INCOME TAX ACT, 1961

Section 11 Section 12 Section 2(15)

Charitable trust - Exemption section 11 - Applicability of proviso to section 2(15) - Trade commerce or business

Assessee was a society registered under the Societies Registration Act, in the State of Jharkhand vide Registration Number-107 of 2003-04. The assessee was also registered under section 12A/12AA, by the CIT, Jamshedpur. Assessee society came into existence to promote sports activities, namely, the sports of cricket which is an object of general public utility. AO had held that income of the assessee cannot be held to be eligible for exemption under section 11 as receipts from BCCI in respect of IPL Subvention & TV subsidy being receipts from commercial activities and were in excess of Rs. 25 lakhs. AO held that activities of assessee were in the nature of carrying on trade, commerce, or business for consideration, which were hit by proviso to section 2(15). Exemption under section 11 was disallowed by AO which was upheld by CIT(A).Held: AO came to a conclusion that the assessee was carrying on commercial activity in the nature of trade, commerce or business as the assessee had received amounts from BCCI on account of IPL Subvention, TV rights subsidy from BCCI, Instedia Advertisement, etc. These receipts from BCCI cannot be considered as income received from activities in the nature of trade, commerce or business. The proviso to section 2(15) cannot be invoked on the ground that these receipts were in the nature of trade, commerce and business. The proviso to section 2(15) had been wrongly invoked. The assessee was eligible for exemption under sections 11 and 12. The grounds were, therefore, allowed accordingly.

Followed:Gujarat Cricket Association v. Jt. CIT (Exemptions) (2019) 101 Taxmann.com 453 (Ahd.-Trib.) : 2019 TaxPub(DT) 1108 (Ahd-Trib) and Delhi & District Cricket Association v. DIT (Exemptions) (2015) 69 SOT 101 (URO-Trib) : 2015 TaxPub(DT) 771 (Del-Trib).

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