In a recent ruling, the division bench of the Chennai ITAT dismissed the departmental appeal and held that the activities of the Tamil Nadu Cricket Association are not “Commercial” in nature. The Tribunal therefore, reversed the order denying exemption under section 11 of the Income Tax Act to the assessee.
Assessee-society, affiliated to Board of Control for Cricket in India was established for promoting sports in the State of Tamil Nadu and Pondicherry. The assessee derives income from subscription, rent for hiring cricket ground, sponsorship fee for providing service to IPL, income from advertisement, subsidy /subvention from BCCI, sale of tickets for conducting matches etc. The AO denied exemption under section 11 of the Act by invoking Section 2(15) the Income Tax Act and held that the assessee had exceeded the prescribed limit.
It was noticed that in an earlier case, the Tribunal found that the activity of the assessee cannot be considered to be business activity with a specific finding that it is not providing any services to any trade or commerce or industry.
In the above cae, while considering the question, whether the activity of conducting one-day matches, T-20 matches and Indian Premier League matches would amount to doing business or trade, the bench observed that, “It is the case of the Revenue that the assessee-society is conducting or organizing T-20, one-day matches or Indian Premier League matches. In fact, BCCI, the parent organization which is a national body in India, is organizing and conducting the matches. The assessee-society, being a member of BCCI, hosts the matches which are conducted by BCCI. For the purpose of meeting its expenditure, the BCCI allocates funds from the revenue it collected from advertisement and other sources. The assessee-society is allowed to sell tickets to the cricket viewers. No doubt, the players of Indian Premier League are sold in public auction for very huge amount. But the question is who is conducting and who is auctioning, whether the assessee-society or BCCI? In fact, BCCI conducts the public auction for selling premier players at a huge premium rate. In fact, the BCCI collects the money. The role of the assessee-society is only to provide stadium for conducting matches. Other than that, the assessee-society has no role in conducting the international matches and Indian Premier League matches.”
Following the decision, the bench dismissed the departmental appeal and directed the AO to grant exemption to assessee under section 11 of the Income Tax Act.
Read the full text of the Order below.
