RUGBY ASSOCIATION OF MAHARASHTRA,MUMBAI vs. DIT (E), MUMBAI

आदेश / O R D E R PER AMARJIT SINGH, JM:

“B(12) To establish and support, or aid in the establishment and support of the associations, institutions, funds calculated to benefit and employees or ex-employees of the Company, or the dependents or connections of such persons, and to grant pensions and allowances to make

ITA No.2511/M/13 A.Y. 2013-14 payments towards insurance, and to subscribe, donate or guarantee money for any charitable, patriotic or benevolent purposes for any exhibition or for any public, general or useful objects.

B(16) To arrange, visits of an Indian Rugby team (that is to say a national team) and any other team, whatsoever to countries that are members of the International Rugby Board or elsewhere in conjunction with the bodies governing Rugby in the countries to be visited.”

“B(12) To establish and support, or aid in the establishment and support of the associations, institutions, funds calculated to benefit and employees or ex-employees of the Company, or the dependents or connections of such persons, and ITA No.2511/M/13 A.Y. 2013-14 to grant pensions and allowances to make payments towards insurance, and to subscribe, donate or guarantee money for any charitable, patriotic or benevolent purposes for any exhibition or for any public, general or useful objects.

B(16) To arrange, visits of an Indian Rugby team (that is to say a national team) and any other team, whatsoever to countries that are members of the International Rugby Board or elsewhere in conjunction with the bodies governing Rugby in the countries to be visited.”

3.1 The learned representative of the appellant has argued that the clause B(12) deals with the support of the associations, institutions, funds calculated to benefit and employees or ex-employees of the Company, or the dependents or connections of such persons, and to grant pensions and allowances to make payments towards insurance, and to subscribe, donate or guarantee money for any charitable, patriotic or benevolent purposes for any exhibition or for any public, general or useful objects which cannot be said against the charitable purposes objective of which has been mentioned in section 2(15) of the Act. In support of this contention the learned representative of the assessee has placed reliance on the law settled in Commissioner of Income Tax Vs. Agricultural Produce and Market Committee [2007]

ITA No.2511/M/13 A.Y. 2013-14 163 Taxman 359 (Bom.) High Court of Bombay. It is also argued that the subsidiary objective to the main object cannot be considered as profit making specifically in view of the Memorandum of Association of the appellant on record, therefore, in the said circumstances learned DIT(E) has wrongly rejected the application of the appellant hence the order dated 30.01.2013 is wrong against law and facts and is liable to be set aside. It is also argued that in view of the clause B-16 also there is nothing contrary to the provision of section 12, 12AA & 2(15). It is also argued that visiting of an Indian Rugby team to the foreign countries nowhere make the circumstance contrary to the object of Memorandum of Association in view of the law settled in [2012] 21 taxmann.com 213 (Delhi) High Court of Delhi, in Director of Income Tax (Exemption) Vs. National Association of Software and Services Companies and [2012] 25 taxmann.com 217 (Mum.) Income Tax Appellate Tribunal Bench in CEO Club India Vs. Director of Income Tax (Exemption). It is also argued that the promotion of sports and games is required to be considered as charitable purpose in view of the law settled in [2013] 34 taxmann.com 168 (Chandigarh Trib) in the case titled as Professional Golf Tour of India Vs. Commissioner of Income Tax – II.

3.2. On the other hand learned representative of the department strongly relied upon the order dated 30.01.2013 and requested to dismiss the appeal.

ITA No.2511/M/13 A.Y. 2013-14 3.3 By giving careful thoughts to the arguments advanced by the learned representative of the parties and perusing the record, it came into the notice that the Rugby Association of Maharashtra has no doubt moved an application 12AA(1)(b)(ii) r.w.s. 12A of the Act for the registration. The said application has been rejected by the DIT(E), Mumbai by virtue of order dated 30.01.2013 under challenge. The application has been dismissed on the basis of two ground which have been mentioned in clause B(12) and B(16) of the Memorandum of Association and has been produced above. So far as the clause B(12) is concern the appellant is going to establish and support, or aid in the establishment and support of the associations, institutions, funds calculated to benefit and employees or ex-employees of the Company, or the dependents or connections of such persons, and to grant pensions and allowances to make payments towards insurance, and to subscribe, donate or guarantee money for any charitable, patriotic or benevolent purposes for any exhibition or for any public, general or useful objects. The charitable purpose has been defined in section 2(15):

ITA No.2511/M/13 A.Y. 2013-14 3.4 No doubt the above mentioned parameters have been prescribed for the activity of charitable purpose but there is test also to consider the activities of charitable purpose which has been prescribed in case of Institute of Chartered Accountants of India Vs. Director General of Income Tax (Exemptions) [2011] 202 taxman 1/13 taxmann.com 175. The said law speaks about the test of business, trade or commerce for consideration the purpose of the Trust. It is specifically held that if the object of the trust comes within the purview of business, trade and commerce then in the said circumstances also the purpose of the trust would not be consider as charitable. In the instant case, nothing came into the notice that the object of the applicant is of the nature of trade, business and commerce. No doubt in the said circumstances and in now of the above mentioned law the application of the assessee has wrongly rejected on the ground. Now considering the para B (12) of the Memorandum of Association, we also nowhere found that this clause is also agreed the object of charitable purpose. In this regard we find support of the order passed by the co-ordinate bench of Chandigarh in [2013] 34 taxmann.com 168 (Chandigarh Trib) in the case titled as Professional Golf Tour of India Vs. Commissioner of Income Tax – II. 3.5 Now in the said circumstances the application of appellant is not liable to be rejected on this ground specifically in view of the law settled in Commissioner of Income Tax

ITA No.2511/M/13 A.Y. 2013-14 Vs. Agricultural Produce and Market Committee [2007] 163 Taxman 359 (Bom.) High Court of Bombay and [2012] 25 taxmann.com 217 (Mum.) Income Tax Appellate Tribunal Bench in CEO Club India Vs. Director of Income Tax (Exemption). The other point of rejection of the application is that the clause B (16) mentioned in the Memorandum of Association is agreed the object of charitable purpose. The clause B (16) is hereby reproduced as under:-

B(16) “To arrange, visits of an Indian Rugby team (that is to say a national team) and any other team, whatsoever to countries that are members of the International Rugby Board or elsewhere in conjunction with the bodies governing Rugby in the countries to be visited.”

3.5 The said clause is required to be seen on the point of that it is sufficient to reject the application of the appellant or not. Here there is no need to repeat the provision contain in section 2(15) as well as to consider the application of the appellant on the point of trade, business and commerce. It is only to be seen whether the arrangement by the appellant for the visit of Indian Rugby Team or any other team to the foreign countries is hurdle for registration of the appellant u/s. 12AA(1)(b) or not. In this regard there are number of judicial pronouncements on record which speaks that said purpose does not come within the purview of trade, business and commerce and cannot

ITA No.2511/M/13 A.Y. 2013-14 be considered a point of rejection of application. To arrive at this conclusion we find support of law settled in [2012] 21 taxmann.com 213 (Delhi) High Court of Delhi, in Director of Income Tax (Exemption) Vs. National Association of Software and Services Companies and [2012] 25 taxmann.com 217 (Mum.) Income Tax Appellate Tribunal Bench in CEO Club India Vs. Director of Income Tax (Exemption). In view of the said circumstance we are of the view that the learned DIT(E) has wrongly rejected the application of the appellant u/s. 12AA(1)(b)(ii) r.w.s. 12A of the Act on the ground of para B (12) and B (16) specified in the Memorandum of Association. Therefore we hereby ordered to be set aside the same and direct the DIT(E) to reconsider the matter and pass the order in accordance with law.