PUNJAB CRICKET ASSOCIATION,PUNJAB vs. ASSISTANT COMMMISSIONER OF INCOME TAX, EXEMPTION-I, CHANDIGARH

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ITA 1154/CHANDI/2024Status: DisposedITAT Chandigarh28 July 2026AY 2017-1813 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) failed to consider the binding judgment of the Hon'ble Supreme Court on the proviso to section 2(15). The matter was restored to the Assessing Officer for de novo adjudication based on the Supreme Court's principles.

What were the facts?

The assessee, Punjab Cricket Association, registered under section 12AA, claimed exemption under sections 11 and 12. The Assessing Officer denied exemption, stating the assessee was engaged in trade and business activities, attracting the proviso to section 2(15). The CIT(A) granted relief, holding the activities were charitable.

What were the issues?

Whether the assessee's activities fall under the proviso to section 2(15) and thus disentitle it from exemption under sections 11 and 12, and whether the CIT(A) properly considered the Supreme Court's judgment.

Which sections of the Income-tax Act were involved?

Section 2(15),Section 11,Section 12

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH

Before: SHRI LALIET KUMAR & SHRI MANOJ KUMAR AGGARWAL

For Appellant: Shri Rakesh Marwaha, CA
For Respondent: Smt. Kusum Bansal, Pr. CIT, DR
Hearing: 28.07.2026Pronounced: 28.07.2026

PER LALIET KUMAR, JM

These are cross-appeals filed by the assessee and the Revenue against the separate orders dated 30.09.2024 passed by the Commissioner of Income Tax (Appeals) NFAC [in short ‘the CIT(A)’.

2.

The facts of the case are that the assessee, Punjab Cricket

Association, is a society registered under the Societies Registration

Act and is also registered under section 12AA of the Income-tax

Act. It is engaged in promoting the game of cricket in the State of Punjab. For the assessment year under consideration, the assessee

filed its return declaring ‘Nil’ income after claiming exemption

under sections 11 and 12 of the Act.

3.

During the scrutiny assessment, the Assessing Officer

examined the nature of receipts from BCCI, media rights, IPL,

international matches, hosting fees, interest income and other

receipts and concluded that the assessee was carrying on activities

in the nature of trade, commerce and business, thereby attracting

the proviso to section 2(15) of the Act. Consequently, exemption

under sections 11 and 12 was denied and the entire surplus was brought to tax besides making an addition on account of membership fees.

4.

The learned CIT(A), following the prevailing judicial

precedents available at the relevant point of time, granted relief to the assessee by holding that the activities of the assessee

continued to be charitable and that the receipts from BCCI and allied activities were intrinsically connected with the promotion of cricket and could not be regarded as commercial activities

disentitling the assessee from exemption under sections 11 and

12.5.

Being aggrieved, both the assessee as well as the Revenue are in appeal before the Tribunal. The learned Authorised

Representative submitted that the assessee exists solely for the promotion and development of cricket, which is an object of general public utility. It was argued that the receipts from BCCI,

media rights, hosting of matches and other allied receipts are incidental to the main object and are entirely deployed for the development of infrastructure, coaching facilities, promotion of cricket and other charitable activities. It was further submitted

that the identical issue had been adjudicated by the Coordinate

Bench in ITA No. 427/CHD/2017, and partial relief had been granted to both the sides against which both sides are in appeal

before the Hon’ble High Court. At this stage, it is relevant to reproduce the relevant portion of the decision dated 12.09.2019

wherein it was held as under :

“41. The above object reveals that now the assessee’s activities inter alia are also directed for generation and augmentation of revenue by way of exploitation of its rights and properties. The assessee in the earlier years (before the introduction of the above revised object) might have claimed the application of income on capital assets/infrastructure as application for charitable purposes. However now with the amended objects, it may exploit the so created infrastructure for commercial purposes. This leads to a very peculiar situation. In our view, the introduction of the above object has brought clarity about the manner of operation and activities of the assessee.

42.

Under the circumstances, the appellant cannot be granted exemption under section 11 of the Act as its activities no more fall under the definition of charitable purposes as per the provisions of section 2(15) of the Act.In view of the discussion made above, the amount paid by the BCCI to the appellant which has already been taxed at the hands of BCCI, cannot be now taxed in the hands of the member of the AOP i.e. the appellant

State Association as it will amount to double taxation of the same amount. However, if the claim of the BCCI for treating the payments made to the State Association as deductible expenditure is accepted by any higher appellate authority in its case for the year under consideration, it will be open to the assessing officer of the appellant to reopen the case of the appellant and to decide whether the said payments received from BCCI can be taxed as income of the appellant which will be subject to our observations given on other issues raised in this appeal. However, the income received by the appellant/assessee otherwise, except the club income, which has not been taxed at the hands of the BCCI, will be assessed as per the normal provisions of the Act.

43.

However, so far as the income from club facilities and from caterer is concerned, the plea of the assessee is that all the above facilities e.g. Gym, Lawn Tennis, Swimming pool etc. are interconnected and interwoven with the objects of the appellant i.e. promotion of sport and cannot be viewed separately. Without prejudice to above, it has been submitted that the appellant is maintaining separate books of accounts in respect of all above club activities. That these facilities are being provided on the principle of mutuality, accordingly, these cannot be termed as trade, commerce or business activity. That the receipts from the caterer for providing catering service during the matches is intrinsically linked with the activity of organizing matches and tournaments for the promotion of cricket. It has been submitted that the club facilities are being run for the benefits of members and cricketers as per the objects of the society on the principle of mutuality. However, the Assessing officer observed that the assessee earned huge income of Rs. 123.03 lacs during the year from these facilities and this includes a sum of Rs. 14.97 lacs from caterer. That the assessee hosted these facilities for the purpose of recreation or one time booking for parties, functions etc. and these were commercial activities in nature as the assessee was charging fees for providing these facilities.

44.

After considering the rival submissions, in our view, this issue is required to be reexamined by the Assessing officer after verification of the accounts of the assessee as to ascertain which part of the club income and catering services has been generated from the members of the assessee association and which part of the income is earned from non-members. It is also to be looked into whether the income from the club house and other facilities is generated generally from the members only and the receipt from the non-members is an exception or the income is generated from members and non-members in normal course of business. Whether the catering services are limited to the members and their guests only or the same are also provided to non-members also on commercial basis. The Assessing officer after thoroughly examining the above facts will decide if the principle of mutuality applies to the club income including catering contract in accordance with law. This issue is accordingly restored to the file of the Assessing officer.

45.

Before parting, we deem it appropriate to mention here that in some of the case laws cited by the Ld. Counsel for the assessee the issue regarding the charitable nature in the case of other state associations

has been decided in favour of those assessees, however, after going through the said decisions, with due respect to the said decisions and most humbly we are of the view that those decisions are based on the facts presented before the respective Benches in those cases. What is to be applied from a decision having precedential value is the proposition of law laid down after discussion on certain bundle of facts. Our findings above are based on the distinguished and specific facts brought out and evidences furnished before us by the parties and our findings may not be treated in any manner as laying down any contrary proposition of law to the decisions cited by the Ld. counsel for the assessee.

46.

It is also made clear that our observations made above will not have any bearing as such on any adjudication in the cases of the BCCI and that the BCCI will have right and liberty to contest its cases irrespective of the observations given above as our findings rests on the pleadings of the parties before us though, the viewpoint of the BCCI has also been considered after giving due opportunity to the BCCI.”

6.

The learned CIT-DR supported the assessment order and submitted that the Assessing Officer had rightly invoked the proviso to section 2(15) on account of substantial commercial receipts earned by the assessee from media rights, IPL, sponsorships and other sources. However, it was submitted that the Hon'ble Supreme Court in case of Ahmedabad Urban Development Authority & Ors. Comprehensively interpreted section 2(15) and specifically dealt with cases involving cricket associations. The learned CIT-DR accordingly submitted that the matter deserves to be restored to the Assessing Officer for fresh adjudication in accordance with the principles laid down by the Hon'ble Supreme Court. It was submitted that the decision of the Co-ordinate Bench is no more applicable to the case in hand as the issue involved in the present case has been authoratitively been decided by the Hon’ble Supreme Court and further the issue of the assessee being charitable is no longer res integra in view of the judgment of the Hon'ble Supreme Court in Ahmedabad Urban Development Authority & Ors., wherein the Hon'ble Supreme Court has held that the issue has to be examined year-wise after analysing the nature of receipts and the activities actually undertaken by the assessee. The learned AR, therefore, fairly submitted that the matter may be restored to the file of the Assessing Officer for fresh adjudication in accordance with the law laid down by the Hon'ble Supreme Court.

7.

We have carefully considered the rival submissions, perused the material placed on record and examined the authorities relied upon by both the parties. We have also gone through the earlier order of the Coordinate Bench in the assessee's own case in ITA No. 427/Chd/2017 dated 12.09.2019, whereby certain issues were decided and certain issues were restored to the file of the Assessing Officer. It is, however, an admitted position that, against the said order, further proceedings travelled before the Hon'ble Supreme Court along with other matters relating to various State Cricket Associations. Subsequently, the Hon'ble Supreme Court, in Assistant Commissioner of Income-tax (Exemptions) v. Ahmedabad Urban Development Authority & Ors., has authoritatively interpreted the scope and ambit of the proviso to section 2(15) of the Income-tax Act and the entitlement of institutions advancing objects of general public utility to exemption under sections 11 and 12. While dealing specifically with the appeals concerning various State Cricket Associations, the Hon'ble Supreme Court has laid down the governing legal principles and, in paragraph 254(vii) of the judgment, has categorically set aside the judgments of the Hon'ble Gujarat High Court and Hon'ble Rajasthan High Court and remitted the matters to the concerned authorities for fresh adjudication in the light of the principles enunciated in the judgment.

8.

The Hon'ble Supreme Court has unequivocally held that the applicability of the proviso to section 2(15) cannot be determined merely on the basis of the objects of the institution or the source of its receipts. The examination has necessarily to be undertaken on a year-to-year basis after analysing the actual activities carried out during the relevant previous year, the nature and character

of the receipts, the cost structure, the manner in which such receipts have been generated, and whether the consideration charged is merely to recover costs or is in the nature of commercial profit-making. The Apex Court has further held that such an examination has to be undertaken independently for each assessment year on the basis of the factual matrix pertaining to that year.

9.

In the present case, we find that the impugned order of the learned CIT(A) was passed after the judgment of the Hon'ble Supreme Court had already become available. Surprisingly, however, the learned CIT(A) neither referred to nor considered the aforesaid binding judgment while adjudicating the controversy. The impugned order is completely silent on the law declared by the Hon'ble Supreme Court, which is binding on all Courts, Tribunals and authorities under Article 141 of the Constitution of India. An appellate order rendered without considering a binding judgment of the Hon'ble Apex Court cannot be sustained in law.

10.

We further find that although the Coordinate Bench had earlier adjudicated certain issues in the assessee's own case, the legal position now stands governed by the subsequent authoritative pronouncement of the Hon'ble Supreme Court. Consequently, the controversy must be examined afresh strictly

in accordance with the principles laid down by the Hon'ble Apex Court. The earlier findings of the Tribunal, to the extent they are inconsistent with or superseded by the subsequent declaration of law by the Hon'ble Supreme Court, cannot govern the present adjudication.

11.

Respectfully following the binding judgment of the Hon'ble Supreme Court, particularly the directions contained in paragraphs 254(vii) and 255 thereof, we set aside the impugned order passed by the learned CIT(A). Since the controversy requires a comprehensive factual examination in accordance with the parameters prescribed by the Hon'ble Supreme Court, we consider it appropriate to restore the entire matter to the file of the Assessing Officer for de novo adjudication. The Assessing Officer shall examine the assessee's claim independently and uninfluenced by the earlier orders, strictly in accordance with the principles laid down by the Hon'ble Supreme Court. While doing so, the Assessing Officer shall examine, inter alia, the actual nature of the activities undertaken during the relevant assessment year, the character of the receipts from BCCI, media rights, IPL, sponsorships, match receipts and other allied sources, the manner in which such receipts have been applied, the applicability of the proviso to section 2(15), and the consequential entitlement of the assessee to exemption under sections 11 and 12 of the Act. The Assessing Officer shall afford an adequate and effective opportunity of hearing to the assessee, permit it to produce all documentary evidence in support of its claim, consider every contention raised by both sides and thereafter pass a reasoned and speaking order in accordance with law.

12.

In view of the above discussion, the appeals filed by the assessee as well as the Revenue are allowed for statistical purposes, and the entire matter is restored to the file of the Assessing Officer for fresh adjudication in accordance with the directions and law laid down by the Hon'ble Supreme Court in Assistant Commissioner of Income-tax (Exemptions) v. Ahmedabad Urban Development Authority & Ors.

13.

In the result, all the appeals of the assessee as well as Revenue are treated as allowed for statistical purposes.

Order pronounced on 28th July, 2026. (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER “Poonam”

आदेश क" "ितिलिप अ"ेिषत/ Copy of the order forwarded to : अपीलाथ"/ The Appellant

1.

""यथ"/ The Respondent 2. आयकर आयु"/ CIT 3. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"डीगढ़/ DR, ITAT, CHANDIGARH 4. गाड" फाईल/ Guard File 5. सहायक पंजीकार/

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