DCIT, Faridabad v. M/s. Escorts Sports Club, Faridabad

ITA 3651/DEL/2009 | 1996-1997
Pronouncement Date: 16-03-2011 | Result: Dismissed

Appeal Details

RSA Number 365120114 RSA 2009
Assessee PAN AAATE0570F
Bench Delhi
Appeal Number ITA 3651/DEL/2009
Duration Of Justice 1 year(s) 6 month(s) 19 day(s)
Appellant DCIT, Faridabad
Respondent M/s. Escorts Sports Club, Faridabad
Appeal Type Income Tax Appeal
Pronouncement Date 16-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 16-03-2011
Date Of Final Hearing 11-03-2011
Next Hearing Date 11-03-2011
Assessment Year 1996-1997
Appeal Filed On 27-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.D. RANJAN ITA NO. 3651/DEL/09 ASSTT. YR: 1996-97 DCIT CIR. I VS. M/S ESCORTS SPORTS CLUB FARIDABAD. 15/5 MATHURA ROAD FARIDABAD. PAN/ GIR NO. AAATE0570F ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SH. K. RAVI RAMA CHANDRAN SR. DR RESPONDENT BY : SHRI R.M. MEHTA ADV. & SH. A.K. BHATIA O R D E R PER R.P. TOLANI J.M : THIS IS REVENUES APPEAL AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 19-6-2009 RELATING TO THE ASSESSMENT YEAR 199 6-97. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEE CLUB IS ENTITLED TO FULL EXEMPTION WITH RE SPECT TO SECTION 11 AND 13 OF THE INCOME TAX ACT 1961 EVEN THE ACTIVITIES OF THE ASSESSEE CLEARLY VIOLATED SECTION 11 AND COME UNDER THE MISCHIEF OF SECTION 13(2) OF THE INCOME T AX ACT 1961? 2. LEARNED DR RELIED ON THE ORDER OF AO. 3. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSES SEE IN REPLY CONTENDS THAT THIS IS SECOND ROUND OF PROCEEDINGS. ITAT VIDE ITS ORDER DATED 26-10- 2007 SET ASIDE THE MATTER BACK TO THE FILE OF AO FO R DE NOVO ASSESSMENT IN 2 ACCORDANCE WITH LAW. THE AO HOWEVER CHOSE TO REP EAT THE SAME ORDER. ON FIRST APPEAL THE CIT(A) TOOK INTO ACCOUNT THE HIST ORY OF THE ASSESSEES CASE AND FOLLOWING THE ORDER OF HIS PREDECESSOR FOR A.Y. 1998-99 AND CONSIDERING THE LEGAL POSITION HELD THAT ASSESSEE WAS ELIGIBLE FOR BENEFIT OF SEC. 11 AS THERE WAS NO VIOLATION OF THE PROVISION OF SECTION 13(2) AS ALLEGED BY AO. CIT(A) HAS FURTHER OBSERVED THAT AO HAS NOT BROUGHT ON RECORD ANY ADVERSE MATERIAL EXCEPT BY THE USE OF ESCORT SPORTS CLUB THE TRUSTEES WHICH ARE DIRECTLY OR INDIRECTLY CONNECTED WITH ESCORT GROUP HAVE GOT UNDUE ADVANTAGE. CBDT CIRCULAR DATED 24-9-1984 HAS BEEN D ULY CONSIDERED BY CIT(A) IN WHICH PROMOTION OF SPORTS AND GAMES ARE HELD TO BE CHARITABLE PURPOSES WITHIN THE MEANING OF SECTION 2(15). 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CIT(A) ALLOWED THE ASSESSEES APPEAL BY FOLLOWING OBSERVATIONS: 8. I HAVE PERUSED MY PREDECESSORS ORDER FOR THE A SSESSMENT YEAR 1998-99 IN APPEAL NO. 580/2000-01 DATED 04-02- 2003 WHEREIN HE HAD ALLOWED THE CLAIM OF THE ASSESSEE U/ S 11 OF THE INCOME TAX ACT 1961. THERE IS NO CHANGE IN THE FAC TS AND CIRCUMSTANCES AS WELL AS THE OBJECTIVES OF THE APPE LLANT SPORT CLUB IN FUNCTIONING FOR THE ASSESSMENT YEAR 1996-97 AS WELL. THE CLUB IS NOT FOUND TO HAVE BEEN ESTABLISHED WITH A VIEW TO BENEFIT ANY INDIVIDUAL OR GROUP OF INDIVIDUALS. CLA USE IV OF THE CONSTITUTION OF THE CLUB SPECIFIES THAT NO PORTION OF THE INCOME OR PROPERTY OF THE CLUB AFORESAID SHALL BE P AID OR TRANSFERRED DIRECTLY OR INDIRECTLY BY WAY OF HIS DI VIDENDS BONUS OR OTHERWISE BY WAY OF PROFIT WHO AT ANY TIME ARE OR HAVE BEEN MEMBERS OF THE CLUB. THIS CLAUSE STATES THAT THE INCOME AND PROPERTY OF THE CLUB WHEN SO EVER DERIVED SHALL BE APPLIED SOLELY FOR THE PROMOTION OF ITS OBJECTS AS SET HERE IN FORTH. THE APPELLANT CLUB ITSELF BEARS THE NAME OF ESCORT SPO RTS CLUB. THOUGH THE NAME ESCORTS MAY ALSO BE USED BY VARIO US COMPANIES IN THE ESCORTS GROUP YET THIS DOES NOT C HANGE THE BASIC NATURE AND CHARACTER OF THE ACTIVITIES OF THE CLUB WHICH ARE ALWAYS CHARITABLE IN NATURE. NO SPORTS CAN BE P ROMOTED AT 3 ANY LEVEL UNLESS IT HA INSTITUTIONAL SUPPORT. UNDER NO CIRCUMSTANCES THEREFORE CAN IT BE SAID THAT THE P ARTICIPATION BY THE APPELLANT CLUB IN VARIOUS TOURNAMENTS DIRECTLY RESULTED IN PUBLICITY TO THEY VARIOUS GROUP OF COMPANIES OF ESC ORTS LIMITED OR BENEFITS TO A PERSON MENTIONED IN SUB-SECTION 3 OF SECTION 13 OF THE I.T. ACT 1961. AS REGARDS THE APPLICABILIT Y OF SECTION 13(2) OF THE INCOME TAX ACT 1961 THE APPELLANT HA D SUFFICIENTLY EXPLAINED THE MATTER THROUGH ITS SUBMI SSIONS CONTAINED IN ITS LETTER DATED 24-02-1998 BY ASSERTI NG THAT NO PART OF THE INCOME OR PROPERTY OF THE CLUB CAN BE DEEMED TO HAVE BEEN USED OR APPLIED FOR THE BENEFIT OF A PERSON RE FERRED TO IN SUB-SECTION (3) OF SECTION 13 OF THE INCOME TAX ACT 1961. ONCE AGAIN IT IS ALSO ARGUED THAT AMATEUR SPORTSPERSON CANNOT FLOURISH IN SPORTS OR SHOW HIS OR HER TALENT UNLESS THERE IS AN INSTITUTIONAL SUPPORT. ALL UPCOMING PLAYERS HAVE BE EN EMPLOYED BY VARIOUS PUBLIC OR PRIVATE SECTOR COMPANIES AND A RE SUPPORTED AND ENCOURAGED BY THEIR EMPLOYERS TO WORK HARD AND COME UP IN THEIR RESPECTIVE SPORTS. THE ACTIVITIES MENTIONE D IN PARA III(2&3) OF THE OBJECTS OF THE CLUB ARE ONLY SMALL SEGMENTS OF THE OVERALL OBJECTS OF THE CLUB THE DOMINANT OBJEC T HOWEVER BEING THE PROMOTION OF VARIOUS SPORTS. THEREFORE A LL THE SPORTS ACTIVITIES AND THE EXPENSES INCURRED FOR THEIR ORGA NIZATION AND EXECUTION AS MANIFEST FROM THE INCOME AND EXPENDITU RE ACCOUNT FOR THE YEAR ENDED 31.03.1996 PINPOINT THE MUTUAL SPORTS ARENA OF THE ESCORTS GROUP WHICH DOES NOT HA VE ANY ADVERTISEMENT VALUE AS SUCH AND WHICH CONSTITUTES A CHARITABLE MISSION MAKING THE CLUB ELIGIBLE FOR BENEFITS UNDE R SECTION 11 OF THE I.T. ACT 1961. IN VIEW OF SUCH FINDINGS AN D ALSO THOSE OF MY PREDECESSOR FOR THE ASSESSMENT YEAR 1998-99 WHE N THERE IS NO ADVERSE MATERIAL ON RECORD THE APPELLANT CLUB I S ENTITLED TO FULL EXEMPTION WITH RESPECT TO SECTION11 AND 13 OF THE INCOME TAX ACT 1961. THEREFORE THE DULY REGISTERED CLUB HAVING THE SPORTS ACTIVITIES AS THEIR CHARITABLE PURPOSE IS AL LOWED BENEFIT U/S 11 OF THE INCOME TAX ACT 1961 AND THUS THE AO IS DIRECTLY TO ALLOW IT ACCORDINGLY. 4.1. THERE IS NO MATERIAL ON RECORD EXCEPT SPORTIN G ACTIVITIES THE ASSESSEES ORGANIZATION WAS ENGAGED IN NO OTHER ACT IVITY. BY ADOPTING THE 4 NAME ESCORT SPORTS CLUB IT CANNOT BE ASSUMED THA T TRUSTEES HAVE DERIVED UNDUE BENEFIT AS PROHIBITED BY SEC. 13(2). THE AO M ADE THE ADDITIONS SOLELY ON ASSUMPTIONS WHICH HAVE BEEN RIGHTLY DELETED BY T HEY CIT(A). WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS U PHELD. 5. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 16-3-2011. SD/- SD/- ( K.D. RANJAN ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16-3-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR