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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI MANISH BORAD & MS. ASTHA CHANDRA
ORDER \nPER ASTHA CHANDRA, JM :\nThe appeal filed by the Revenue is directed against the order dated\n12.11.2022 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi\n[“CIT(A)"] pertaining to Assessment Year (“AY”) 2010-11.\n2.\nThe Revenue has raised the following grounds of appeal :\n\"1.\nOn facts and circumstance of the case, the Ld. Commissioner of\nIncome Tax(Appeals) (hereinafter CIT(A) in short) erred in holding the\nreceipt of subsidy/ grant from the BCCI by the assessee as a capital\nreceipt, without appreciating the facts of the case and the landmark\ndecision of the Hon'ble Supreme Court of India in respect of Sports\nAssociations in ACIT(E) Vs. Ahmedabad Urban Development Authority\nin Civil Appeal No. 21762 Of 2017 dated 19.10.2022, wherein the\nHon'ble Apex Court has opined that the Tribunal as well as the High\nCourt fell into error in accepting at face value the submission that the\namounts made over by BCCI to the Cricket Associations were in the\nnature of subsidy.\n2.\nOn facts and circumstance of the case, the Ld. CIT(A) erred in allowing\nthe benefit of exemption u/s 11 of the I.T. Act to the assessee, without\nappreciating the facts of the case and the ratio laid down by the\nHon'ble Supreme Court of India in respect of Sports Associations in\nACIT(E) Vs Ahmedabad Urban Development Authority (Supra).\n3.\nOn facts and circumstance of the case, the Ld. CIT(A) erred in allowing\nthe exemptions claimed u/s 11 & 12 of the Act, without appreciating\nthe fact that the issue of assessee's 12AA registration matter is still\npending before the Hon'ble Bombay High Court for adjudication.\n4.\nThe appellant craves leave to add, alter, amend or omit any or all the\ngrounds of appeal.\"\n3. Briefly stated, the facts are that the assessee is a charitable trust\nregistered under the Bombay Public Trust Act and the Societies\nRegistration Act, 1860. It continues to hold registration u/s 12A of the\nIncome Tax Act, 1961 (the \"Act”) with effect from 9th December, 1991 till\ndate. The main object of the assessee is “to encourage physical education,\nfoster and maintain friendly cordial relationship through sport tournaments\nand competitions in connection therewith and to create a healthy spirit in the\ncountry through the medium of sports in general and cricket in particular.”\nFor AY 2010-11, the assessee filed its return of income on 30.09.2010\ndeclaring total income at Rs. Nil claiming exemption u/s 11 of the Act. The\ncase was selected for scrutiny under criteria, \"cases claiming exemption of\nincome as a result of registration u/s 12AA or approval u/s 10(23C)\nrequire scrutiny to examine whether these continue to be eligible for such\nexemptions after amendment to definition of the term 'charitable purpose'\nu/s 2(15) of the Act\". Accordingly, notice(s) u/s 143(2) and 142(1) along\nwith questionnaire were issued by the Ld. Assessing Officer (“AO\") calling\nfor the requisite details in response to which the assessee filed its reply/\nwritten submission(s) from time to time.\n3.1 During the course of assessment proceedings, the Ld. AO noticed\nthat the assessee in its return for the relevant AY 2010-11 has shown\nincome from other sources of Rs.35,89,11,665/-. This constitutes subsidy\nfor shares in TV rights from BCCI of Rs.18,63,99,133/-, Addition to grants\nfor capital expenditure of Rs.16,93,02,554/-, Annual affiliation fees of\nRs.1,19,000/-, Other income of Rs.7,97,990/-, Sponsorship from BOM of\nRs.3,33,333/-, Sponsorship receivable from Sil-Tech of Rs.3,45,000/-,\nInterest on FDs Rs.5,46,999/- and Bank interest of Rs.10,67,656/-. The\nassessee has shown amount applied to charitable purposes of\nRs.10,05,08,183/-, accumulation @ 15% of Rs.5,38,36,750/-, depreciation\nof Rs.17,67,439/-, capital expenditure being application of Rs.\n23,02,72,512/- and deficit brought forward of Rs.58,64,46,708/- and\nclaimed total of these of Rs.97,28,31,592/- as deduction and arrived at\ntotal income of Rs. NIL in view of exemption u/s 11 claiming application of\nincome of more than 85% and working deficit as per computation of total\nincome. The Ld. AO also called for certain details / information from BCCI.\nHe further observed that the Ld. Commissioner of Income Tax-1, Pune vide\nhis order dated 30th July, 2012 cancelled the registration granted to the\nassessee trust u/s 12A of the Act with effect from AY 2009-10 on account\nof amendment to section 2(15) due to which the assessee does not remain\nto be a charitable trust and non-communication of change in objects of the\ntrust to the income tax authority and raised specific queries in respect\nthereto such as nature of its activities, subsidies received, capital\nexpenditure incurred etc. In response to the said queries, the assessee\nfiled its written submission(s) which were duly considered by the Ld. AO\nbut not accepted and he proceeded to complete the assessment u/s 143(3)\nof the Act vide his order dated 12.02.2013 disallowing the exemption of\nincome u/s 11 and the deficit claimed by the assessee and computed the\nassessed income of the assessee at Rs.25,66,36,042 as under :\nIncome from Business\nNet profit as per I & E account\nother sources\nLess: interest to be considered under\n8,73,33,488\n16,14,655\n8,57,18,833\nAdd : Grants from BCCI for capital\nexpenditure\na) For Gahunje stadium\n16,32,18,949\n25,50,21,387\nb) For assets\n60,83,605\n25,50,21,387\nIncome from other sources\nBank interest\n16,14,655\n16,14,655\nTOTAL INCOME\n25,66,36,042\n4. On appeal, after considering the contentions of the assessee\nadvanced before him during the appellate proceedings, the Ld.\nCIT(A)/NFAC observed that the assessee is entitled to exemption under\nsection 11 of the Act and cannot be treated as an AOP as done by the Ld.\nAO on the ground that the registration granted to assessee from the year\n1991 still holds the field and the amount is applied towards the charitable\npurposes. He, therefore, allowed the appeal of the assessee and deleted the\naddition(s) made by the Ld. AO including the disallowance of the claim of\ndeficit holding that there is no merit in the addition(s) made by the Ld. AO\nfor the reasons recorded in pars 5.1 to 5.5.2 of his impugned appellate\norder.\n5.\nDissatisfied, the Revenue is in appeal before the Tribunal and all the\ngrounds of appeal relate thereto.\n6. The Ld. DR contended that the Ld. CIT(A)/NFAC has not appreciated\nthe facts of the case in correct perspective while allowing the appeal of the\nassessee. He vehemently argued that the Ld. CIT(A) has adjudicated the\nmatter without considering the decision of the Hon'ble Supreme Court in\nthe case of Assistant Commissioner of Income Tax Vs. Ahmedabad Urban\nDevelopment Authority (2022) 144 taxmann.com
78. (SC) (“AUDA's case\")\nwherein the impugned issue has been elaborately dealt with by the Hon'ble\nApex Court. He also brought to our attention, the decision of this Tribunal\nin assessee's own case, Maharashtra Cricket Association Vs. ACIT(E), ITA\nNos.1387 & 975/PUN/2024 for AYs 2011-12 & 2012-13 wherein the\nTribunal under the similar set of facts as that of the present appeal, has\nset aside the matter to the file of the Ld. CIT(A) to decide the issue afresh in\nthe light of AUDA's case and therefore requested that the present appeal\nshould also be restored to the file of the Ld. CIT(A)/ NFAC for deciding the\nissue(s) afresh. He filed detailed written submission(s) before us in support\nof his contention(s), which is reproduced below:\n\"Subject :\nWritten Submission w.r.t. applicability of sec 2(15) of Income-\ntax Act, 1961 to the above captioned case and its implications\nreg\n\"1.\nFacts of the case:\n1.1\n2.\nThe assessee had obtained registration as a charitable trust under\nsection 12A of the Income-tax Act, 1961 (hereinafter referred to as the\n\"Act\") in the year 1991. In the AY under consideration, the AO during\nthe assessment proceedings found that the assessee was hit by the\nprovisions of section 2(15) of the Income-tax Act, 1961 and also that\nthe registration granted u/s 12A had been cancelled by the CIT (E),\nPune vide order dated 30.07.2012 exercising powers u/s 12AA(3). On\nthese twin grounds, the AO denied exemption to the assessee u/s 11\nand 12 of the Act. The assessee challenged the cancellation of\nregistration u/s 12A by the CIT (E), Pune before the Hon'ble ITAT,\nPune, which was pleased to grant/restore the registration earlier\ngranted u/s 12. A of the Act. The revenue being aggrieved challenged\nthe order of the Hon'ble ITAT, Pune restoring this registration of the\nassessee before the Hon'ble Bombay High Court where the appeal of\nthe revenue stands admitted Accordingly, the issue has not reached\nfinality and la pending adjudication before the Hon'ble jurisdictional\nHigh Court. The assessment order dated 12.02.2013 of the AO for AY\n2010-11 came to be challenged before the CIT (A) by the assessee,\nwho, on the basis of the ITAT having restored the registration u/s\n12A, allowed the appeal of the assessee and thereby striking down\nthe assessment order.\nIt is to submit that the CIT(A) while allowing the appeal of the\nassessee, forgot/glossed over the fact that the AO while denying the\nclaim u/s 11 and 12 of the Act had done so on twin grounds and not\nonly on the cancellation of registration u/s 12A. The CIT (A)\ncompletely lost sight of the fact that the AO had examined the\nactivities of the assessee trust and that the major thrust of the AO in\ndenying exemption u/s 11 and 12 was the applicability of the\nprovisions of section 2(15) of the Act. Therefore, the cancellation of\nregistration u/s 12A or its restoration by the ITAT and its pending\nadjudication before the Hon'ble jurisdictional High Court is not the\ncore ingredient on which the AO has denied the exemptions under\nsection 11 and 12 of the Act.\n2.1 The apex court had already held in the case of Assistant\nCommissioner of Income-tax Vs. Ahmedabad Urban Development\nAuthority [2022] 144 taxmann.com
78. (SC) that the activities of cricket\nassociations were on commercial lines. The Supreme Court by the\njudgment (supra) had considered and pronounced upon the\ninterpretation of Section 2. (15) of the Income Tax Act, 1961, in relation\nto charitable trusts which engage in activities that further objects of\ngeneral public utility The activities and cases of various kinds of\ncharities, trusts and organizations, including statutory corporations\nand bodies, regulatory bodies, non-statutory regulatory bodies, trade\norganizations and bodies, sports bodies and organizations, trusts, etc\nwere considered by the court, and dealt with in the judgment. Para\n253 recorded the court's summary of conclusions in relation to each\nsuch trust, charity or organization.\nThe Supreme Court categorically held that there was no doubt that the\nclaim of the sport associations will not fall within 'education' and will\nhave to be examined under the fourth limb of s.2(15) i.e. general\npublic utility category, if it is to make a case for tax exemption. It is\nevident that the activities of the cricket associations are run on\nbusiness lines. The associations own physical and other\ninfrastructure, maintain them, have arrangements for permanent\nmanpower and have well-organised supply chains to cater to the\nseveral matches they host. Many such matches are not at national\nlevel and are under-16 or under-18 matches at the regional level.