The Chandigarh Bench of the Income Tax Appellate Tribunal in the case of Punjab Cricket Association v ACIT held Punjab Cricket Association to be engaged in a commercial activity.
The assessee is a cricket association registered under the Societies Registration Act, 1860 and Section 12A of the Act, which was cancelled by the Commissioner of Income Tax on the ground that the assessee formed with e charitable purpose was engaged in a commercial activity. The AO and on an appeal to the CIT (A), the order was held against the assessee. Hence the present appeal.
The Bench constituting of Members Sanjay Garg and Dr B.R.R. Kumar has concluded that it is clear from the facts and evidence that the appellant is involved in commercial activity in a systematic and regular manner not only by offering its Stadium and other services for conduct of IPL matched but by actively involving in the conduct of matches and exploiting its rights commercially in an arrangement arrived at with the BCCI. An analysis of the Tripartite Agreement, it is clearly revealed that the assessee is systematically involved in the conduct of IPL matches. The assessee association not only being the member of the BCCI which is the AOP of the assessee along with other members but also, is individually involved in a systematic and regular manner in the commercial exploitation of the popularity of cricket matches and its infrastructure. The BCCI in clear terms has pleaded that without the involvement of State Associations, the conduct of the IPL matches and huge revenue generation from the same is not possible.
Hence the issue is required to be reexamined by the AO after verification of the accounts of the assessee as to ascertain which part of the club income and catering services has been generated from the members of the assessee association and which part of it is earned from the clubhouse and other facilities is generated from the members-only and the receipt from non-members is an exception.
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