Promoting Cricket is ‘Charitable Activity’ under Section 2(15) and not entitled to relief under Section 11: ITAT [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) in the case of Gujarat Cricket Assn. v. J.CIT held that assessee engaged in promoting and developing the game of cricket is engaged in carrying out ‘charitable activity’ within the meaning of Section 2(15) and is not entitled to relief under Section 11.

The assessee is registered under the Societies Registration Act and also registered as a charitable institution under Section 12AA of the Income Tax Act engaged in promoting and developing the game of cricket, at different levels, in identified areas of the State of Gujarat working with similar objects. The assessee is also engaged in providing education for cricketers and running a coaching academy for teaching.

The issue before the Tribunal was that whether or not the entitlement to exemption under Section 11 of the Income Tax Act, 1961 is hit by the proviso to Section 2(15) which states the activities not classifiable as a charitable purpose.

The assessee contended that it is engaged in the provision of education for cricketers and the wordings of Section 2(15) suggest that such other object of general public utility will cease to be a charitable activity only when “it involves the carrying of activity in the nature of trade, commerce or business”. Also, that proviso to Section 2(15) is attracted only in case of the residuary class of objects pursued by charitable institutions and in absence of the same is inapplicable in the present case. On the other hand the department was of the view that the assessee being a society having objects of promotion for sports falls in the category of charitable institutions hence would attract proviso to Section 2(15).

After going through the submissions of both the parties, the purpose of inserting proviso to Section 2(15) by 2008 Amendment was looked at wherein it was held that where the assessee is covered by the descriptions of ‘relief of the poor’, ‘education’ or ‘medical relief’, it is not material whether or not the assessee is carrying on business in the nature of trade, commerce or business.

The Hon’ble bench constituting of Justice P P Bhatt and Pramod Kumar held that the assessee is engaged in carrying out ‘charitable activity’ within the meaning of Section 2(15) and is not entitled to relief under Section 11.