23. (2018) 66 ITR (Trib.) 82 (Delhi) D.C.I.T. vs. India Olympic Association ITA No.: 1130/DEL/2016 A.Y.: 2011-12 Dated: 19th July, 2018
Sections 11, 12 – Tax exemption u/s. 11/12 cannot be denied merely for receiving sponsorship from a corporate business entity.
FACTS
The assessee-society was an Apex sports body for selecting athletes to represent India at Olympic Games, Asian Games and other international athlete meets at these events. It was registered u/s. 12A of the Act. The assessee received an income from sponsorship amounting to Rs. 86 lakh received from Samsung India Electronics Pvt. Ltd for 2010 Asian Games and 2010 Youth Olympic Games. Therefore, the Assessing Officer (AO) formed an opinion that the assessee had carried out the activities for the purposes of general public utility in the nature of trade, commerce or business. The AO further formed a belief that this transaction of the assessee was in the nature of rendering services in relation to business of Samsung in lieu of consideration from Samsung India Electronics Pvt. Ltd. The AO was convinced that proviso to section 2(15) of the Act squarely applies and hence the assessee does not fall within the category of ‘charitable organisation’. Accordingly, benefit u/s. 11/12 of the Act was denied to the assessee. Being aggrieved, the assessee carried the matter before the first appellate authority and reiterated that the proviso to section 2(15) of the Act does not apply in the case of the assessee and the AO had wrongly denied claim of exemption u/s. 11/12 of the Act.
HELD
The Tribunal allowed the assessee’s appeal and held as under:
1. On drawing support from the speech of the Finance Minister and subsequent clarification issued by the CBDT within the framework of amended provisions of section 2(15) of the Act, the Tribunal was of the view that an object of public utility need not be an object in which the whole of the public is interested. It is sufficient if well defined section of the public benefits by the objects which means that the expression “object of general public utility” is not restricted to objects beneficial to the whole mankind.
2. Receiving sponsorship is not a part of any business carried out by the appellant. Merely receiving sponsorship from a business entity cannot tantamount to a conclusion that the assessee has entered into a business activity with such sponsorer.
3. The Hon’ble ITAT relied on the following decisions:
(a) CIT vs. Swastik Trading Co. Ltd. (113 ITR 852) wherein it was held that establishing and maintaining Gaushalas and Panjrapole constitutes charitable purpose.
(b) ICAI vs. Director General of Income Tax (Exem) (347 ITR 99) where ICAI which was denied exemption u/s. 10(23C)(iv) of the Act because in the opinion of the DGIT (Exem.) the institute was holding coaching classes and therefore was not an educational institution. The Hon’ble Delhi High Court held that the order denying the exemption was not valid.
Thus, in the Tribunal’s opinion, there was no material which may suggest that the assessee association was conducting its affairs solely on commercial lines with the motive to earn profit. There was also no material which could suggest that the assessee association had deviated from its objects which it had been pursuing since past many decades. The proviso to section 2(15) of the Act was not applicable to the facts of the case and the assessee-association deserved benefit u/s. 11/12 of the Act.