\nHowever, these activities are not to be seen in isolation but are to be\nregarded as part of the overall scheme, and ecosystem in which the\ngame of cricket is organized in India. Talent is spotted, at local levels\nand dependent on the promise shown, given appropriate exposure. On\na close scrutiny of the expenses borne, having regard to the nature of\nreceipts, the expenditure incurred by Cricket Associations does not\ndisclose that any significant proportion is expended towards\nsustained or organized coaching camps or academies. Therefore, the\nTribunal fell into error in not considering the nature of receipts flowing\nfrom the BCCI into the corpus of GCA and SCA as well as other\nassociations to determine their true character. Recent trends have\nshown that media rights, especially broadcasting and digital media\nrights have yielded colossal revenues to the BCCI. The model adopted\nin the last 10 years or so has been auction media rights in respect of\nevents over a 3 or 5-year period. These media rights are not per se\nowned by BCCI, which but an AOP or agglomerate of at the State\nCricket Associations. The stadia which form the venue for these\ncricket matches in relation to which media rights are transferred or\nlicensed are owned by the State Cricket Associations. According to the\nBCCI self the State Associations can well bargain and enter into\narrangements for the sale of such media rights. However to obtain\nbetter terms, and gain bargaining leverage a centralized form of sale\nof such rights has been agreed and adopted by which the BCCI\nauctions these rights on behalf of the State Associations. All State\nAssociations put together are entitled to 70 per cent of the revenue le\nthe proceeds of sale of the media nights. This may or may not be in\nproportion to the events hosted by each or some of the cricket\nassociations. Yet, this forms part of the arrangement by which the\nconsideration flowing from such commercial nights has been agreed to\nbe shared amongst all members of the BCCI. These rights are\napparently commercial. The Tribunal as well as the High Court fell\ninto error in accepting at face value the submission that the amounts\nmade over by BCCI to the cricket associations were in the nature of\ninfrastructure subsidy in each case, and for every year, the tax\nauthorities are under an obligation to carefully examine and see the\npattern of receipts and expenditure. Whilst doing so, the nature of\nrights conveyed by the BCCI to the successful bidders, in other words,\nthe content of broadcast rights as well as the arrangement with\nrespect to State associations (either in the form of master documents\nresolutions or individual agreements with State associations) have to\nbe examined. It goes without saying that there need not be an exact\ncorrelation or a proportionate division between the receipt and the\nactual expenditure. This is in line with the principle that what is an\nadequate consideration for something which is agreed upon by parties\nis a matter best left to them. These observations are not however, to\nbe treated as final; the parties' contentions in this regard are to be\nconsidered on their merit Director of IT (Exemption) vs. Gujarat Cricket\nAssociation (2019) 184 DTR(Guj) 97: (2020) 314 CTR (Guj) 297 and\nGujarat Cricket Association vs. Jt. CIT (Exemption) (2019) 183DTR\n(Ahd)(Trib) 367: (2019) 202 TTJ (Ahd) 409 set aside. (Paras 234, 235,\n237 & 238). This judgement of the apex court was available to the CIT\n(A) at the time of passing the impugned order dated 12.11.2022 but\nthe same came to be ignored thereby rendering the decision of the CIT\n(A) to be divorced from the finding of the apex court on the issue of\nactivities carried out by the cricket associations.\n2.2 The issue can be looked at from another angle i.e. from the angle of\npowers vested in the CIT (E) under section 12. AA (3) of the Act. It has\nbeen held by the Hon'ble Tribunal's that the CIT (E) is not vested with\nthe power to cancel registration u/s 12AA(3) when the registration\ncame to be granted u/s 12A but it could be done so in any other\nproceedings i.e. assessment proceedings etc. It is submitted that such\nan interpretation would mean that once registration. has been granted\nunder section 12A, the same cannot be then cancelled even though\nthe activities were not charitable in nature. It needs to be appreciated\nthat there was a change in law in 2009 whereby section 2. (15) was\nbrought on to the statute and where the assessee was hit by the said\nprovisions, the assessee would still get away by doing work which\ncannot be held to be charitable in nature and claim exemption u/s 11\nand 12 of the Act. There may not be an explicit legislation with\ncancellation of registration in section 12AA(3), however, an inference\nor reading of the provisions of the statute in the manner held by the\nITAT could render otiose the provisions of section 2(15) of the Act.\nAccordingly, such a reading of the statute would be contrary to the\nlegislative intention with regard to bringing section 2(15) onto the\nstatute.\n3. In view of the above, it is humbly prayed that the order of the AO be\nupheld.\nWith regard to above appeal following submission may kindly be considered:\nFor the kind reference in the assessee's own case Pr. CIT\n(Exemptions) Vs Maharashtra Cricket Association [2019] 101 taxmann.com\n339 (Bombay) dated
