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Facts
The assessee, a trust registered under the Bombay Public Trust Act and Societies Registration Act, objects to the addition of Rs. 17,00,99,881 made by the AO by denying exemption under Section 11 of the Income Tax Act. The AO treated the assessee as an AOP instead of a charitable trust, considering its receipts from BCCI, IPL, ODI, and Test matches as commercial in nature.
Held
The Tribunal, following its own co-ordinate bench's decision in identical cases for AYs 2011-12 and 2012-13, set aside the order of the CIT(A). The matter was restored to the CIT(A) for fresh adjudication, considering the Hon'ble Supreme Court's decision in the AUDA's case and the assessee's submissions.
Key Issues
Whether the receipts from BCCI, IPL, ODI, and Test matches are commercial in nature, thus disentitling the assessee trust from exemption under Section 11 and 12 of the Income Tax Act, and if the assessee should be treated as an AOP.
Sections Cited
11, 12, 143(1), 143(3), 142(1), 2(15), 12A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आयकर अपील सं. / Assessment Year : 2017-18 cricketmaharashtra@yahoo.com, ACIT(E), Pune Gahunje Stadium, At Post Gahunje, Thehsil-Maval, Pune-412101 Vs. PAN : AAATM2192D अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri C.H. Naniwadekar Department by : Shri Prashant Gadekar Date of hearing : 15-04-2025 Date of 10-06-2025 Pronouncement : आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 19.06.2024 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] pertaining to Assessment Year (“AY”) 2017-18.
The assessee has raised the following grounds of appeal:- “1. The learned CIT(A) erred in confirming the addition of Rs.17,00,99,881 made by the A.O. by denying the exemption u/s 11 of the Act and thereby taxing the receipts of the assessee trust without appreciating that the said action of the CIT(A) was not justified on facts and in law.
2. The learned CIT(A) erred in not accepting the claim of the assessee trust that the activities of the trust are that of Charitable Nature, and thereby invoking the provisions of amended Section 2(15) w.e.f 01-04- 2009 without appreciating that the said action is not justified on facts and in law.
3. The learned CIT(A) erred in sustaining the addition made by the A.O towards T.V. subsidy received from Board of Control for Cricket in India (BCCI) without appreciating that the said addition is not justified on facts and in law.
4. The learned CIT(A) failed to appreciate that the subsidy received from BCCI was a voluntary grant from the parent body for promotion and development of the game of cricket in Maharashtra and there was no commercial activity involved on the part of assessee trust is concerned; thus, the receipt of subsidy was not a payment for 2 AY 2017-18 carrying on of any trade, commerce or business and hence, the same should be treated as Voluntary Donation.
5. The learned CIT(A) ought to have appreciated that the TV subsidy was given to all State Associations and was part of the scheme of BCCI and state associations neither have any role in deciding the quantum of such donation nor compel BCCI to pay such subsidy every year; its BCCI who decides the quantum and frequency of payment hence, there was no commercial character attached to these receipts.
The learned CIT(A) also failed in not appreciating that the TV subsidy was granted to all the state associations irrespective of hosting the international matches and the this policy was in existence since last many years.
7. The learned CIT(A) erred in holding that the surplus generated from IPL is a commercial receipt in the hands of the assessee trust and thereby denying the exemption u/s 11 of the Act without appreciating that the said addition is not justified on facts and in law.
8. The learned CIT(A) failed to appreciate that the Indian Premier League is an activity carried out of the Board of Control for Cricket in India (BCCI) along with franchises involved and the assessee trust apart from renting its stadium does not play any active role in it, therefore, the exemption of the assessee trust should not be adjudicated on basis on the activities carried out by another entity.
9. The learned CIT(A) ought to have appreciated that irrespective of the nature of the activities of the BCCI (commercial or charitable), what is pertinent for the purpose of determining the nature of the activities of the assessees trust, is the object and the activities of the assessees trust and not that of the BCCI; the nature of the activities of the assessee cannot take its colour from the nature of the activities of the donor.
10. The learned CIT(A) erred in treating the hosting of ODI and Test matches as commercial activity of the trust and thereby treating the surplus generated from such activities as commercial receipts of the assessee trust without appreciating that said action was not justified on facts and in law.
