ALL INDIA CHESS FEDERATIION ,CHENNAI vs. ITO EXEMPTIONS WARD 1, CHENNAI

आदेश / O R D E R

PER JAGADISH, A.M : Aforesaid three appeals filed by the assessee for Assessment Years (AYs) 2015-16, 2016-17 & 2017-18 arises out of the common order of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 15.11.2022.

ITA Nos.28, 29 & 30/Chny/2023 :- 2 -:

and issues are common hence, we proceed to pass a common order.

For brevity, we shall take up the appeal in ITA No.28/Chny/2023 for

A.Y 2015-16 as lead case. The grounds of appeal raised by the

assessee for A.Y 2015-16 are as under:

“1. The re-opening of the assessment for this assessment year on the reasoning of the Assessing Officer is unsustainable and untenable in law and in the facts and circumstances of the case and hence the CIT(A) ought to have quashed the reassessment. 2. The Commissioner of Income Tax (Appeals) has erred in not appreciating in the proper perspective the grounds of appeal and the submissions of the Appellant Assessee both on facts and in law against the re-opening of the assessment by the Assessing Officer. 3. The Commissioner of Income Tax (Appeals) erred in law to conclude, that, based on the findings of the Hon'ble Competition Commission of India in their order dated 12/7/2018, the re-opening of the assessment for this year is sustainable. Exemption u/s. 11 2.1 The Order of the Commissioner Of Income Tax (Appeals) holding that the in view of the finding of the Competition Commission under the provisions of Competition Act, the Appellant does not qualify as a charitable institution to claim exemption under Sec 11 of the IT Act is contrary to the facts and is in direct conflict with the reasoned judgement of the Hon'ble Income Tax Appellate Tribunal in Appellant's own case for the earlier years and thus are not sustainable. 2.2 The commissioner of Income Tax (Appeals) erred in concluding that the facts as noted by the Competition Commission of India were not before the Income Tax Appellate Tribunal when the Appellate Tribunal dealt with the Appellant's case for the earlier assessment years. 2.3 The Commissioner of Income Tax (Appeals) failed to note that the Competition Act 2002 and the Income Tax Act 1961 are for different purposes and operates and made applicable in totally different situation, different purposes and on different considerations and consequently the approach of the adjudicating Authorities for the

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purpose of the provisions of the Competition Act cannot have any bearing in the approach under the IT Act. 2.4 The Commissioner of Income Tax (Appeals) failed to note that with reference to the objects of the Appellant Assessee and in its status as a recognized Sports Federation by the Govt. of India carrying out its activities in terms and in compliance with the National Sports Code and read with the Circular issued by CBDT dated 24.9.1984, the Appellant Federation promoting the Games would be a charitable purpose within the meaning of Sec 2(15) of the IT Act. Decision of Hon'ble Supreme Court in Ahmedabad Development Authority inapplicable. 3.1 The Commissioner of Income Tax (Appeals) erred in placing reliance on the decision of the Hon'ble Supreme Court in Ahmedabad development Authority case, that too out of context. 3.2 The Commissioner of Income Case Tax (Appeals) ought to have seen that the decision of the Hon'ble court is prospective only and in the light of issue on hand is already a decided one by the Hon'ble Income Tax Appellate Tribunal and already attained finality, the tax authorities applying such decision to the case on hand does not arise. 3.3 The findings of the Commissioner of Income Tax (Appeals) that the activities of the Appellant is being run as a normal commercial enterprises and there is no element of charity or public utility is unsustainable.”

management and development of the game of chess in India. The

assessee is a recognized Sports Federation in India by Ministry of

Youth Affairs and Sports, Government of India and its functions and

activities are governed and controlled by the National Sports

Development Code issued by the Government of India. The assessee

is registered u/s. 12AA of the Income-tax Act, 1961 (hereinafter “the

Act”) with the DIT(E), Chennai. The A.O has reopened the assessment

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for A.Y 2015-16, 2016-17 & 2017-18 on the basis of finding in the

Competition Commission of India (hereinafter “CCI) order dated

12.07.2018 which has levied penalty u/s.27 of Competition

Commission of India Act for breach of conduct and practices. The CCI

on the basis of enquiry conducted by the Director General, has

concluded the assessee is an enterprise and provides services to

chess players involving economic elements and is also in receipt of

money from Doordarshan for preparing highlights of the matches and

also received income from sale of advertisement space, sale of media

rights and sponsorship. The A.O based on the information received

from CCI has reopened the assessment holding that the assessee is

not engaged any charitable activities as provided in Section 2(15) of

the Act and therefore, not eligible for exemption u/s. 11 & 12 of the

Act. The assessee has challenged the order of A.O before Ld. CIT(A).

The Ld. CIT(A) after examining the reasons recorded for reopening

has upheld the reopening and also held that the assessee is not

engaged in charitable activities. The Ld. CIT(A) has also examined

the order of ITAT from A.Y 2009-10 to 2014-15, where the Tribunal

has held that the assessee is engaged in the charitable activities as

the activities amounts to imparting education. The Ld. CIT(A) has

relied upon the decision of Hon’ble Supreme Court in the case of ACIT

ITA Nos.28, 29 & 30/Chny/2023 :- 5 -:

vs. Ahmedabad Urban Development Authority [2022] 143

taxmann.com 278 (SC) and held that activities also do not come

under general public utility as per proviso to Section 2(15) of the Act.

us has challenged the order of Ld. CIT(A) confirming the reopening of

assessment and upholding findings of A.O that the assessee is not

involved in any charitable activities. The Ld. AR has argued that the

Hon’ble ITAT in assessee’s own case for AY 2009-10 to 2014-15 has

held that the assessee is engaged in charitable activities and the order

of ITAT has been final. The Ld. AR has submitted that the A.O has

reopened the case on the basis of borrowed satisfaction of CCI order

and therefore, the reopening is not valid. The Ld. AR has argued that

the decision of Hon’ble Supreme Court in the case of ACIT vs.

Ahmedabad Urban Development Authority, supra is prospective and

not applicable in assessee’s case as the issue has already been

decided by the Hon’ble ITAT.

has justified the reopening and placed the reasons recorded by the

A.O on record. The Ld. DR also submitted that the decision of ITAT,

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Chennai in assessee’s own case for AY 2009-10 to 2012-13 has not

been accepted by the Department and appeal has not filed only for the

low tax effect. The Ld. DR has argued that in view of decision of

Hon’ble Supreme Court in the case of ACIT vs. Ahmedabad Urban

Development Authority, supra, the decision of ITAT for A.Y 2009-10 to

2012-13 is no longer applicable for A.Y 2015-16 I.

available on record including the order of Ld. CIT(A) and the order of

Competent Commission of India (CCI). The assessee has filed return

of income on 10.09.2015 claiming exemption u/s. 11 of the Act. The

return was not scrutinized u/s.14(3) of the Act. The A.O reopened the

assessment on the basis of information contained in CCI order that the

assessee is an “enterprise” and engaged in revenue generating

activities. The Ld. CIT(A) after going through the reasons recorded and

assessee’s arguments has upheld the reopening of the assessment.

The main arguments of assessee has been that reopening was on

borrowed satisfaction and there was no tangible material available with

A.O. The assessee has argued that the Hon’ble ITAT in earlier years

has held the activities for charitable purpose. We find that A.O has

reopened the assessment on the basis of order CCI order and enquiry

ITA Nos.28, 29 & 30/Chny/2023 :- 7 -:

conducted by Director General. The CCI order has brought out facts

that assessee is an enterprise and engaged in revenue generating

activities. At the stage of issuance of notice, the only question to be

seen is whether there was relevant material on which a reasonable

person could have formed the requisite belief. In our view these are

new and tangible material. The A.O therefore has reopened the

assessment based on the new tangible material and We, therefore

find no infirmity in the order of Ld. CIT(A) in confirming the reopening

of the assessment.

been reopened assessment after four years and the competent

authority to grant sanction was CIT, but approval in this case has been

taken by Addl. CIT. The LD AR has relied upon various case laws. We

find that the Additional Commissioner was the competent authority to

reopen the case before 31.03.2020. However, due to TOLA , the time

limit was extended up to 31.03.2021. The issue of approving authority

in such cases has been settled by the Hon’ble Supreme Court in the

case of Union of India & Ors. Vs. Rajeev Bansal in Civil Appeal

No.8629 of 2024 dated 03.10.2024 (SC) holding that in the case of

section 151 of the old regime, if the time limit of four years from the

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end of relevant assessment year falls between 20th March, 2020 and 31st March 2021, the specified authority under section 151(2) has extended time till 31st March, 2021 to grant approval. In view of the

above, the appeal filed by the assessee is dismissed.

been held for charitable purposes by the Hon’ble ITAT in assessee’s

case for A.Y 2009-10 to 2014-15, it is seen that the ITAT in assessee’s

case in ITA No/184/Mds/2013 dated 09.05.2014 for A.Y. 2009-10 has

held that recognized sports association in India, who imparts

knowledge in sports, promotion of sports by conducting various sports

activities in all branches fall within the scope of education as defined

under the amended provisions of section 2(15) of the Act. The Bench

accordingly held the objects of assessee fall within the scope of first

limb of the amended provisions of section 2(15) of the Act viz.,

education. This order was followed in A.Y. 2010-11 to 2012-13.

However , subsequent to this decision, Honorable Supreme Court in

the case of ACIT vs. Ahmedabad Urban Development Authority,

supra, clubbing number of appeals pertaining to statutory bodies, trade

promotion bodies, State Cricket Associations etc. has elaborately

discussed as what constitutes charitable activities and interpreted

section 2(15) of the Act holding that sports associations will not fall

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within education and will have to be examined under the 4th limb of

Section 2(15) of the Act i.e., GPU category. The Ld. CIT(A) placing on the reliance of the decision of Hon’ble Supreme Court, supra, has upheld the order of A.O that the assessee is not engaged in charitable

activities. We are in complete agreement with the order of Ld. CIT(A) and therefore uphold the same.

Therefore, for the similar reasons, we dismiss the appeals in ITA Nos.29 & 30/Chny/2023 as well.

Sd/- Sd/- (एबी टी. वक�) (जगदीश) (Jagadish) (ABY. T. Varkey) लेखा सद! /Accountant Member �ाियक सद! / Judicial Member चे�नई/Chennai, �दनांक/Dated: 10th January, 2025. EDN/-

ITA Nos.28, 29 & 30/Chny/2023 :- 10 -:

आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF