ADIT(E), NEW DELHI vs. M/S. AMATEUR ATHLETICS FEDERATION OF INDIA, NEW DELHI

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ITA 6222/DEL/2013Status: DisposedITAT Delhi02 February 2016AY 2009-107 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the primary object of the federation is to promote athletics and sports, which falls under the definition of charitable purpose under Section 2(15). The receipt of recognition fees is incidental and does not negate the charitable nature of the organization.

What were the facts?

The assessee, Amateur Athletics Federation of India, is a sports federation recognized by the Ministry of Youth Affairs & Sports. The Assessing Officer denied exemption under Section 11 of the Income Tax Act, 1961, citing violation of Section 2(15) due to receipt of recognition fees.

What were the issues?

Whether the receipt of recognition fees by a sports federation disqualifies it from claiming exemption under Section 11 as a charitable organization under Section 2(15) of the Income Tax Act.

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

Before: SHRI J. SUDHAKAR REDDY & SMT SUCHITRA KAMBLE

Hearing: 08.01.2016Pronounced: 02.02.2016

per Memorandum of Association of Society which was quoted in Assessment Order. The test to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. The restrictive condition that the purpose should not involve the carrying on of any activity for profit would be satisfied if profit making is not the real object. Therefore the assessee is entitled for the deduction under Section 11 of the Act. Hence, the Revenue’s case does not sustain.

8.

In result, both the appeals are dismissed.

The order is pronounced in the open court on 2nd of February, 2016.

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