Hyderabad Cricket Association allowed to claim exemption u/s. 11

Hyderabad Cricket Association Vs. Jt. Director of Income Tax (ITAT Hyderabad)

A survey u/s. 133A of the Act was conducted on 21-10-2011 in the office premises of the assessee located at Rajiv Gandhi International Cricket Stadium, Uppal, Hyderabad. It was found that the assessee was carrying on activities which are not charitable in nature. It was observed that the assessee was deriving income from various commercial sources including receipts from league fees, sale of tickets of One Day International matches, IPL matches, advertisement charges, franchise fees and sponsorship fees from various companies.

In view of the above, DIT(E) was of the opinion that the assessee has lost its character as a charitable society in view of the first proviso to Section 2(15) of the Act.

AO observed that the assessee has no valid registration u/s. 12AA of the Act for the AY. 2006-07 in view of its cancellation by DIT(E), even if such registration were available, the exemption u/s. 11 is not allowable in view of the assessee’s activities which are neither charitable nor allowed by its own Memorandum of Association. Accordingly, exemption u/s. 11 is denied by the AO.

Assessee preferred an appeal before the CIT(A) and CIT(A) after considering the submissions of the assessee has adjudicated in favour of assessee by observing that in view of the order of the ITAT date 31-05-2012, the matter was remanded back to the file of DIT(E), which amounts to registration of assessee stands restored as of date. Therefore, exemption u/s. 11 cannot be denied to the assessee for the reason of absence of registration. Further, after considering the various submissions of assessee, he found that the activities and sources of income of assessee are similar to the facts of the Tamil Nadu Cricket Association, following the decision of Hon’ble Madras High Court in the case of Tamil Nadu Cricket Association, assessee was found to be not engaged in activities in nature of trade and commerce or business. Therefore, assessee is eligible for exemption u/s. 11 of the Act.