Section 11 exemption to Cricket Association

By | August 20, 2015

Question: Where the Assessee is not conducting any business activity and not providing service to any trade, commerce or industry, it is eligible for exemption under section 11 ?

It is BCCI, the parent organization, which is organizing and conducting T-20, one-day matches or IPL matches. The role of the assessee-society(TNCA) is only to provide stadium for the matches conducted by BCCI. TNCA receives funds from BCCI for meeting the expenditure for hosting matches. It cannot be said that TNCA is conducting any business activity. Also, assessee is not providing any service to any trade, commerce or industry. The Assessing Officer got confused himself with the activity carried on by BCCI as that of the activity carried on by the assessee. Therefore, the first proviso to section 2(15) is not applicable and assessee is eligible for tax exemption under section 11

IN THE ITAT CHENNAI BENCH ‘A’

Tamil Nadu Cricket Association

v.

Deputy Director of Income-tax (Exemptions), Chennai

N.R.S. GANESAN, JUDICIAL MEMBER
AND A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER

IT APPEAL NOS. 1535 TO 1537 (MDS.) OF 2014
[ASSESSMENT YEARS 2008-09 TO 2010-11]

AUGUST  14, 2015

ORDER

N.R.S. Ganesan, Judicial Member – All the three appeals of the assessee are directed against the common order passed by the Commissioner of Income Tax (Appeals)-VII, Chennai, dated 28.03.2014 and pertain to assessment years 2008-09, 2009-10 & 2010-11. Since common issue arises for consideration in all the three appeals, we heard the appeals together and disposing of by this common order.

2. Shri V. Ravichandran, the Ld. representative for the assessee, submitted that the assessee, a registered society under the Tamil Nadu Societies Registration Act, was registered under Section 12AA of the Income-tax Act, 1961 (in short ‘the Act’) as a charitable institution. According to the Ld. representative, the main object of the assessee-society is to promote the sport of cricket in the State of Tamil Nadu and in the Union Territory of Puducherry. The Ld. representative submitted that the assessee-society conducts cricket tournaments including inter-university, inter-school, inter-association and inter-district tournaments. Apart from that, the Ld. representative clarified that the assessee-society is also providing coaching for the benefit of cricketers. According to the Ld. representative, the members of the assessee-society are the district associations and the cricket clubs in the city of Chennai.

3. The Ld. representative for the assessee further submitted that the assessee-society is a member of the national body, Board of Control for Cricket in India (BCCI), which regulates and promotes the sport of cricket in India. In turn, BCCI is the member of the International Cricket Council (ICC). According to the Ld. representative, other cricket associations/societies are also members of BCCI.

4. The Ld. representative for the assessee further submitted that BCCI holds test matches with visiting foreign teams and one-day international matches. Various cricket associations in State which play matches in their respective stadium. The inter-state and inter-zone tournaments such as Ranji Trophy, Duleep Trophy, Irani Trophy, etc. are organized by BCCI. However, the same was conducted by the State Cricket Association like assessee. The Ld. representative further submitted that BCCI also organizes twenty over cricket matches between various franchisees which is otherwise known as Indian Premier League. The franchisees conduct the matches in the stadia belonging to the State Cricket Associations / societies. According to the Ld. representative, the assessee, being a State Cricket Association, is entitled to revenue on sale of tickets when it conducts international matches. The assessee would also be entitled to all in-stadia sponsorships, advertisements and beverage revenue, etc. The Ld. representative further submitted that the assessee has to incur all the expenditures at the stadium for conducting the matches. BCCI earns revenues by way of sponsorships and media rights for telecast and broadcast of the matches as well as franchise revenues from the Indian Premier League. According to the Ld. representative, BCCI distributes 70% of revenues to member cricket associations, including the assessee-society. The Ld. representative has clarified that the assessee earns income under the following heads:-

(1) Subscription from members
(2) Sale of tickets
(3) Revenue from advertisements
(4) Receipts from BCCI
(5) Interest from bank deposits

According to the Ld. representative, the assessee-society in fact uses all these incomes to promote the sport of cricket in the State of Tamil Nadu and in the Union Territory of Purudcherry. The assessee-society, according to the Ld. representative, has constructed a modern cricket stadium at Chennai with state of art facilities for conducting international cricket matches. Over the decades of time, the sport of cricket became popular in the State of Tamil Nadu and several players from Tamil Nadu have gone on to win international and national acclaim.

