In a major relief to the IPL cricket team, Royal Challengers, Bangalore, the Income Tax Appellate Tribunal (ITAT) has held that the expenses incurred by the Company, for construction of Cricket Academy is deductible as the business expenditure from their total income as the same was incurred was for business purpose.
During the relevant assessment year, the Company made the contribution to the Karnataka State Cricket Association (KSCA), Bengaluru, for construction of Cricket Academy of Rs.45 lakhs. The Assessing Officer rejected the claim for the said expenditure and also disallowance of ticketing expenses of Rs.51,47,000/-.
The assessee claimed that at the time of admission of player to the Academy, the (KSCA) shall ensure that the player shall sign a contract giving the appellant first right to offer an uncapped player contract to recruit the player to play for the appellant.
Allowing the contentions, the bench noted that the terms of the contract are directly related to business interest of the assessee. “Therefore, the contribution made for the creation of Cricket Academy can be held to be in business interest and the same is allowable as deduction. Accordingly, we allow this ground of appeal,” the bench said.
“As regards the ticketing expenses, there is neither doubt about the genuineness of the expenditure nor that the expenditure incurred was for the business purpose. Undoubtedly, this expenditure incurred by the assessee was to promote goodwill and enhance the business interest and therefore, the same is allowable as a business deduction in the light of the decision of the Hon’ble High Court Punjab & Haryana in the case of CIT vs. Avery Cycle Inds. Ltd,” the bench added.
Subscribe Taxscan Premium to view the Judgment
