Womens Golf Association of India Vs CIT (Exemption) (ITAT Delhi)
Golf Is Charity, Sponsorship Is Its Caddie — Delhi ITAT Restores 12AB & 80G Registration; 20% Test u/s 2(15) Cannot Be Applied Mechanically
Summary: The Delhi Bench of the Income Tax Appellate Tribunal has held that substantial sponsorship receipts received by a sports association do not, by themselves, convert its charitable sporting activities into trade, commerce or business. The Tribunal accordingly directed the Commissioner of Income Tax (Exemptions) to grant registration under section 12AB and approval under section 80G to Women’s Golf Association of India.
The assessee is a non-profit sports association established with the principal object of promoting and developing women’s golf in India. It had originally obtained registration under section 12AA with effect from 01.12.2004 and subsequently obtained registration under the new regime for AYs 2022-23 to 2026-27. Its activities included organising professional golf tournaments, promoting participation of women golfers at national and international levels, coaching, training, player development and welfare.
The assessee applied for renewal of registration in Form No. 10AB. The CIT(E), however, rejected the application primarily on the ground that the assessee conducted professional golf tournaments, charged entry and professional entry fees and received substantial sponsorship receipts. According to the CIT(E), sponsorship arrangements were contractual services rendered for consideration and the relevant receipts exceeded the 20% threshold contemplated by the proviso to section 2(15).