22. Jan 2018 in total 3 substantial questions of law\nwere raised by Revenue which are as follows:\n(1) \"Whether on the facts and circumstances of the case and in law,\nthe Tribunal did not err in holding that the registration granted under\nSection 12A of the Income-tax Act, 1961 to avail the benefit of\nexemption would continue even after the assessee society was found\nto be regularly involved in holding various commercial tournaments on\nbehalf of BCCI and receiving payment from BCCI for TV and other\nrights, which also amounted to carrying on activity in the nature of\nrendering services to trade, commerce or business and thus hit by the\nmischief of the proviso to Section 2(15) introduced w.e.f. 01.04.2009\"?\n(ii) \"Whether on the facts and circumstances of the case and in law,\nthe Tribunal did not err in holding that the Commissioner was not\nright in invoking the provisions of Section 12AA(3) of the Act when the\nactivities carried out by the assessee in Maharashtra under the\ncontrol of BCCI was primarily commercial in nature and thereby\nfulfilling the twin conditions provided in Section 12AA(3) of having not\ncarrying the activities genuinely and in accordance with objects of the\ntrust approved.\"?.\n(iii) \"Whether on the facts and circumstances of the case and in law,\nthe Tribunal did not err in holding that even after addition to the\nobjects clauses made without intimation to the department, the\nregistration cannot be ipso facto cancelled in terms of Sec. 12AA(3) of\nthe Act, without appreciating the fact that registration granted under\nSection 12A and the benefits flowing there from, cannot continue after\namending the objects without the approval of the competent authority\nas the registration granted is to be objects prior to such\namendment\"?.\n4. Appeal is admitted on substantial question (iii) as above.\nHence it can be seen that Ground No. 3 is still subjudiced\nbefore Hon'ble Bombay High Court. With regard to the same, kind\nattention is hereby drawn to the Ground of Appeal No. 3 raised by the\nRevenue in the instant appeal before Hon'ble ITAT Pune is reproduced\nbelow:\n\"3.\nOn facts and circumstance of the case, the Ld CITTA) erred in\nallowing the exemptions claimed u/s 11 & 12 of the Act without\nappreciating the fact that the issue of assessee's 12AA registration\nmater is still pending before the Hon'ble Bombay High Court for\nadjudication.\nNotwithstanding above in the case of BCCI VS ITO, ITA No.\n1285/Mum/2010, the Hon'ble ITAT, Mumbai has held that the\nbenefits that flow from registration of an assessee u/s 12A cannot be\nextended to the amended clauses of the memorandum and rules and\nregulations. Following observations of the referred judgement are\nfurther relied upon:\n11. The learned Special Counsel, G.C. Srivastava, representing the\nRevenue, submitted that the admitted position is that the assessee\nhas changed its memorandum and rules and regulations twice i.e. on\n1st June 2006 and for the second time is on 21st August 2007, and\nthat these changes in objects were not intimated to the DIT for a\nperiod of three years, on the ground of inadvertence. He pointed out\nthat only during assessment proceedings, in an enquiry made that the\namendments were informed to the Revenue authorities. He submitted\nthat what is registered is not merely the name of the assessee but the\nentire objects based on the Memorandum of Association and the rules\n& regulations of the institution. He contended that the benefits under\nsection 12A flows from the objects and when there are material\nchanges in the objects, the benefit would definitely be affected. The\nlearned Special Counsel contended that the DIT has neither cancelled\nthe registration nor withdrawn the registration and that he has just\nintimated the assessee of the consequences of the changes in the\nobjects to the assessee. He argued that on such intimation, an appeal\ncannot lie under section 253 of the Act. He submitted that this is a\ncase where the assessee by his own voluntary act of changing the\nobjects without seeking approval, cancelled the registration. He\nvehemently contended that when the association has been registered\nunder section 12A, and subsequently it alters its objects and also\ninvolved in commercial transactions, it would be unreasonable to hold\nthat the registration under section 124 still holds good. He argued\nthat the benefit of registration cannot be extended with the newly\namended objects. He argued that it is not for the assessee to decide\nas to whether the amendments are material or not. On merits, he\nsubmitted that the assessee has suppressed Pages-38 and 39 of the\namended Memorandum and rules and regulations and that these two\npages are of vital importance and for the benefit of the bench, he\nprovided copies of the same. He pointed out that change such as\nIndian Premier League was added by way of these amendments. He\nfurther filed a copy of 79th Annual Report of the assessee for the year\n2007-08, wherein the concept of \"DLF Indian Premier League\" was\nmentioned and it was stated that new standards of entertainment\nwas sought and the project was launched as \"Manoranjan Ka Baap\".\nHe further referred to other parts of the annual report and submitted\nthat what is being done was something more than mere promotion of\nsports and this is definitely a drastic change in the object. He filed\nphotocopy of some of the untitled report to point out that clause 6.2.4\nof the regulations for players, team officials, umpires and\nadministrators and submitted that this was amended to allow direct\nand indirect commercial interest in Indian League and 20:20. Не\nsubmitted that when the society allowed the administrators and\nmanagers to have commercial interest, the Revenue has the right to\nexamine whether the amended objects are of general public utility. Не\nargued that if the assessee does not intimate such changes what\nwould the Assessing Officer look at. He submitted that the drastic\nchange in the objects resulted in the foundation on which the\nregistration stood withdrawn. Alternatively, he submitted that the\nregistration cannot be extended to the new objects. He submitted that\nsection 124, will not be workable if changes in objects are not to be\nconsidered by the authorities. He pointed out that the DIT has not\ngone into by clause by clause and examination of amendments but\nhas simply directed the assessee to file for fresh registration and also\nintimated the consequence of change of objects. He relied on the\ndecision of Mumbai \"E\" Bench of the Tribunal in M/s. Sterlite\nFoundation v/s DIT(E). IТА по. 5340/Mum/2009, order dated 1st\nJanuary 2010, and argued that withdrawal of registration under\nsection 124, was not held as illegal by the Bench.....\n.........
We agree with the findings of the DIT that granting of\nregistration under section 124A means granting of registration based\non the objects and by-laws of the society as filed by the assessee\nalong with the application for registration. Grant of registration under\nsection 124 does not mean that only the name of the society is\nregistered. It means that the memorandum and by-laws are examined\nby the authorities and on being satisfied that the memorandum and\nby-laws fulfilled the conditions laid down under the Act, registration\nunder section 124. is granted and this, in turn, enables the assessee\nto avail the benefit of sections 11 to 13 of the Act. Thus, what is\nregistered is the society along with its memorandum and by-laws. If\nthere are significant or material changes in the objects or bye-laws, in\nour opinion, it cannot be said that the registration under section 124,\ncan be extended to those amended objects and bye-laws. Any other\nview would defect the very purpose of registration. The assessee has\nmade various amendments to the Memorandum of Association as well\nas in the Rules and Regulations, which are placed in the paper book\nvide Pages-36 to 41. These changes have been highlighted during the\ncourse of hearing. We do not want to list out the amendments as the\nRevenue has not examined the same, clause by clause and come to\nany conclusion. Suffice to say that some of the amendments are\nmaterial and substantive, one of them being holding ODIs and Twenty\n20, any other matches, etc........\n.....
These amendments when read together leaves us in nо\ndoubt that certain substantial and material changes have taken place\nto the memorandum, as well as to the rules and regulations which\npermit commercial interest to administrators in IPL Champion League\nand Twenty 20. In our opinion, the Revenue authorities definitely\nhave a right to examine the question whether these changes in the\nmemorandum, rules and regulations are in consonance with the\nprovisions of the Act so as to enable the assessee to continue to claim\nbenefit us a charitable institution under section 11, 12 and 13 of the\nAct.\n22. We are of the opinion that the benefits that flow from registration\nof an assessee under section 124, cannot be extended to the\namended clauses of the memorandum and rules and regulations,\notherwise an absurd situation will arise. If an institution obtains\nregistration under section 124, on a certain objects and bye-laws,\nexamined by the DIT and thereafter, that institution amends its\nobjects and regulations substantially, then to hold that the\nregistration under section 12A would hold good for the amended\nobjects and bye-laws would be against law and the scheme of the\nAct. Whether the amendment is substantial or otherwise, is also to be\nexamined by the Revenue authorities and it is not for the assessee to\nunilaterally declare that the amendments are not drastic or\nsubstantive. If the assessee does not intimate the Revenue of the\namendments on the ground that there is no statutory requirement, in\nour opinion, the assessee, as a consequence, cannot claim the benefit\nthat flows under section 124 for these changed objects, otherwise it\nwould amount to a situation where the assessee shifts the goalpost\nmidway and continues to claim benefit. There might be no statutory\nrequirement for intimating the DIT of the changes in the memorandum\nand rules and regulations but if the assessee does not fulfill its\nundertaking to furnish the changes, then he cannot claim automatic\nbenefits under sections 11 to 13 of the Act for those altered objects,\nrules and regulations Benefits under the Act cannot be claimed unless\nthe changes are vetted by the authorities..\n.
To sum up, we are of the opinion that the registration\ngranted under section 12A, on 12th February 1996, and the benefits\nflowing therefrom, cannot be extended to the amended objects of the\nsociety unless the DIT examines the same and comes to a conclusion\nthat the registration under section 124 can be extended to the revised\nobjects, memorandum and by laws. It would be illogical to hold that\nonce an institution is registered under section 124 no matter whatever\nmay be the changes in the objects, rules and regulations, for any\nnumber of times, the institution should be given the benefit of section\n11 to 13 of the Act, in view of the original registration granted under\nsection 124. In our opinion, the assessee society should approach the\nregistering authority with the changes and amendments so that the\nauthorities could examine as to whether the amendments in question\nmeet the requirement of law. Since the stand of the Revenue, as\nalready stated, is that the letter dated 18th November 2009, is only\nadvisory in nature and is not an exercise of a statutory power and\nthat it is not a withdrawal or cancellation of registration under section\n124 we hold that the appeal is not maintainable under section 253 of\nthe Act.\nIt is also a matter of fact to be known that, the impugned\nappellate order of CIT(A), NFAC has been passed on 12.11.2022\nwhereas the Hon'ble Apex Court's judgement of ACIT (Exemptions) Vs\nAhmedabad Urban Development Authority (AUDA) [2022] 143\ntaxmann.com 278 (SC) passed on 19.10.2022 was very much\navailable before CIT(A) and the same has not been taken into\ncognizance.\nIn the AUDA judgement following findings has been made by\nthe Hon'ble Apex Court which is relevant in the instant case:\n\"234. It is quite evident that the activities of the cricket associations\nare run on business lines. The associations own physical and other\ninfrastructure, maintain them, have arrangements for permanent\nmanpower and have well-organised supply chains to cater to the\nseveral matches they host. Many such matches are not at national\nlevel and are under-16 or under-18 matches at the regional level.\nHowever, these activities are not to be seen in isolation but are to be\nregarded as part of the overall scheme, and ecosystem in which the\ngame of cricket is organized in India. Talent is spotted, at local levels\nand dependent on the promise shown. given appropriate exposure.\n235. On a close scrutiny of the expenses borne, having regard to the\nnature of receipts, the expenditure incurred by Cricket Associations\ndoes not disclose that any significant proportion is expended towards\nsustained or organized coaching camps or academies. Therefore, in\nthe opinion of this court, the ITAT fell into error in not considering the\nnature of receipts flowing From the BCCI into the corpus of GCA and\nSCA-as well as other associations that are before this court to\ndetermine their true character. The ITAT appears to have been\nswayed by the submission that the amount given by the BCCI were\ntowards capital subsidy.\n236. To determine whether a given receipt is to be characterized as\nfalling in the revenue or capital stream, the objective for which it is\ngiven as well as the manner in which it is utilized has to be\nscrutinized This aspect has been highlighted in Sahney Steel & Press\nWorks Lid. v. CIT [1997] 94 Тахтап 368/228 ITR 253/142 CTR 261\n(SC)/1997 (Suppu) SCR 189 in the following terms: \"It is not the\nsource from which the amount is paid to the assessee which is\ndeterminative of the question whether the subsidy payments are of\nrevenue or capital nature. The first proposition stated by Viscount\nSimon in Ostime case [28 TC 261: (1946) 1 All ER 668) is that if\npayments in the nature of subsidy from public funds are made to the\nassessee to assist him in carrying on his trade or business, they are\ntrade receipts.\" This has later been followed in CIT v. Ponni Sugars\n[2008] 174 Τахтап 87/306 ITR 392/219 CTR 105 (SC)/[2008] 9 SCC\n337.\n237. Recent trends have shown that media rights, especially\nbroadcasting and digital media rights have yielded colossal revenues\nto the BCCL The model adopted in the last 10 years or so has been to\nauction media rights in respect of events over a 3 or 5-year period. As\ndiscussed previously, these media rights are not per se owned by\nBCCI, which is but an association of persons or agglomerate of all the\nState Cricket Association. The stadia which form the venue for these\ncricket matches (in relation to which media rights are transferred or\nlicensed) are owned by the State Cricket Associations. According to\nthe BCCI itself, the State Associations can well bargain and enter into\narrangements for the sale of such media rights. However, to obtain\nbetter terms, and gain bargaining leverage a centralized form of sale\nof such rights has been agreed and adopted by which the BCCI\nauctions these rights on behalf of the State Associations. All State\nAssociations put together are entitled to 70% of the revenue- i.e., the\nproceeds of sale of the media rights. This may or may not be in\nproportion to the events hosted by each or some of the cricket\nassociations. Yet, this forms part of the arrangement by which the\nconsideration flowing from such commercial rights has been agreed to\nbe shared amongst all members of the BCCI. These rights are\napparently commercial.\n238. In the light of these, the Court is of the opinion that the ITAT as\nwell as the High Court fell into error in accepting at face value the\nsubmission that the amounts made over by BCCI to the cricket\nassociations were in the nature of infrastructure subsidy. In each\ncase, and for every year, the tax authorities are under an obligation to\ncarefully examine and see the pattern of receipts and expenditure.\nWhilst doing so, the nature of rights conveyed by the BCCI to the\nsuccessful bidders, in other words, the content of broadcast rights as\nwell as the arrangement with respect to state associations (either in\nthe form of master documents, resolutions o individual agreements\nwith state associations) have to be examined. It goes without saying\nthe there need not be an exact correlation or a proportionate division\nbetween the receipt and t actual expenditure. This is in line with the\nprinciple that what is an adequate consideration for something which\nis agreed upon by parties is a matter best left to them. These\nobservations a not however, to be treated as final; the parties'\ncontentions in this regard are to be consider on their merit.\nThe Revenue has placed reliance on following judgements :\nSr. No.\nDocument Details\nPages\n1\nPr. CIT (Exemptions) Vs Maharashtra Cricket\nAssociation [2019] 101 taxmann.com 339\n(Bombay)\n7-8\n2\nThe Board of Control for Cricket in India Vs ITO,\nITA No. 1285/Mum/2010\n9-24\n3\nACIT (Exemptions) Vs Ahmedabad Urban\nDevelopment Authority (AUDA) [2022] 143\ntaxmann.com 278 (SC)\n25 - 116\nHence, in view of the observation made by the Hon'ble Apex Court\nw.r.t. State Cricket Associations per se the order of the CIT(A), NFAC needs to\nbe set aside as despite the availability of the AUDA judgement before the\ndisposal of CIT(A) order on 12.11.2022, the Hon'ble Apex Court judgement\nhas not been considered and hence the matter requires to be restored back to\nthe CIT(A) / AO to be decided on merit based on the directions given by\nHon'ble Supreme Court of India in respect of sports associations at Para 238\nof the said judgement.”\n7. The Ld. AR, on the other hand, supported the order of the Ld.\nCIT(A)/ NFAC and argued that the Ld. CIT(A) has rightly allowed the case\nof the assessee considering the factual and legal matrix of the case. He\nargued that the findings and ratio of the AUDA's case is not applicable to\nthe facts of the present case for AY 2010-11 under consideration and filed\nthe following written submissions before us contending as under :\n\"MAY IT PLEASE YOUR HONOR.\nAs directed by the Hon'ble Bench during the hearing held on 07.01.2025, we\nsubmit herewith our views on the grounds raised
by the department and\nHon'ble Supreme Court's observations in AUDA's case.\n1. Issue: Infrastructure Subsidy\nThe first issue raised by the department relates to infrastructure\nsubsidy of Rs. Rs.16,32,18,949 towards Gahunje Stadium and\nRs.60,83,605 for specific assets allowed by the learned CIT(A)\n1.1 The subject subsidy is granted by BCCI in respect of construction\nof Gahunje Stadium and for purchase of specific assets. (Evidence\nattached from Page No.10 to 22 of the paper book).\n1.2 The learned CIT(A) by relying upon the Hon'ble Supreme Court's\ndecision in case of Ponni Sugars and Chemicals Ltd [(2008) 174\nТахтапп
87. (SC)] has allowed the claim of the assessee as Capital\nReceipts. (Ref. Para 5.5 on Page 21 of CIT(A)'s Order)\n1.3 Department's ground is that the CIT(A) has allowed the claim\nwithout appreciating the decision of the Hon'ble Supreme Court in\nAUDA's case.\n1.4 Contrary to the department's ground, the Hon'ble Supreme Court\nin AUDA's case has held that the purpose test is to be followed for\ndetermination of nature of receipts. The Hon'ble Supreme Court has\nquoted Sahney Steel & Press Works Ltd vs. CIT [(1997)
4. SCR 189)\nand Ponni Sugars and Chemicals Ltd [(2008) 174 Taxmann
87. (SC)]\ncases in this regard. (Kindly refer Para 236 of AUDA's decision: Page\n90 of the paper book)\n1.5 Thus, since the learned CIT(A)'s decision is in line with the Hon'ble\nSupreme Court's decision in AUDA's case, no interference is called for\nwith the CIT(A)'s decision in this regard.\n2. Issue: Exemption u/s 11 of the Act\nGround No.2 of the department relates to the learned CIT(A)'s decision in\nallowing benefit of exemption u/s 11 of the Act without appreciating the ratio\nlaid down by the Hon'ble Supreme Court in AUDA's case.\n2.1 In para 238 of AUDA's decision (Ref. page 91 of the paper book), the\nHon'ble Supreme Court has held that \"In each case and for every year, the\ntax authorities are under an obligation to carefully examine and see the\npattern of receipts and expenditure and the party's contention in this regard\nare to be considered on their merits.\"\n2.2 While coming to this conclusion, the Hon'ble Supreme Court has\nexamined the facts found in Gujrat Cricket Association's case and as well as\nin Saurashtra Cricket Association's case.\n2.3 The Hon'ble Supreme Court has found that, these associations were\nreceiving amounts mainly towards sale of entry tickets for various matches,\nadvertisement money and broadcasting as well as digital rights for national\nand international events.\n2.4 The Hon'ble Supreme Court also found that the expenses of these\nassociations towards the stated objects of promotion of cricket were only a\nfraction of these receipts.\n2.5 The Hon'ble Supreme Court further held that the media/broadcasting\nrights are in the nature of Intellectual Property Rights and the BCCI sells\nthese rights to the broadcasters on behalf of all the associations.\n2.
