Delhi High Court - Orders
Commissioner Of Income Tax ... vs M/S Indian Olympic Association on 1 February, 2024
Author: Yashwant Varma
Bench: Yashwant Varma, Purushaindra Kumar Kaurav
$~21
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 389/2023
COMMISSIONER OF INCOME TAX (EXEMPTIONS)
DELHI ..... Appellant
Through: Mr. Abhishek Maratha, Mr.
Parth Semwal, Mr. Nupur
Sharma, Advs.
versus
M/S INDIAN OLYMPIC ASSOCIATION..... Respondent
Through: Mr. Satyen Sethi, Mr. Artha
Trana, Advs.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR
KAURAV
ORDER
% 01.02.2024
1. We note that the judgment of the Income Tax Appellate Tribunal ["ITAT"] dated 10 November 2022 impugned in this appeal essentially follows the view that was taken by the ITAT in ITA No. 1130/DEL/2016 dated 19 July 2018 pertaining to Assessment Year ["AY"] 2011-2012.
2. In our dated 20 July 2023, we had also noted that the appeal of the Department against the aforesaid order of the ITAT came to be dismissed by the Court in terms of the order dated 04 February 2019 passed in ITA No. 110/2019. We were informed that the Special Leave Petition against the aforesaid order is pending consideration before the Supreme Court.
3. Mr. Maratha, learned counsel, however, draws our attention to a subsequent judgment rendered by the Supreme Court in Assistant Commissioner of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority [(2023) 4 SCC 561] where the This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/02/2024 at 20:53:33 following observations came to be made:-
"250. It is quite evident that the activities of the Cricket Associations are run on business lines. The associations own physical and other infrastructure, maintain them, have arrangements for permanent manpower and have well-organised supply chains to cater to the several matches they host. Many such matches are not at national level and are Under-16 or Under-18 matches at the regional level. However, these activities are not to be seen in isolation but are to be regarded as part of the overall scheme, and ecosystem in which the game of cricket is organised in India. Talent is spotted, at local levels and dependent on the promise shown, given appropriate exposure.
251. On a close scrutiny of the expenses borne, having regard to the nature of receipts, the expenditure incurred by the Cricket Associations does not disclose that any significant proportion is expended towards sustained or organised coaching camps or academies. Therefore, in the opinion of this Court, the ITAT fell into error in not considering the nature of receipts flowing from the BCCI into the corpus of GCA and SCA -- as well as other associations that are before this Court -- to determine their true character. The ITAT appears to have been swayed by the submission that the amount given by the BCCI were towards capital subsidy.
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253. Recent trends have shown that media rights, especially broadcasting and digital media rights have yielded colossal revenues to the BCCI. The model adopted in the last 10 years or so has been to auction media rights in respect of events over a 3 or 5- year period. As discussed previously, these media rights are not per se owned by BCCI, which is but an association of persons or agglomerate of all the State Cricket Association. The stadia which form the venue for these cricket matches (in relation to which media rights are transferred or licensed) are owned by the State Cricket Associations. According to the BCCI itself, the State Associations can well bargain and enter into arrangements for the sale of such media rights. However, to obtain better terms, and gain bargaining leverage a centralised form of sale of such rights has been agreed and adopted by which the BCCI auctions these rights on behalf of the State Associations. All State Associations put together are entitled to 70% of the Revenue -- i.e. the proceeds of sale of the media rights. This may or may not be in proportion to the events hosted by each or some of the Cricket Associations. Yet, this forms part of the arrangement by which the consideration flowing from such commercial rights has been agreed to be shared This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/02/2024 at 20:53:33 amongst all members of the BCCI. These rights are apparently commercial.
254. In the light of these, the Court is of the opinion that the ITAT
-- as well as the High Court fell into error in accepting at face value the submission that the amounts made over by BCCI to the Cricket Associations were in the nature of infrastructure subsidy. In each case, and for every year, the Tax Authorities are under an obligation to carefully examine and see the pattern of receipts and expenditure. Whilst doing so, the nature of rights conveyed by the BCCI to the successful bidders, in other words, the content of broadcast rights as well as the arrangement with respect to State Associations (either in the form of master documents, resolutions or individual agreements with State Associations) have to be examined. It goes without saying that there need not be an exact correlation or a proportionate division between the receipt and the actual expenditure. This is in line with the principle that what is an adequate consideration for something which is agreed upon by parties is a matter best left to them. These observations are not however, to be treated as final; the parties' contentions in this regard are to be considered on their merit.
xxxx xxxx xxxx IV. Summation of conclusions
269. In view of the foregoing discussion and analysis, the following conclusions are recorded regarding the interpretation of the changed definition of "charitable purpose" (w.e.f. 1-4-2009), as well as the later amendments, and other related provisions of the IT Act.
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F. Sports Associations
283. So far as the State Cricket Associations are concerned (Saurashtra, Gujarat, Rajasthan, Baroda, and Rajkot), this Court is of the opinion that the matter requires further scrutiny, in light of the discussion in paras 244-254 of the judgment. Accordingly, a direction is issued that the AO shall adjudicate the matter afresh after issuing notice to the assessees concerned and examining the relevant material indicated in the previous paragraphs of this judgment. Furthermore, if any consequential order needs to be issued, the same shall be done and resulting actions, including assessment orders shall be passed in accordance with the law under relevant provisions of the IT Act."
4. We consequently admit this appeal on the following question of This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/02/2024 at 20:53:33 law:-
A.) Whether, on the facts and in circumstances of the case and in law, the ITAT has erred in not setting aside the matter to the file of Assessing Officer ["AO"] to adjudicate it afresh in line with the judgment of the Supreme Court in Assistant Commissioner of Income Tax (Exemptions)?
5. List again on 06.03.2024.
YASHWANT VARMA, J.
PURUSHAINDRA KUMAR KAURAV, J.
FEBRUARY 01, 2024/neha This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/02/2024 at 20:53:34