Case Law Details
Haryana Rifle Association Vs CIT (ITAT Delhi)
Introduction: In a pivotal ruling, the Income Tax Appellate Tribunal (ITAT) in Delhi has favored the Haryana Rifle Association in a case against the Commissioner of Income Tax (CIT). The case revolved around whether the association’s activities, particularly its charging of fees for conducting matches or tournaments and its sale of ammunition, were of a commercial nature. This verdict has important implications for similar sports associations seeking tax exemptions under the Income Tax Act.
Analysis: The CIT(E) in Chandigarh had rejected the Haryana Rifle Association’s applications under sections 12AA and 80G of the Income Tax Act, citing the organization’s revenue from match fees and ammunition sales. They argued that these activities bore a commercial aspect, which would make the association ineligible for the benefits sought.
However, the association contended that these sales were not profit-driven but rather necessary for conducting its tournaments. They underscored that the ammunition was provided to participants at subsidized rates, leading to a substantial loss that was offset by promotion money from the Haryana Government. Furthermore, the association argued that the match fees collected were used to further the organization’s core purpose: promoting and organizing rifle shooting events.
Upon examining the association’s income and expenditure statements, the ITAT Delhi sided with the association. The tribunal ruled that the Haryana Rifle Association was not profit-oriented and thus eligible for registration under sections 12AA and 80G.
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