As against these observations, the facts found in the assessee's case\nare as under;\nThe Marashtra Cricked Association (\"MCA\") did not own any\nstadium/infrastructure to conduct any matches during the relevant period\n(Ref. Para 5.1.1 on Page 5 of the Assessment Order)\nBCCI has also confirmed that the MCA did not host any matches during the\nrelevant period (Ref. Para 5.2.1 on Page 10 of the Assessment Order)\nConsequently, the MCA did not have any income from sale of entry tickets,\ncorporate boxes etc. This is evident from the annual accounts of MCA also.\n(Ref. Page 3 of the paper-book)\nThe MCA did not hold any Intellectual Property Rights in the form of\nbroadcasting rights/media rights, as no matches giving rise to such rights\nwere held by MCA during the relevant period. BCCI has also confirmed this\nfact.\n2.7 In fact, the only major income of the MCA by of way of interest income\nand revenue subsidy (TV subsidy) from BCCI which is in any case offered to\ntax. (Ref. Page 3 of the paper book). Since MCA did not own TV rights and\ntherefore could not be transferred to BCCI, this subsidy is in fact a voluntary\ncontribution from BCCI.\n2.8 It will also be seen that from various BCCI domestic matches held at\ndistrict centres of MCA, the MCA has incurred a deficit of about Rs.3.87\nCrores and has not earned any revenue. (Ref. Page 8 of the paper book).\nSuch domestic matches did not give rise to any media rights.\n2.9 The enclosed cash flow statement will also reveal that as against\nreceipts from BCCI of Rs.35.57 Crores and interest income of Rs.32 Lacs, the\nassessee has spent Rs.46.04 Crores on its objects of promotion of cricket.\nThe assessee infact has taken loans of about Rs.20 Crores in furtherance of\nits objects.\n2.10 Since the assessee did not own any Intellectual Property Rights in form\nof television and media rights, there is no question of these being assigned or\ntransferred to BCCI or BCCI negotiating on behalf of the MCA, for the simple\nreason that nobody can sell anything that he does not have. There is neither\nany contract agreement between MCA and the BCCI on MCA's record in this\nregard. (Ref. Para 5.1.3 on Page 7 and 8 of the Assessment Order).\n2.11 All these contentions were put before the learned CIT(A) as well as the\nlearned AO and the CIT(A) has rightly appreciated these contentions which\nare in line with the observations of the Hon'ble Supreme Court. (Ref. Para\n230 and Para 238 of the AUDA's decision on Page 89 and 91 of the paper\nbook). As such, no interference is called for in CIT(A)'s decision.\n3. Issue: Registration u/s 12A of the Act\nGround No. 3 of the department relates to the allowance of exemption u/s 11\nof the Act by the learned CIT(A) without appreciating that the issue of\nassessee's registration u/s 12AA of the Act is still pending before the Hon'ble\nBombay High Court for adjudication.\n3.1 The Hon'ble CIT-1 Pune had cancelled the assessee's registration u/s\n12A of the Act vide his order dated 30.07.2012 on the grounds of,\nThe activities of the assessee are hit by the amendment to section 2(15) of\nthe Act made through Finance Act, 2008, and\nNon intimation of changes in the objects clause by the assessee to the\ndepartment.\n3.2 Against the same, the assessee preferred an appeal before the Hon'ble\nITAT Pune bench to restore the registration u/s 12A of the Act.\n3.3 The Hon'ble ITAT while deciding the matter in favour of the assessee has\nobserved that;\nThe registration granted to the assessee u/s 12A of the Act cannot be\ncancelled by the CIT in terms of section 12AA (3) on the basis of the\namendment to section 2(15) of the Act by way of insertion of the first proviso\nby the Finance Act, 2008. (Ref. Para 20 of the Hon'ble ITAT Order on Page\n106 of the paper book)\nThe import of newly inserted clauses to the object clause is not in\ncontravention of the assessee's primary objects of promoting, developing and\ncontrolling the game of cricket in Maharashtra. Therefore, even after\nconsidering the additional objects, it does not signify that the registration\ngranted u/s 12A of the Act is rendered nugatory.\n(Ref. Para 31 of the Hon'ble ITAT Order on Page 108 (backside) of the paper\nbook)\n3.4 In the result, the Hon'ble ITAT has set aside the CIT's order and restored\nthe assessee's 12A registration dated 09.12.1991. (Ref. Para 33 of the\nHon'ble ITAT Order on Page 109 of the paper book).\n3.5 Consequently, the CIT (Exemptions), Pune has passed an order u/s 12AA\nr.w.s 254 of the Act to give the effect of the Hon'ble ITAT decision in this case\nwherein it has been admitted that the assessee is considered to be\ncontinuously registered u/s 12A of the Act w.e.f. 09.12.1991. (Ref. Para 5 of\nthe CIT(E) Order on Page 119 of the paper book).\n3.6 The department has filed an appeal before the Hon'ble Bombay High\nCourt against the said Order of the Hon'ble ITAT challenging the restoration\nof assessee's registration u/s 12A of the Act.