Sec. 11 exemption can’t be granted just because assessee having Sec. 12AA registration: ITAT

Case Details: ACIT (Exemption) v. Hyderabad Cricket Association - [2022] 145 taxmann.com 473 (Hyderabad-Trib.)

Judiciary and Counsel Details

• • R.K. Panda, Accountant Member & Laliet Kumar, Judicial Member
  • Y.V.S.T. Sai, CIT (DR) for the Appellant.
  • C. Suresh, C.A. for the Respondent.

Facts of the Case

The assessee was a cricket association with the primary objective of promoting, organizing, managing, and conducting the game of cricket, affiliated with the Board of Control for Cricket in India (BCCI). On application, registration under section 12AA was granted to the assessee.

The assessee filed its return of income by claiming exemption under section 11. During the assessment proceedings, the Assessing Officer (AO) noted that huge grants were received as share of advertisement income from IPL, domestic and international cricket matches. AO contended that the assessee conducted the cricket matches purely on a commercial basis and denied the exemption under section 11.

On appeal, CIT (A) allowed the exemption under section 11 as the assessee was holding valid registration under section 12AA. The matter reached the Hyderabad Tribunal.

ITAT Held

The Tribunal held that the amount received by the assessee was in the nature of income as it represents sharing of the advertisement income. As per the Memorandum of Association of the assessee, the grant received with respect to sharing of such income is not a voluntary contribution by BCCI. Therefore, it cannot be considered charity.

Also, as per the provisions stated in section 2(15), the matches of the Celebrity Cricket league were in the nature of business. The IPL matches conducted by the assessee are purely on commercial basis.

Further, the tribunal clarified that it was stated while giving registration under section 12AA that the nature of income always remains a subject matter of assessment and is determined in accordance with the nature of income.

Therefore, exemption under section 11 cannot be allowed merely based on having registration under section 12AA. Thus, the matter was redirected for fresh consideration while assessing the nature of the income of the assessee.

List of Cases Referred to

• • Punjab Cricket Association v. Asstt. CIT [2019] 109 taxmann.com 219/[2020] 180 ITD 347 (Chd. – Trib.) (para 13).