The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) granting relief to Haryana Rifle Association ruled that charging of fees for conducting matches or tournaments in rifle shooting is not commercial activity.
The assessee Haryana Rifle Association objects is to organize, promote, encourage, popularize games and sports specially rifle shooting in the state of Haryana.
Moreover organize and conduct athletics meet/cross country/ marathon/ mini marathon race at least once a year of district/ state/ national / International level to organize and conduct sports and games tournaments/ championships/ exhibition matches of district/ state/ national/ international level.
While examination of registration application under section 12AA Income Tax Act,1961, the CIT(E) opinion that sale of ammunition and charging of fees for conducting matches or tournaments is in the nature of commerce and there is no charitable aspect attached to it. Therefore assessee trust does not come under purview of charity.
Aggrieved by the order, the assessee filed an appeal before the tribunal.
Charitra Gupta, counsel for assessee submitted that association is fully dependent upon the State of Haryana who provides ‘supports promotion money’.
Further, whenever the association organize rifle shooting tournaments the participants are supplied with the ammunition by the association as the said bullets are not available in the open market.
Sapna Bhatia, Department Representative rejected the submissions of assessee and supported the decision of CIT(E).
It was observed by the tribunal that the association has purchased ammunition and sold the same at a subsidized rate by incurring a substantial loss.
Thus, which has been recouped by receiving sports promotion money from Haryana Government.
Further, the association organised several tournaments of State/ National level for which it receives match fee and the same is spent on the furtherance of the object of the association.
After reviewing the facts and submissions, the two member bench of the tribunal comprising N. K. Billaiya (Accountant Member) and C.N. Prasad (Judicial Member) held that the association is not running on profit motive and, therefore, is very much eligible for registration under Section 12AA Income Tax Act.
Thus, the bench allowed the appeal filed by the assessee.
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