The learned CIT(A) failed to appreciate that the organizing/hosting of various cricket matches is one of the core object of the trust and the same was remained unchanged since the registration u/s 12A was granted and hence, the same cannot be treated as commercial activity only on the basis of higher surplus earned during the year under consideration.
The learned CIT(A) erred in confirming the disallowance of deficit claim of Rs.350,87,17,535 in respect of application of income without appreciating that the said action is justified on facts and in law.
The appellant craves, leave to add, alter, amend and delete any of the above grounds of appeal.”
Briefly stated the facts are that the assessee is an association of person (trust) registered under the Bombay Public Trust Act, 1950 and the Societies Registration Act, 1860. It was originally registered u/s 12A of the Income Tax Act, 1961 (the “Act”) with effect from 9th December, 1991 and later on the registration has been renewed which is currently in effect. It is formed with the core objective of promoting, supporting and imparting education in the game of cricket and is affiliated with BCC, the apex cricketing activity controlling body in India. For AY 2017-18, the assessee filed its return of income on 31.10.2017 declaring total income of Rs. Nil. The return was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS. Accordingly, notice(s) u/s 143(2) and 142(1) of the Act along with questionnaire were issued by the Ld. Assessing Officer (“AO”) and duly served on the assessee. In response thereto, the assessee furnished the requisite information electronically/manually as called upon by the Ld. AO. During the course of assessment proceedings, on examining the ROI, audited financial statements and other details/ documents furnished by the assessee as well as the relevant provisions of the Act, the Ld. AO observed that the assessee is in receipt of large amount of receipts from BCCI and IPL, ODI and test match which appears clearly commercial in nature and hence asked the assessee vide issue of show cause notice to justify as to why the said receipts shall not be treated as business receipts and why the assessee should not be treated as an AOP by invoking the provisions of section 2(15) of the Act. In its reply, the assessee, interalia, stated as under (reproduced by the Ld. AO in para 8 of his assessment order):
1. 1. IPL, international test and ODI matches are organized by BCCI and not by MCA.
2. Assessee does not have any inherent right to demand the allotment of such matches to be conducted by BCCI.
3. All revenue generated from ticket sale goes to IPL franchise" 4. Assessee had conducted only few matches which have yielded a surplus. 5. No portion of profit is utilized for distribution of income.
6. Assessee relied on various verdicts pronounced by judicial authorities which says that profit motive should be determined to decide whether a particular entity is charitable or not.
7. Predominant object of the activities should be seen to decide whether a particular entity is charitable or not. 8. lt is not correct to say that since assessee receives share of income from BCCI activity of assessee could be said to the activity of assessee.
9. Assessee stated that charges are levied for maintenance and it is not possible to Provide tickets free of cost' 10. Advertisement income is used for maintenance of stadium.
11. MCA provides helping hands to ex-cricketers in case of financial crisis 12. There is no contract between BCCI and state association for entitlement of any type of subsidy to be provided by BBCl to assessee and other state association. Rather it is gratutious payment 13. Assessee had relied on verdict of Hon'ble Gujarat High court in case of Gujarat Cricket Association.
3.1 After considering the reply of the assessee, the Ld. AO invoked the proviso to section 2(15) of the Act and held that the receipts/total income of the assessee is income received from the activities which are in the nature of trade, commerce or business and denied the benefit of section 11 and 12 treating the assessee as an AOP and not as charitable trust.
3.2 The Ld. AO also disallowed the claim of the assessee with regard to the carry forward and set off of deficit of earlier years amounting to Rs. 350,87,17,535/- accumulated since 2001-02 for the reasons recorded in para 11.1 of his assessment order. The Ld. AO therefore to completed the assessment u/s 143(3) of the Act vide order dated 31.12.2019 assessing the total income (surplus) at Rs.17,00,99,881/- (Gross receipts : Rs.57,41,06,939/- Less Revenue expenditure : Rs.40,40,07,058/- ).
Aggrieved, the assessee filed an appeal before the Ld. CIT(A)/NFAC who dismissed the appeal of the assessee by upholding the order of the Ld. AO by observing as under : “1. Ground no.1 objects to computing the total income of the assessee at Rs.170099881, denying exemption u/s 11 r w s 2(15). The AO treated the assessee as AOP instead of Trust registered u/s12A of the Act. Assessee is treated as an AOP in the assessment orders and hence claim of capital expenditure is not allowed. Accordingly revenue expenditure is only allowed. Further, in various orders by specific comment in assessment order deficit is disallowed; Also, appeal of the assessee is pending before CIT(A) against the assessment order. Further assessee did not furnish copy of audited financial. Also appeal of department against 12A registration (granted by ITAT) is pending before Hon‟ble Bombay High Court. Further, in few AYs. Scrutiny assessment is not completed but does not change the fact that even if scrutiny assessment gets completed, assessee would have been treated as AOP rather than charitable trust and accordingly, deficit on account of capital expenditure would not have been allowed to carry forward in this background and facts and circumstance of the case, carry forward of deficit and its set off against income of AY.2017-18 cannot be allowed. Subject to the above remarks, total income of the assessee is computed as under: Gross receipts :Rs.574106939/- Less: Revenue expenditure : Rs.404007058/- Surplus : Rs.170099881/- The assessment of total income at Rs.170099881/- is confirmed. 2. Ground no. 2 objects to treating receipts from BCCI as neither „voluntary in nature „nor income derived from property held under trust. However, it is import to discuss here that receipt from BCCI are not exactly in nature of voluntary contribution rather in form of share of income derived from commercial activities from conduct of international Test Matches, one day international and IPL matches. Even assessee does not classify it as donation/voluntary contribution in its books of account s rather classify as subsidy from BCCI, surplus from IPL, surplus from international test match and surplus from ODI. Further, donations from one cricketing apex body to its state association every year is very unusual and in turn, state association as helping hand supports it apex body to its state association every year is very unusual and in turn, state association as helping hand supports it apex body in conduct of IPL, Test match and ODI. Thus only conclusion that can be drawn from this arrangement is that receipts from BCCI is nothing but a commercial receipt as a share/distribution of income against support extended by state association for conduct of such matches and by no stretch of imagination, it can be held as voluntary contribution within the meaning of section 12 of the act. The assessment of Rs.170099881 as income of the AOP is confirmed.”
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
6. At the outset the Ld. AR submitted that the impugned issue is covered by the decision of Co-ordinate Bench of this Tribunal in assessee’s own case for AYs 2011-12 and 2012-13 in & 975/PUN/2024, dated 11.04.2025, wherein the Tribunal has set aside the matter to the file of the Ld. CIT(A) to decide the impugned issue afresh in the light of the decision of the Hon’ble Supreme Court in the case of Assistant Commissioner of Income Tax Vs. Ahmedabad Urban Development Authority (2022) 144 taxmann.com 78 (SC) (“AUDA’s case”). He therefore prayed that the present matter may also be set aside to the file of the Ld. CIT(A), facts of the case being identical to AYs 2011-12 and 2012-13 in ITA Nos.1387 & 975/PUN/2024 (supra).
The Ld. DR conceded with the above submission of the Ld. AR and did not bring on record any material contrary to the submissions of the Ld. AR.
