Kerala HC directs ITAT to decide Challenge on Income tax Exemption for Amount Received by Cricket Association [Read Order]

The Kerala High Court has remanded the matter to the Income Tax Appellate Tribunal ( ITAT ) and directed to decide whether income received by the Kerala Cricket Association during the assessment years 2010-11, 2012-13, and 2013-14 would partake of the nature of exempted income going by the provisions of Section 2(15) of the Income Tax Act.

The revenue challenged the finding of the Income Tax Appellate Tribunal ( ITAT )on the issue as to whether the income received by the Kerala Cricket Association during the assessment years 2010-11, 2012-13, and 2013-14 would partake of the nature of exempted income going by the provisions of Section 2(15) of the Income Tax Act, 1961.

The assessing authority found that the income earned by the assessee Cricket Association would be hit by the proviso to Section 2(15), and they would not be entitled to the benefit of the exemption.

On appeal, the First Appellate Authority found that the proviso to Section 2(15) of the Income tax law could not apply to deny the benefit of exemption to the assessee. 

The Appellate Tribunal recognising the entitlement for Exemption under Section 2(15) of the Income tax legislation read with Section 12AA of the tax statute.

In light of the case Assistant Commissioner of Income Tax (Exemptions) v.Ahmedabad Urban Development Authority (2023) wherein, with specific reference to incomes earned by State Cricket Associations, the bench of Justice A.K. Jayasankaran Nambiar and Justice Syam held that in each case and for every year, the tax authorities are under an obligation to carefully examine and see the pattern of receipts and expenditures.  

 In the light of the aforesaid observations of the Supreme Court, the high court remanded the matter to the Appellate Tribunal for a fresh adjudication on the facts, especially with regard to whether or not the amount made over to the assessee Cricket Association by the Board for Control of Cricket in India ( BCCI ) were in the nature of infrastructure subsidy or business income.

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