5. The Ld. representative for the assessee submitted that in fact registration to the assessee-society under Section 12AA was granted by Director of Income Tax (Exemptions) on 28.03.2003 and the assessee had availed exemption under Sections 11 to 13 of the Act upto assessment year 2008-09. For the assessment years 2009-10 and 2010-11, the assessee claimed exemption under Section 11 of the Act in respect of its entire income. However, the Assessing Officer found that promoting cricket may be charity provided it does not involve any activity which is in the nature of commercial. Referring to subscription fee received from the members of the assessee-society, the Ld. representative submitted that the Assessing Officer came to a conclusion that subscriptions are in the nature of commercial receipt for providing service to the members of the assessee-society. The Assessing Officer has also found that the assessee earns surplus profit on conducting test matches between India and England. Referring to Section 2(15) of the Act, the Ld. representative submitted that with effect from 01.04.1984, “charitable purpose” includes relief of poor, education, medical relief and advancement of any other object of general public utility. Referring to the circular issued by the CBDT in Circular No.395 dated 24.09.1984, the Ld. representative submitted that promoting sport was considered to be a charitable purpose by the CBDT. According to the Ld. representative, advancement of any object beneficial to general public or a section of public as distinguished from an individual or group of individuals would be an object of general public utility. Accordingly, the CBDT found that promotion of sports and games would amount to advancement of an object beneficial to public. Therefore, the assessee-society has to be treated as charitable institution. In fact, according to the Ld. representative, the registration granted to the assessee-society under Section 12AA of the Act was cancelled by the Director of Income Tax (Exemptions) by an order dated 29.12.2011, a copy of which is available at page 197 of the paper-book. The assessee challenged the correctness of the order of the Director of Income Tax (Exemptions) cancelling the registration granted under Section 12AA of the Act, in I.T.A. No.396/Mds/2012. This Tribunal by an order dated 22.02.2013, confirmed the order of the Director of Income Tax (Exemptions). The assessee carried the matter before the High Court in Tax Case (Appeal) No.450 of 2013. A Division Bench of the High Court, by judgment dated 21.10.2013, found that cancellation of registration is not justified, accordingly, set aside the order of the Tribunal. The High Court further found that the Revenue has not made out any ground to cancel the registration granted under Section 12AA of the Act. Therefore, according to the Ld. representative, as on today, the registration granted under Section 12AA of the Act stands restored. Therefore, the assessee is entitled for exemption under Section 11 of the Act. Referring to the order of the assessment for assessment year 2008-09, Ld. representative pointed out that the assessee claimed depreciation in respect of the capital asset to the extent of Rs. 1,61,75,931/-. However, in the revised return, the assessee claimed depreciation to the extent of Rs. 1,61,75,931/- and the capital expenditure to the extent of Rs. 1,32,74,928/- as application of income. The Assessing Officer found that the income was re-computed after taking into account the receipts and payments of South Africa Test Match and Afro Asia Cup Match separately. However, the Assessing Officer rejected the claim of the assessee for depreciation by placing reliance on the judgment of Apex Court in Escorts v. Union of India (199 ITR 43). After condoning the delay in filing Form 10 of accumulation of income, exemption was allowed under Section 11(2) of the Act. Referring to the order of the Tribunal in the assessee’s own case for assessment year 2007-08 in I.T.A. No.1851/Mds/201(1) dated 10.04.2012, the Ld. representative submitted that in the assessee’s own case for assessment year 2007-08, this Tribunal granted depreciation after following its earlier order in Sri Mariamman Educational Health and Charitable Trust v. ACIT in I.T.A. Nos.142 to 144/Mds/2010 dated 02.02.2011. Therefore, according to the Ld. representative, the Assessing Officer is not justified in rejecting the claim of depreciation for assessment year 2008-09.

