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Income Tax Appellate Tribunal, DELHI BENCH “SMC-II, NEW DELHI
Before: SHRI H.S. SIDHU
ORDER ORDER ORDER ORDER This appeal by the Revenue is directed against the order of the Ld.
Commissioner of Income Tax (Appeals)-36, New Delhi dated 12.5.2016 pertaining to assessment year 2012-13 on the following grounds:-
On the facts and in the circumstances of the case and in law,
the Ld. CIT(A) has erred in law ignoring that assessee’s activity falls under the category of ‘advancement of any other object of General Public Utility’ and last proviso to section 2(15) is clearly applicable to it as ‘Income from Sponsorship/ Royalty’ is explicitly business receipt in nature.
2. On the facts and in the circumstances of the case and in law,
the Ld. CIT(A) has erred in law in ignoring the addition on 1 account of Life Member’s Subscription without discussing any facts in the order.
3. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing.
The brief facts of the case are that the return showing NIL income accompanied with audit report in Form No. 10B was filed on 13.12.2012. The assessee society is engaged in organizing golf tournaments in India and abroad for promotion of the game of gold in India. The main objectives of the assessee society, inter-alia include: a) To promote the game of golf in India. b) To foster and maintain a high standard of amateur gold in India. c) To arrange for the conduct of the Amateur Gold Championship in India and other gold Championship in India. d) To promote and arrange golf matches and competitions in India and elsewhere
The assessee society is registered u/s. 12A of the I.T. Act, 1961 vide registration dated 31.8.1999. A perusal of income and expenditure account of the assessee revealed that the assessee apart from other receipts, have also received the following incomes : IGU sponsorship fees, rental income and Rolex 2 Contribution (sponsorship). AO observed that since the above receipts are in nature of commercial receipts, the assessee was asked to furnish its explanation as to why not the activities of the assessee be covered under newly amended proviso to section 2(15) of the Income Tax Act, 1961. In response to the notice, assessee filed its reply. After considering the same, the AO observed that the surplus amounting to Rs. 27,15,855/- generated from the activities of the assessee as per income and expenditure account was taxed. No benefit of section 11 & 12 of the I.T. Act was allowed to the assessee in view of applicability of Section 13(8) of the I.T. Act, 1961. The assessee had shown life membership subscription of Rs. 19,05,000/- which was shown directly in balance sheet and not offered to tax. Since the benefit of section 11 & 12 of the I.T. Act, 1961 was denied to the assessee in view of Section 13(8), Life Membership Subscription of Rs. 19,05,000/- was also added to the total income of the assessee and AO assessed the income of the assessee at Rs. 46,20,855/- vide his order dated 10.3.2015 u/s. 143(3) of the I.T. Act, 1961.
Aggrieved with the impugned order, the Revenue is in appeal before the Tribunal.
Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal.
I have heard both the parties and perused the relevant records, especially the order of the Ld. CTI(A). I find that Ld. First Appellate Authority has elaborately discussed the issue in dispute by considering the submissions of the Ld. Counsel of the assessee and adjudicated the issues in dispute as under:-.
“6. I have considered the order of the AO, submissions of the assessee and the earlier order of my predecessor CIT(A). It is seen that in the case of Hamsadhwani Vs. DIT(E) (2012) 19 Taxmann.com 10 ITAT Chennai, the assessee was promoting music in Tamil Nadu for which it was receiving sponsorship and coaching fees and the Hon'ble Tribunal did not accept the argument of DIT(E) that the assessee was involved in any business activity and the exemption was allowed. Recently the Hon'ble Delhi High Court in the case of India Trade Promotion Organization vs. DGIT(E), 53 Taxmann.com 404 (Delhi) 2015 (order dated 22.01.2015) has upheld the constitution validity of the proviso of section 2(15) which was under challenge being discriminatory in view of the Article 14 (Equality before law) of the Constitution of India but the Hon'ble High Court has read down the strict and literal Interpretation of the Proviso of section 2(15) and has held that mere receipt of fee or charge cannot be said that the assessee involved in any trade, commerce or business and has accordingly allowed the relief to the ITPO.
After considering all the facts and circumstances of the case and following the order of CIT(A) for AY 2010-11 &
2011-12, I am of. the view that the assessee is a charitable institution and accordingly the AO is directed to allow exemption u/s. 11 & 12 to the assessee alongwith consequential benefits.
In the result, the appeal of the assessee is allowed.
5.1 On going through the aforesaid finding of the Ld. CIT(A), I find that Ld. CIT(A) has noted that it is seen that in the case of Hamsadhwani Vs. DIT(E) (2012) 19 Taxmann.com 10 ITAT Chennai, the assessee was promoting music in Tamil Nadu for which it was receiving sponsorship and coaching fees and the Hon'ble Tribunal did not accept the argument of DIT(E) that the assessee was involved in any business activity and the exemption was allowed. It was further observed by the Ld. CIT(A) that recently the Hon'ble Delhi High Court in the case of India Trade Promotion Organization vs. DGIT(E), 53 Taxmann.com 404 (Delhi) 2015 (order dated 22.01.2015) has upheld the constitution validity of the proviso of section 2(15) which was under challenge being discriminatory in view of the Article 14 (Equality before law) of the Constitution of India but the Hon'ble High Court has read down the strict and literal Interpretation of the Proviso of section 2(15) and has held that mere receipt of fee or charge cannot be said that the assessee involved in any trade, commerce or business and has accordingly allowed the relief to the ITPO. I further find that after considering all the facts and circumstances of the case and following the order of Ld. CIT(A) for AY 2010- 11 & 2011-12, Ld. CIT(A) has rightly held that the assessee is a charitable institution and accordingly, the AO was directed to allow the exemption u/s. 11 & 12 of the I.T. Act to the assessee alongwith consequential benefits. In view of above, I am of the considered view, that Ld. CIT(A) has passed a well reasoned order which does not need any interference on my part, hence, I uphold the same. As a result, the grounds raised by the Revenue stand dismissed.
In the result, the Appeal filed by the Revenue stands dismissed.
Order pronounced in the Open Court on 03/1/2017.