is no specific direction from the BCCUI to treat the said amounts as towards the 'corpus fund'. If the intention of the donor was to donate this amount: towards the 'corpus fund' of the assessee, then it has to be specifically mentioned. In the absence of written direction, a particular donation cannot: be considered as 'corpus donation'. It is pertinent to mention that the assessee could not produce any particular direction from the BCCJ in the form of documentary evidence either for the year under consideration or in any of the earlier assessments. In this case, that specific direction is clearly missing. Therefore, the-said receipt of subsidy has to be income of the assessee Trust and it cannot: be exempt u/s. ll(l)(d) of the I.T. Act. Thus, the infrastructure subsidy received by the assessee from BCCI of Rs. 27,09,948/'- in the form of is treated as income of the assessee as no evidence was furnished to show that the voluntary contribution was made with a specific direction that they shall form part of the corpus of the trust so as to qualify for the exemption u/s l](l)(d) of the Act. On the contrary, if is evident from the letter dated 25.03.2013 of the BCCI that the said infrastructure subsidy is only on account of transfer of umpiring assessment program Equipments to the Affiliated Unit's inventory under the internal transfer of capital goods between BCCI and BCA. Assuming, but not accepting that the amount of Rs. 27,09,948/- received as 'infrastructure subsidy" is 'corpus donation' as claimed by the assessee, even then, as per provisions of Sec 13(8) of the l.T Act, the exemption claimed u/s ll(l)(d) of the l.T Act is not allowable if the provisions of the first proviso to Sec.2(15) of the l.T Act become applicable to the facts of the case, as discussed in the order below. It has been discussed in the preceding paragraphs that the assessee is squarely covered under the provisions of Sec. 2(15) r.w.s proviso 1 & 2 of the l.T Act. Further it is gathered that above amount of Rs. 27,09,94s/- is not routed through P & L account.

ITA No. 1435/Ahd/2015 15 . A.Y. 2013-14

ITA No: 336 /Ahd/2015 130. This appeal challenges correctness of the order dated 7th November, 2014 passed by the CIT(A) in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961, for the assessment year 2009-10. 131. Ground nos. 1 to 3 challenge reassessment proceedings. However, learned counsel for the assessee submits that he does not wish to press these grounds of appeal. Accordingly, these three grounds of appeal are summarily dismissed for want of prosecution. 132. Ground nos. 1 to 3 are dismissed. 133. In ground nos 4 to 9, the assessee has raised grievance against the CIT(A) upholding proviso to Section 2(15) being invoked, against the income from cricketing activities being treated as business income, against resultant denial of exemption under section 11(1)(a), and against CIT(A) upholding the view of the AO of taxing interest income earned from corpus funds, surplus funds as non-

ITA No. 1435/Ahd/2015 16 . A.Y. 2013-14 charitable income. The dispute before us also involves the treatment of Rs 7,21,22,353 received on account of corpus donation described as TV subsidy. 134. In view of our findings on the core issue in these appeals before us, as set out earlier in this order at pages 2 to 55 and in view of our decision above in the case of Gujarat Cricket Association on the issue of TV subsidy- as set out at pages 56 to 58 earlier in this order, the assessee must succeed on these points. Learned representatives fairly agree that whatever we decide in the case of Gujarat Cricket Association, the same will equally apply in this case as well. We, therefore, uphold the plea of the assessee and allow these grounds of appeal to that extent. 135. Ground nos. 4 to 9 are allowed in the terms indicated above. 136. In ground no 9, the assessee has raised an alternative plea to that effect that promoting cricket is covered by educational activities, and, for this reason, the proviso to Section 2 (15) cannot be invoked. 137. As we have allowed the main plea of the assessee, as set out in ground nos. 4 to 9, this plea is rendered academic and does not call for our adjudication as on now. 138. Ground no. 10 is dismissed as infructuous. 139. In the result, ITA No 336/Ahd/15, i.e. assessee’s appeal for the assessment year 2009-10 is partly allowed in the terms indicated above. ITA No.: 2957/Ahd/2014 140. By way of this appeal, the assessee appellant has challenged correctness of learned CIT(A)’s order dated 6th August 2014 in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2010- 11. 141. Ground nos, 1, 4, 5 and 7, which we will take up together, raise the following grievances: 1. The C.I.T. (Appeals) erred in applying the provision of section 13(8) r.w.s.2(15) of the income Tax Act, 1961 as return was filed based on Finance Act, 2009 and on that day section 13(8) was not even in the Statue Book.

ITA No. 1435/Ahd/2015 17 . A.Y. 2013-14 142. In view of our findings on the core issue in these appeals before us, as set out earlier in this order at pages 2 to 55 and in view of our decision above in the case of Gujarat Cricket Association on the issue, the assessee must succeed on these points. Learned representatives fairly agree that whatever we decide in the case of Gujarat Cricket Association, the same will equally apply in this case as well. We, therefore, uphold the plea of the assessee and allow these grounds of appeal to that extent in principle. There is, however, a rider. In this case, there is also a reference to the assessee organizing a one day international match, on commercial scale, for fund raising. That issue is dealt with in a separate ground of appeal. In case, it is held that the said one day international match is in the nature of commercial adventure, it will have the impact on section 2(15) being invoked. That ground is separately being remitted to the file of the CIT(A) for fresh adjudication, and the eventual decision on the same will also have the impact on these issues. We, therefore, remit the matter to the file of the CITI(A) for fresh adjudication in the light of our observations in the case of Gujarat Cricket Association (supra) and the findings on the said aspect of the matter. 143. Ground nos. 1,4,5 and 7 are allowed in the terms indicated above. 144. In ground no. 2, the assessee has raised the following grievance:

ITA No. 1435/Ahd/2015 18 . A.Y. 2013-14 rights, and is, as such, taxable as income of the assessee. It was observed that it cannot be said to be voluntary contribution by the BCCI. The Assessing Officer also shows that as accepted by the auditor of the company the amount is relatable to the TV rights and it cannot, therefore, be treated as voluntary contribution in the nature of corpus donations. He also noted that as registration of the assessee, under section 12AA, stands cancelled, the assessee is anyway not eligible for the benefit of Section 11(1)(d). On the basis of this line of reasoning, the Assessing Officer treated the said amount of Rs 1,58,00,000 as income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. It was pointed out to the CIT(A) that the BCCI has passed a specific resolution that the amount computed as TV subsidy is given to the Member associations as corpus donation. The CIT(A), identified the core issue for adjudication as follows: “the fundamental question which now arises is whether the specific direction once issued is sufficient for the purpose of section 11(1)(d) or specific direction is required for each year individually”. He then proceeded to answer this question by observing as follows:

As per section 11(1)(d), a written specific direction is necessary to claim it as corpus donation. For a donation as a corpus donation, a written document with specific direction from the donor should be obtained and should accompany the donation from the donor. In absence of written direction, for a donation in a given assessment year, a donation would not be considered as a corpus donation and the organization (in this case, GCA) would not be entitled to claim full exemption. To add, donation covered by a written document but without any specific direction cannot be claimed as corpus donation

ITA No. 1435/Ahd/2015 19 . A.Y. 2013-14 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 voluntary payment, and, any payment which is with a specific direction that it for corpus fund is a corpus donation. In our considered view, even without the two specific confirmations filed by the assessee, in the light of the BCCI resolution under which the payment is made and in the light of the payment not being under any legal obligation, the conditions under section 11(1)(d) are satisfied. We, therefore, uphold the plea of the assessee. The Assessing Officer is accordingly directed to delete this addition of Rs 1,58,00,000.

ITA No. 1435/Ahd/2015 20 . A.Y. 2013-14 the Assessing Officer to the effect that infrastructure subsidy is revenue in nature. As a matter of fact, the claim is made for the subsidy only after the expenditure having been incurred. The authorities below have simply brushed aside the case and the submissions of the assessee and proceeded to hold it as an income. Looking to the nature of the subsidy, which is clearly relatable to the capital assets generated, we are unable to hold this receipt in the revenue field. We, therefore, uphold the plea of the assessee on this point as well and delete the addition of Rs 2,13,34,033.

ITA No. 1435/Ahd/2015 21 . A.Y. 2013-14 therefore it does not attract proviso to section 2(15) of the Act accordingly provisions of section 13(8) of the Income Tax Act, 1961 are not applicable.

ITA No. 1435/Ahd/2015 22 . A.Y. 2013-14 7. The ld. CIT(A) erred in upholding view of ld. AO of not allowing exemption u/s.11(1)(a) of the Income Tax Act, 1961 on provision of section 2(15) of the Income Tax Act, 1961.

The ld. CIT(A) erred in upholding view of ld. AO of withdrawing exemption u/s 11(1)(d) of the Income Tax Act, 1961 of Rs.10.53 Cr. received in the form of Corpus donation.

ITA No. 1435/Ahd/2015 23 . A.Y. 2013-14 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 Rs 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 been paid to the assessee is a share out of earnings by the BCCI, out of proceeds of sale of TV rights, and is, as such, taxable as income of the assessee. It was observed that it cannot be said to be voluntary contribution by the BCCI. The Assessing Officer also shows that as accepted by the auditor of the company the amount is relatable to the TV rights and it cannot, therefore, be treated as voluntary contribution in the nature of corpus donations. He also noted that as registration of the assessee, under section 12AA, stands cancelled, the assessee is anyway not eligible for the benefit of Section 11(1)(d). On the basis of this line of reasoning, the Assessing Officer treated the said amount of Rs 1,58,00,000 as income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. It was pointed out to the CIT(A) that the BCCI has passed a specific resolution that the amount computed as TV subsidy is given to the Member associations as corpus donation. The CIT(A), identified the core issue for adjudication as follows: “the fundamental question which now arises is whether the specific direction once issued is sufficient for the purpose of section 11(1)(d) or specific direction is required for each year individually”. He then proceeded to answer this question by observing as follows:

As per section 11(1)(d), a written specific direction is necessary to claim it as corpus donation. For a donation as a corpus donation, a written document with specific direction from the donor should be obtained and should accompany the donation from the donor. In absence of written direction, for a donation in a given assessment year, a donation would not be considered as a corpus donation and the organization (in this case, GCA) would not be entitled to claim full exemption. To add, donation covered by a written document but without any specific direction cannot be claimed as corpus donation

ITA No. 1435/Ahd/2015 24 . A.Y. 2013-14 14. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

The ld. CIT(A) erred in upholding view of ld. AO of withdrawing exemption u/s 11(1)(d) of the Income Tax Act, 1961 of Rs.1.92 Cr. received in the form of Corpus donation.

ITA No. 1435/Ahd/2015 25 . A.Y. 2013-14 fairly agree that this issue is also covered by our decision in the case of Gujarat Cricket Association, and whatever we decide in the said case will equally apply in the present case as well.

The ld. CIT(A) erred in not appreciating the fact that hosting of One Day International match (“ODI” for short) is one of adventure to raise funds to carry out objects of the Trust. The income from said ODI cannot take colour of commercial activities or income.

ITA No. 1435/Ahd/2015 26 . A.Y. 2013-14 and without specific and categorical discussions on the same. We, therefore, deem it fit and proper to remit the matter to the file of the CIT(A) on this issue. We order so. As we do so, and for the detailed reasons set out earlier while dealing with Gujarat Cricket Associations case, we make it clear that it is only in the event of this event being organized by the appellant cricket association on its own, rather than under arrangements and planning by the BCCI, that this could be put against the assessee as an adventure in the nature of trade, commerce or business.

Order pronounced in Open Court on 10- 07- 2019

Sd/- Sd/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad: Dated 10/07/2019 Rajesh Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad