CIT (Exemptions) Vs Kerala Cricket Association (Kerala High Court)
Kerala High Court remanded back matter to ITAT for Income received by Kerala Cricket Association would be Exempted Income or not?
Conclusion: Income received by the Kerala Cricket Association during the assessment years 2010-11, 2012-13, and 2013-14 would partake of the nature of exempted income was to reexamined by the Tribunal as in each case and for every year, the tax authorities were under an obligation to carefully examine and see the pattern of receipts and expenditures.
Held: Department had challenged the finding of Tribunal on the issue as to whether the income received by the Kerala Cricket Association during the assessment years 2010-11, 2012-13, and 2013-14 would partake of the nature of exempted income going by the provisions of Section 2(15) of the Act. For the assessment year 2010-11, AO found that the income earned by the assessee Cricket Association would be hit by the proviso to Section 2(15), and therefore, assessee Cricket Association would not be entitled to the benefit of the exemption. CIT (A) found that the proviso to Section 2(15) could not apply to deny the benefit of exemption to the assessee. Tribunal sustained the order of CIT (A). While AO had granted the benefit of exemption to assessee Cricket Association, for the assessment years 2012-13 and 2013-14, the department had initiated suo motu revision proceedings, which culminated in an order of the CIT denying the benefit of exemption to the assessee Cricket Association for those years. In appeals carried by the assessee before Tribunal, Tribunal followed its own earlier order for the assessment year 2010-11 and allowed the appeal and the claim for exemption preferred by assessee Cricket Association. It was held that appeals need to be remanded to the Appellate Tribunal for a fresh adjudication on the facts, especially with regard to whether or not the amount made over to assessee Cricket Association by the Board for Control of Cricket in India (BCCI) were in the nature of infrastructure subsidy or business income. Therefore, the impugned orders of Tribunal was set aside and the matter was remanded to Tribunal for a fresh determination of the issue in the light of the observations of the Supreme Court in Assistant Commissioner of Income Tax (Exemptions) v. Ahmedabad Urban Development Authority (supra) in which it was held that in each case and for every year, the tax authorities were under an obligation to carefully examine and see the pattern of receipts and expenditures. While doing so, the nature of rights conveyed by the BCCI to the successful bidders—in other words, the content of broadcast rights as well as the arrangement with respect to state associations (either in the form of master documents, resolutions, or individual agreements with state associations)—had to be examined.