\n3.7 The said department's appeal before the Hon'ble Bombay High Court has\nbeen admitted however, the decision of the Hon'ble ITAT on this matter has\nnot been stayed. The matter is yet to be heard by the Hon'ble Bombay High\nCourt.\n3.8 As such, the Order of the Hon'ble ITAT restoring the assessee's\nregistration u/s 12A of the Act still subsists and therefore, no interference is\ncalled for with the CIT(A)'s decision in this regard.”\n8. We have heard the Ld. Representatives of the parties and perused\nthe material on record, written submission(s) of Ld. AR and Ld. DR, the\npaper book filed by the Ld. AR on behalf of the assessee as well as the\njudicial precedents relied upon by the parties. The facts on record are not\nin dispute. It is a matter of fact that the assessee has been regularly filing\nits return of income and has been subjected to scrutiny assessment in\nprevious AYs i.e. 2002-03, 2003-04, 2004-05, 2008-09, 2009-10. In all\nthese assessment years, the objects of the trust have been found to be\ncharitable in nature (even post amendment to section 2(15) of the Act) by\nthe Ld. AO including the immediate preceding year i.e. AY 2009-10. We\nfind that the Ld. AO during the relevant AY 2010-11 under consideration\nhas denied the assessee's claim of exemption u/s 11 of the Act by applying\nthe amended provisions of section 2(15) of the Act holding that the\nactivities carried out by the assessee are not charitable in nature. The Ld.\nCIT(A) has allowed the exemption and deficit claimed by the assessee for\nthe reason that the registration granted to the assessee u/s 12A of the Act\nsince 1991 still continues to hold the field inspite of the fact that the\nDepartment is in appeal before the Hon'ble Bombay High Court on the said\nissue which is still sub-judiced. Before us, the main thrust of the Ld. DR's\nargument is that the Ld. CIT(A)/NFAC has failed to consider the decision of\nthe Hon'ble Supreme Court in AUDA's case whereas in contrast to this, the\nLd. AR has strongly argued that the AUDA's case is not applicable to the\nfactual matrix of the present case. We find some force in the arguments of\nthe Ld. DR that the Ld. CIT(A) has failed to take into account the\nobservations made by the Hon'ble Supreme Court in AUDA's case vis-à-vis\nthe nature of activities/receipts of the assessee trust before arriving at the\nconclusion that the assessee is eligible for claim of benefit of section 11\nand 12 of the Act. We note as a matter of fact that the impugned appellate\norder of the CIT(A)/ NFAC has been passed on 12.11.2022 whereas the\nHon'ble Apex Court's judgement in AUDA's case was pronounced on\n19.10.2022 and hence this decision was very much available before CIT(A)\nbut the same has not been taken into cognizance. The Ld. DR has also\nbrought to our attention the decision of this Tribunal in assessee's own\ncase for AYs 2011-12 & 2012-13 ((supra)) and requested that the present\nappeal should also be restored to the file of the Ld. CIT(A) for deciding the\nissue(s) afresh. Perusal thereof, reveals that the Tribunal in its decision\n(supra), under the similar set of facts as that of the present appeal, has set\naside the matter to the file of the Ld. CIT(A) to decide the issue afresh on\nmerits in the light of the observation(s) of the Hon'ble Apex Court in\nAUDA's case.\n9. Based on the factual and legal position enumerated above, in our\nconsidered view, the impugned issue(s) before us needs to be examined in\nlight of the observations of the Hon'ble Supreme Court in AUDA's case\ntaking into consideration the facts and merits of the assessee's case for the\nrelevant AY 2010-11 under consideration. Considering the totality of facts\nand in the circumstances of the case, we deem it fit and proper, to set\naside the impugned order of the Ld. CIT(A/ NFAC and restore the matter to\nhis file for denovo adjudication on merits of the case in light of the decision\nof the Hon'ble Supreme Court in AUDA's case, as per fact and law after\nallowing reasonable opportunity of hearing to the parties. The assessee is\nalso hereby directed to file its submission(s) to substantiate its case before\nthe Ld. CIT(A) on the appointed date without seeking adjournment under\nany pretext unless otherwise required for the reasonable cause, failing\nwhich the Ld. CIT(A) shall be at liberty to pass appropriate order as per\nlaw. We direct and order accordingly. The grounds No. 1 to 3 raised by the\nRevenue are accordingly allowed for statistical purposes.\n10. In the result, the appeal of the Revenue is allowed for statistical\npurposes.\nOrder pronounced in the open court on 09th June, 2025.\nSd/-\n(Manish Borad)\nACCOUNTΤΑΝΤ ΜΕΜMBER\nपुणे / Pune; दिनांक / Dated : 09th June, 2025.\nSd/-\n(Astha Chandra)\nJUDICIAL MEMBER\nरवि\nआदेश की प्रतिलिपि अग्रेषित /