We have heard the Ld. Representatives of the parties and perused the material on record. The facts of the case are not disputed. Before us, both the sides have agreed that the impugned issue is covered by the decision of the Co-ordinate Bench of this Tribunal in assessee’s own case for AYs 2011-12 and 2012-13 and facts of the present appeal for AY 2017- 18 are identical to the facts pertaining to AYs 2011-12 and 2012-13. We have perused the order of the Tribunal in the case of Maharashtra Cricket Association Vs. ACIT(E), Pune (ITA Nos.1387 & 975/PUN/2024), dated 11.04.2025 and find that the Tribunal has decided the impugned issue by observing as under :
“8. We have heard the Ld. Representatives of the parties and perused the material on records and paper book(s) filed by the assessee before us. The facts of the case are not in dispute. We find that the Ld. AO has denied the assessee‟s claim of exemption u/s 11 of the Act mainly for the reason that the assessee‟s registration u/s 12A of the Act has been cancelled w.e.f. 1st April, 2009. The Ld. AO has considered the activities carried out by the assessee as not charitable but commercial in nature and denied the assessee‟s claim of exemption by applying the amended provisions of section 2(15) of the Act which has been upheld by the Ld. CIT(A). Before us, the Ld. AR has contended that the issue pertaining to cancellation of registration of the assessee trust u/s 12A of the Act is pending in Revenue‟s appeal before the Hon‟ble Bombay High Court against the order of the Co-ordinate Bench of the Tribunal (supra) wherein the Tribunal has restored the registration granted to the assessee u/s 12A of the Act w.e.f. 09.12.1991. It is the contention of the Ld. AR is that the Hon‟ble Bombay High Court has not stayed the said order of the Tribunal and therefore it still subsists, meaning thereby the assessee trust still holds valid certificate of registration u/s 12A of the Act. The Ld. CIT(A) therefore has erred in confirming the additions made by the Ld. AO by denying exemption u/s 11 of the Act and thereby taxing the receipts of the assessee trust. The Ld. AR has also contended that the Ld. CIT(A) has failed to take into account the observations made by the Hon‟ble Supreme Court in AUDA‟s case (supra) vis-à-vis the nature of activities/receipts of the assessee trust before arriving at the conclusion that the assessee is not eligible for claim of benefit of section 11 and 12 of the Act. We have perused the decision of the Hon‟ble Supreme Court in AUDA‟s case (supra) wherein the Hon‟ble Supreme Court has observed that "In each case and for every year, the tax authorities are under an obligation to carefully examine and see the pattern of receipts and expenditure and the party's contention in this regard are to be considered on their merits.” This judgment of the Hon‟ble Apex Court was available with the Ld. CIT(A) at the time of passing of his appellate order, however, it remained to be considered by him vis-à-vis the facts and merits of the assessee‟s case for the relevant AY 2011-12 under consideration. Thus, in our considered view, the issue(s) raised in various grounds of appeal by the assessee before us needs to be examined in light of the observations of the Hon‟ble Supreme Court in AUDA‟s case (supra). We also find some force in the arguments of the Ld. AR that the Ld. CIT(A) has passed a non-speaking order by simply upholding the observations and findings of the Ld. AO without himself going into the merits of the case and has also failed to consider the detailed submissions made by the assessee before him in support of its claim. Considering the totality of the facts and in the circumstances of the case and in the absence of any objection being raised by the Revenue, we deem it fit and proper in the interest of justice, to set aside the impugned order of the Ld. CIT(A) and restore the matter to his file for fresh adjudication on merits as per fact and law in the light of the decision of the Hon‟ble Supreme Court in AUDA‟s case (supra) after giving adequate opportunity of being heard to the assessee. The assessee is also hereby directed to make his further submissions before the Ld. CIT(A) to substantiate its case on the appointed date without seeking any adjournment unless otherwise required for the reasonable cause failing which the Ld. CIT(A) shall be at liberty to pass appropriate order as per law. All the grounds No. 1 to 15 raised by the assessee are accordingly allowed for statistical purposes. We direct and order accordingly.
In the result, the appeal of the assessee is allowed for statistical purposes.”
9. Based on the factual and legal position enumerated above and respectfully following the decision (supra) of the Co-ordinate Bench in assessee’s own case for AYs 2011-12 and 2012-13 having similar set of facts and in the absence of any contrary material brought on record by the Revenue, we set aside the impugned order of the Ld. CIT(A)/NFAC and restore the matter to his file with a direction to decide the impugned issue afresh in the light of the decision of the Hon’ble Supreme Court in AUDA’s case (supra) on merits as per fact and law after giving adequate opportunity of being heard to the assessee. The assessee is also hereby directed to make his further submissions before the Ld. CIT(A)/NFAC to substantiate its case on the appointed date without seeking adjournment under any pretext unless otherwise required for the reasonable cause, failing which the Ld. CIT(A)/NFAC shall be at liberty to pass appropriate order as per law. All the grounds No. 1 to 13 raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.