Sponsor Publicity Does Not Convert Charitable Event Into Business: ITAT Mumbai

United Sisters Foundation Vs ITO (ITAT Mumbai)

Sponsor May Advertise, But Charity Does Not Become Business: Pinkathon Sponsorship of ₹3.36 Crore Eligible for Section 11 Exemption

The Mumbai Bench of the Income Tax Appellate Tribunal has held that sponsorship received for organising a women’s marathon does not become a business receipt merely because the sponsors obtained publicity or claimed the payments as advertisement expenditure. Since “Pinkathon” was integrally connected with the assessee’s charitable objects relating to women’s health, fitness & empowerment, the proviso to Section 2(15) was inapplicable. Consequently, Section 13(8) could not be invoked and the addition of ₹2,58,39,236 was deleted.

Pinkathon & Sponsorship of ₹3.36 Crore

United Sisters Foundation was a Section 25 company registered u/s 12A and approved u/s 80G. Its objects included the welfare and development of women, promotion of women’s health and fitness, breast-cancer awareness, education & empowerment through campaigns, exhibitions, competitions and supporting events.

During the year, the assessee organised “Pinkathon”, a marathon for women intended to promote women’s health, fitness, awareness & empowerment. Against total receipts of ₹3,51,53,300, it received sponsorships of ₹3.36 crore. It also received donations of ₹12.94 lakh, event-organising receipts of ₹1.55 lakh and registration fees of ₹1.05 lakh.

The assessee filed its return declaring nil income. However, it inadvertently claimed exemption u/s 10(23C)(iv), though it held registration u/s 12A. Correspondingly, it filed Form 10BB instead of Form 10B. On noticing the error during assessment proceedings, it furnished Form 10B and requested that exemption be allowed u/s 11.