6. Coming to the assessment years 2009-10 and 2010-11, the Ld. representative submitted that the Assessing Officer found that the activity of the assessee-society falls within the purview of business. Referring to Indian Premier League, the Ld. representative submitted that the Assessing Officer estimated the television audience more than 200 millions in India and Indian Premier League match has a global reach in respect of the advertisement pertaining to new production launch. Therefore, the Assessing Officer found that it is a commercial venture. According to the Ld. representative, the Assessing Officer placed his reliance on the order of this Tribunal confirming the cancellation of registration under Section 12AA of the Act. The Assessing Officer had no benefit of going through the judgment of the High Court which reverses the order of the Tribunal. According to the Ld. representative, cricket is admittedly one of the recognized sports in India. Therefore, the assessee is eligible for exemption under Section 11 of the Act.

7. The Ld. representative further submitted that it is nobody’s case that the funds were diverted for any other purpose other than promoting the sports. No individual is benefiting out of the funds of the assessee-society. The entire funds generated in the course of its sport activity is re-invested in training the students and other players. Therefore, according to the Ld. representative, the Assessing Officer is not justified in disallowing the claim of the assessee under Section 11 of the Act. Similarly, for assessment year 2010-11, the CIT(Appeals) disallowed the claim of the assessee. According to the Ld. representative, the Assessing Officer is influenced by the Indian Premier League matches. According to the Ld. representative, Indian Premier League is conducted by BCCI and the assessee has nothing to do with Indian Premier League matches. The assessee, being one of the members of BCCI, is providing the stadium and making all arrangements for conducting Indian Premier League by BCCI. The entire revenue earned out of Indian Premier League goes to BCCI and the assessee is allotted certain shares for meeting the expenditure. The surplus, if any, remains is re-invested for conducting the matches in the State of Tamil Nadu and in the Union Territory of Puducherry. Therefore, the Assessing Officer is not justified in disallowing the claim of the assessee.

8. On the contrary, Shri N. Rengarajan, the Ld. Departmental Representative, submitted that the assessee-society is conducting cricket matches like a trade/business. According to the Ld. D.R., sharing the revenue from BCCI in advertisement is definitely a commercial receipt. During the assessment year 2010-11, the assessee received Rs. 22,29,49,392/- from BCCI. The assessee has also received Indian Premier League subsidy to the extent Rs. 8.02 Crores which amounts to 25% of its gross receipts. According to the Ld. D.R., Indian Premier League matches are high value commercial ventures, the players are sold on auction publicly, the individual players are sold in a heavy price tag. According to the Ld. D.R., Indian Premier League matches are in the nature of entertainment industry. Therefore, the characteristic of the activity of the assessee-society is totally changed into a commercial venture.

9. According to the Ld. D.R., the assessee has received Rs. 14,27,16,192/- in the assessment year 2010-11 from TV subsidy. TV subsidy admittedly is a share received from BCCI on account of audit revenues arising from telecast of test matches. The Ld. D.R. further submitted that assessee-society was expected to host test matches, one-day matches, T-20 matches and Indian Premier League matches. According to the Ld. D.R., the share received by the assessee from BCCI in the form of subsidy/grant is nothing but a share of profit collected from BCCI from advertisements. BCCI in fact earns huge money on account of phenomenal advertisement. Though the assessee claims it to be a TV subsidy, it is obviously a misnomer. According to the Ld. D.R., the assessee is not eligible for deduction under Section 11 of the Act in view of proviso to Section 2(15) of the Act.

10. Referring to the order of the Assessing Officer for the assessment year 2008-09, the Ld. D.R. submitted that in fact the Assessing Officer allowed exemption under Section 11 of the Act. What was disallowed was only depreciation claimed by the assessee. According to the Ld. D.R., the assessee in one hand is claiming as application of income while purchasing the asset and on the very asset, the assessee is claiming depreciation. According to the Ld. D.R., once the cost of the capital asset was allowed as application of income under Section 11 of the Act, the cost of the said asset becomes NIL. Therefore, there is no question of allowing any depreciation. According to the Ld. D.R., this aspect was not considered by the earlier Bench of this Tribunal.

11. We have considered the rival submissions on either side and perused the relevant material on record. Let’s first take assessment year 2008-09. The assessee is claiming depreciation under Section 32 of the Act. For the purpose of convenience, we are reproducing Section 32 hereunder:-

“32 (1) In respect of depreciation of–

(i) buildings, machinery, plant or furniture being tangible assets ;
(ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession the following deductions shall be allowed–
(i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed.
(ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed:

Provided that no deduction shall be allowed under this clause in respect of–(a) any motor car manufactured outside India, where such motor car is acqired by the assessee after the 28th day of February, 1975 5but before the 1st day of April, 2001, unless it is used–(i) in a business of running it on hire for tourists; or(ii) outside India in his business or profession in another country ; and(b) any machinery or plant if the actual cost thereof is allowed as a deduction in one or more years under an agreement entered into by the Central Government under section 42:

Provided further that where any asset referred to in clause (i) 6or clause (ii) or clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this subsection in respect of such asset shall be restricted to fifty per cent. of the amount calculated at the percentage prescribed for an asset under clause (i) 6or clause (ii) or clause (iia), as the case may be:

Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999, and is put to use before the 1st day of April, 1999, for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be prescribed.

Explanation – For the purposes of this proviso,–

(a) the expression “commercial vehicle” means “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle” and “medium passenger motor vehicle” but does not include “maxi cab”, “motor-cab”, “tractor” and “road-roller” ;
(b) the expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

Provided also that, in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1991, the deduction in relation to any block of assets under this clause shall, in the case of a company, be restricted to seventy-five per cent. of the amount calculated at the percentage, on the written down value of such assets, prescribed under this Act immediately before the commencement of the Taxation Laws (Amendment) Act, 1991.

Provided also that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets allowable to the predecessor and the successor in the case of succession referred to in clause (xiii), clause (xiiib) and clause (xiv) of section 47 or section 170 or to the amalgamating company and the amalgamated company in the case of amalgamation, or to the demerged company and the resulting company in the case of demerger, as the case may be, shall not exceed in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them.

Explanation – 1. Where the business or profession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work, in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee.

Explanation – 2. For the purposes of this sub-section “written down value of the block of assets” shall have the same meaning as in clause (c) of sub-section (6) of section 43;

Explanation – 3. For the purposes of this sub-section, 10the expressions “assets” shall mean–(a) tangible assets, being buildings, machinery, plant or furniture ;(b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature.

Explanation – 4. For the purposes of this sub-section, the expression “know-how” means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil-well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto) ;

Explanation – 5. For the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income ;

(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent. of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) :

Provided that no deduction shall be allowed in respect of-(A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person ; or(B) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house ; or(C) any office appliances or road transport vehicles ; or(D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profits and gains of business or profession” of any one previous year ;

(iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is claimed and allowed under clause (i) and which is sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the moneys payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value thereof :

Provided that such deficiency is actually written off in the books of the assessee.

Explanation – For the purposes of this clause,–(1) “moneys payable” in respect of any building, machinery, plant or furniture includes-

(a) any insurance, salvage or compensation moneys payable in respect thereof ;
(b) where the building, machinery, plant or furniture is sold, the price for which it is sold, so, however, that where the actual cost of a motor car is, in accordance with the proviso to clause (1) of section 43, taken to be twenty-five thousand rupees, the moneys payable in respect of such motor car shall be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the amount of any insurance, salvage or compensation moneys payable in respect thereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso ;

(2) “sold” includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is 8an Indian company or in a scheme of amalgamation of a banking company, as referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), with a banking institution as referred to in sub-section (15) of section 45 of the said Act, sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of that Act, of any asset by the banking company to the banking institution.

(2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years.

In view of Section 32 of the Act, depreciation has to be allowed only in respect of an asset owned by the assessee and used for the purpose of business or profession. In this case, it is not a case of the assessee that they are not doing any business or profession. The assessee is categorically making a statement that they are charitable organization engaged itself in public utility service. Once the assessee claims that it is a charitable organization and not engaged in business or profession, this Tribunal is of the considered opinion that the provisions of Section 32 have no application at all. The provisions of Section 32 in fact were not brought to the notice of this Tribunal while deciding the assessee’s own case for assessment year 2007-08 and also the decision of Sri Mariamman Educational Health and Charitable Trust (supra). In fact, this Tribunal examined the issue elaborately in The Anjuman-E-Himayath-E-Islam v. ADIT in I.T.A. No.2271/Mds/2014 by order dated 2nd July, 2015 and found that when the assessee is eligible for exemption under Section 11 of the Act, it is not eligible for depreciation under Section 32 of the Act. For the purpose of convenience, we are reproducing the decision taken by the coordinate Bench of this Tribunal in The Anjuman-E-Himayath-E-Islam (supra):-

“5.2 We find this issue is elaborately discussed in the case of Lissie Medical Institution v. CIT reported in [2012] 348 ITR 344(Ker.) and held the issue against the assessee. While doing so, the Hon’ble Kerala High Court had considered the Circular No.5P(LLX-6) dated 19.06.1968 which has not been considered by the other decisions. The Circular No. 5P(LLX-6) is reproduced herein below for reference:-

1. Circular No. 5-P (LXX-6) of 1968, dated 19-6-1968.

Subject : Section 11-Charitable trusts-Income required to be applied for charitable purpose-Instructions regarding.

In Board’s Circular No. 2-P(LXX-5) of 1963, dated the 15th May, 1963, it was explained that a religious or charitable trust claiming exemption under section 11(1) of the Income- tax Act, 1961, must spend at least 75 per cent of its total income, for religious or charitable purposes. In other words, it was not permitted to accumulate more than 25 per cent of its total income. The question has been reconsidered by the Board and the correct legal position is explained below.

2. Section 11(1) provides that subject to the provisions of sections 60 to 63 “the following income shall not be included in the total income of the previous year… “. The reference in sub-section (a) is invariably to “income” and not to “total income”. The expression “total income” has been specifically defined in section 2(45) of the Act as “the total amount of income… computed in the manner laid down in this Act”. It would accordingly be incorrect to assign to the word “income” used in section 11(1)(a), the same meaning as has been specifically assigned to the expression “total income” vide section 2(45).

3. In the case of a business undertaking held under trust, its “income” will be the income as shown in the accounts of the undertaking. Under section 11(4), any income of the business undertaking determined by the Income-tax Officer in accordance with the provisions of the Act, which is in excess of the income as shown in its accounts, is to be deemed to have been applied to purposes other than charitable or religious, and hence it will be charged to tax under sub-section (3). As only the income disclosed by the account will be eligible for exemption under section 11(1), the permitted accumulation of 25 per cent will also be calculated with reference to this income.

4. Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word “income” should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purposes of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax under section 11(3) to the extent that they represent outgoings for purposes other than those of the trust. The amounts spent or applied for the purposes of the trust from out of the income computed in the aforesaid manner, should be not less than 75 per cent of the latter, if the trust is to get the full benefit of the exemption under section 11(1).

5. To sum up, the business income of the trust as disclosed by the accounts plus its other income computed above, will be the “income” of the trust for purposes of section 11(1). Further, the trust must spend at least 75 per cent of this income and not accumulate more than 25 per cent thereof. The excess accumulation, if any, will become taxable under section 11(1).

After considering the Circular, the Hon’ble Kerala High Court held as follows:-

“Held, that after writing off the full value of the capital expenditure on acquisition of assets as application of income for charitable purposes and when the assessee again claimed the same amount in the form of depreciation, such notional claim became a cash surplus available with the assessee, which was outside the books of account of the trust unless it was written back which was not done by the assessee. It was not permissible for a charitable institution to generate income outside the books in this fashion and there would be violation of section 11(1)(a). It was for the assessee to write back the depreciation and if that was done, the Assessing Officer would modify the assessment determining higher income and allow recomputed income with the depreciation written back by the assessee to be carried forward for subsequent years for application for charitable purposes.”

Further Hon’ble Calcutta High Court has held in the case DCIT v. Girdharilal Shewnarain Tantia Trust reported in [1993] 199 ITR 15(Cal.) that “The “income” contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable. Respectfully following the decision of the Hon’ble Kerala High Court and taking cue from the decision of the Hon’ble Calcutta High Court, we do not find any hesitation to confirm the order of the Ld. CIT(A) and also the views expressed by him in his order. Accordingly this appeal is held in favour of the Revenue.”

12. Apart from that, when the assessee claims the cost of the capital expenditure as exemption under Section 11 of the Act, then the cost of the capital asset becomes NIL. Admittedly, depreciation under Section 32 of the Act has to be allowed only on written down value of the asset. When the written down value of the asset becomes NIL since the entire cost was allowed as application of income under Section 11 of the Act, this Tribunal is of the considered opinion that there cannot be any further claim for deduction under Section 32 of the Act. In view of the above, this Tribunal is of the considered opinion that the assessee is not eligible for deduction under Section 32 of the Act towards depreciation. However, it is made clear that the assessee is eligible for exemption under Section 11 of the Act for all the assessment years under consideration.

13. Now coming to assessment years 2009-10 and 2010-11, the claim of the assessee was rejected by the lower authorities on the ground that the registration under Section 12AA was cancelled and it was confirmed by this Tribunal. The lower authorities have also found that the assessee is engaged in business activity. As regards the cancellation of registration, now the Madras High Court has set aside the order of this Tribunal and restored the registration under Section 12AA of the Act. Therefore, as on today, the registration under Section 12AA is restored.

14. The next contention of the Ld. D.R. that the assessee is engaged in business activity. We have carefully gone through the provisions of Section 2(15) of the Act and the circular issued by the CBDT. In fact, the assessee has filed a copy of the said circular at page 1 of its paper-book. For the purpose of convenience, we are reproducing Section 2(15) of the Act hereunder:-

“2(15) “charitable purpose” includes relief of the poor, education, medical relief, 79[preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility :

Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity ;

Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year ;”

Advancement of any other object of general public utility is also one of the charitable purposes included in Section 2(15) of the Act. However, proviso to Section 2(15) of the Act clarifies that if the assessee involves in carrying on any activity in the nature of trade, commerce or business, or rendering any activity in relation to trade, commerce or business, the same shall not be treated as charitable purpose. The question arises for consideration is whether the assessee involves itself in any activity in the nature of trade, commerce or business or its activity would amount to rendering any service in relation to trade, commerce or business. We have carefully gone through the object of the assessee-society, a copy of which is available at pages 62 to 65 of the paper-book. For the purpose of convenience, we are reproducing the object:-

(a) To take over on registration under the Societies Registration Act XXI of 1860 and assume the affairs and activities of the Madras Cricket Association, as subsequently appellated as Tamil Nadu Cricket Association and continue and take over the dues to and assets, liabilities, commitments and undertakings of the said Madras Cricket Association.
(b) To maintain a general control of the game of cricket in the State and the Union Territory of Pondicherry and give Its decision on all matters concerning the same either when referred to or suo moto. The activities would be confined to India.
(c) To spread the game throughout the State by organizing tournaments, including Inter-University, Inter-School and Inter-Association matches, to educate youn sportsmen in the game generally and also in the field of physical culture and the spirit of sportsmanship. The benefits would be available to the General Public irrespective of caste, creed, religion or sex.
(d) To maintain a library of books, publications and periodicals of interest of sportsmen and to difuse knowledge of Cricket and its ideals of sportsmanship.
(e) To communicate with public authorities and various sports organizations in India and abroad and concert and promote measures for the development of the game and to provide social security safe guards for the p1ayers, officials such as Managers, Coaches, Umpires,, Selectors and others who are directly connected with the game.
(f) To provide, acquire and maintain suitable places, playgrounds, buildings and club houses to afford required facilities for the cricketers, officials such as Managers, Coaches, Umpires, Selectors and others who are directly connected with the game, members to acquire by purchase, lease, hire or Otherwise suitable playgrounds, stadia and any other property, movable and immovable, rights or privileges to the same and to provide all amenities thereon for the promotion of the objects of the Association.
(g) To lay our any ground for playing the game and for other purposes and to provide pavilion, canteen and other conveniences and amenities in connection therewith and for such purpose purchase, lease or otherwise acquire the land at such price or rent for such period and upon such terms and conditions as may seem expedient.
(h) To establish promote or assist in establishing and promoting and to subscribe to and become a member of any other Association or Club whether incorporated or not whose objects are similar or in part to the objects of the Association, the establishment or promotion of which may be beneficial to the Association and in particular to subscribe to, finance, give or lend money to, and guarantee the contracts of the Board of Control for Cricket in India or any other body for the time being controlling the game in India or any part thereof and any state or Regional Association recognized by such body.
(i) To create, foster and maintain friendly relations with and among the population of the area under its control through sports, tournaments and competitions connected therewith, to create, develop and foster a healthy spirit of sportsmanship and a broad and generous outlook devoid of all prejudices and to mould the character of citizen through the medium of sports in general and cricket in particular.
(j) To impart physical education through the medium of cricket and take all steps to assist the citizens to develop their physique and have a healthy mind and healthy body.
(k) To spread the ideals of cricket and all that it stands for throughout the length and breadth of its area by arranging schools for coaching, lectures, tournaments and run international matches between India and other leading foreign countries so as to develop mutual goodwill and better understanding between India and other countries.
(l) . . . . . . . . . . . . time to run such matches for the achievement of the objects of the Association and to utilize the net proceeds thereof towards the implementation of the objects set out herein and to educate the public, the school boys, college students, clubs and cricketers, in cricket and all the ideals it stands for.
(m) To have as many classes of members with such rights as the General Body decide.
(n) To instill keenness for the game and to foster the spirit of sportsmanship in promising students of schools and colleges and members of affiliated Clubs / District Associations and Institutions and thus enable them to develop a good physique and a good standard of the game and to afford facilities to the poorer classes of citizens to attain efficiency in the game.
(o) To regulate and control sports in general and the game of cricket in particular.
(p) To give decisions on the relevant matters referred to the Association by affiliated clubs/district associations and institutions and, if necessary, to finance and conduct matches and tours of representative teams visiting its area on invitation and to regulate and control the visits of the State’s representative teams going out of Tamil Nadu.
(q) To encourage the formation of Zones in the City of Madras and District or regional clubs in every district or part of a district and playing facilities in all such centres.
(r) To select teams to represent the Association in tournaments, championships or fixtures, local or otherwise.
(s) To acquire by all lawful means of movable and immovable property on behalf of the Association and to sell, manage, mortgage lease and exchange, dispose off or otherwise deal with all or any of its properties and/or any income therefrom.
(t) To promote and to contribute to any enterprise conducted by individuals or Associations in conformity with the objects of the Association.
(u) To organize a proper coaching scheme for the benefit of cricketers in the City and in the Districts under the supervision of coaches from India and abroad.
(v) To collect funds and whenever necessary borrow with or without security for purposes of the Association and in particular by the issue of debentures or debenture stock perpetual or otherwise charged upon all or any of the Association’s property both or future and to purchase, redeem or payoff any such securities and to utilize such funds in such manner as the General Body may consider desirable for the fulfillment of the objects of the Association.
(w) To invest monies and funds of the Association as per Section 11(5) of the Income-tax Act, 1961 and to reconvert in such manner as may be decided upon by the General Body of the Members of the Association from time to time.
(x) To carry out any other business or activity which may seem to the committee capable of being conveniently carried out in connection with and in conformity to the objects of the Association and which is connected directly or indirectly to enhance the value of or render more profitable any of the objects, rights or properties of the Association.
(y) To maintain a panel of approved cricket umpires and to do such acts as may be necessary for this purpose including holding of prescribed periodical tests with a view to enable them to qualify themselves as first class umpires.
(z) To add, delete, alter, maintain and enforce rules and regulations for the control and governance of the game in the State of Tamil Nadu and the union Territory of Pondicherry and to maintain discipline amongst players, officials, clubs and affiliated institutions.

The object of the assessee-society is to control game of cricket in the State of Tamil Nadu and in the Union Territory of Puducherry and also to organize tournaments, including inter-university, inter-school and inter-association matches, to educate young sportsmen in the game generally and also in the field of physical culture and the spirit of sportsmanship. Therefore, the sole object of the assessee-society is to promote sport of cricket in the State of Tamil Nadu and in the Union Territory of Puducherry.

15. Now, let’s examine whether the activity of conducting one-day matches, T-20 matches and Indian Premier League matches would amount to doing business or trade. It is the case of the Revenue that the assessee-society is conducting or organizing T-20, one-day matches or Indian Premier League matches. In fact, BCCI, the parent organization which is a national body in India, is organizing and conducting the matches. The assessee-society, being a member of BCCI, hosts the matches which are conducted by BCCI. For the purpose of meeting its expenditure, the BCCI allocates funds from the revenue it collected from advertisement and other sources. The assessee-society is allowed to sell tickets to the cricket viewers. No doubt, the players of Indian Premier League are sold in public auction for very huge amount. But the question is who is conducting and who is auctioning, whether the assessee-society or BCCI? In fact, BCCI conducts the public auction for selling premier players at a huge premium rate. In fact, the BCCI collects the money. The role of the assessee-society is only to provide stadium for conducting matches. Other than that, the assessee-society has no role in conducting the international matches and Indian Premier League matches.

16. The other activity of the assessee-society is to conduct training programmes, coaching classes for college students at district level in the State of Tamil Nadu and in the Union Territory of Puducherry. The assessee is also conducting inter-university, inter-school and inter-association matches. Expenditures involved in such activities were met out of surplus funds remaining with the assessee-society. The Assessing Officer got confused himself with the activity carried on by the BCCI as that of the activity carried on by the assessee-society. The material available on record shows that one-day matches, T-20 matches and Indian Premier League matches are all conducted by the BCCI and the assessee, being the host in the State of Tamil Nadu, is only providing its stadium. The assessee has also received funds from BCCI for meeting the expenditure, being the host. Therefore, this Tribunal is of the considered opinion that at any stretch of imagination, it cannot be said that the assessee is conducting any business activity. The assessee is also not providing any service to any trade, commerce or industry. In those circumstances, this Tribunal is of the considered opinion that proviso to Section 2(15) of the Act is not applicable to the assessee. In view of the above discussion, the assessee is eligible for exemption under Section 11 of the Act for all the assessment years under consideration. Accordingly, the orders of the lower authorities for assessment years 2009-10 and 2010-11are set aside and the Assessing Officer is directed to grant exemption under Section 11 of the Act. The Assessing Officer is also directed to grant exemption under Section 11 of the Act for the assessment year 2008-09 also.

17. In the result, the assessee’s appeal for assessment year 2008-09 in I.T.A. No.1535/Mds/2014 is partly allowed. However, for assessment years 2009-10 and 2010-11 in I.T.A. Nos.1536 & 1537/Mds/2014 are allowed.

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