G.S.Pannu, Member (A) -
(1.) THE captioned two appeals are directed against two separate orders of even date passed by Commissioner of Income -tax -I, Pune (in short "the Commissioner") under sections 12AA(3) and section 263 of the Income -tax Act, 1961 (in short "the Act") relating to the same assessee, therefore they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. ITA No. 1856/PN/2012 is an appeal directed against the order of the Commissioner dated 30.07.2012 passed u/s. 12AA(3) of the Act cancelling from assessment year 2009 -10 onwards the registration allowed to the assessee u/s. 12A(a) of the Act. In this appeal, appellant has assailed the action of the Commissioner in cancelling the registration granted u/s. 12A of the Act. The primary grievance of the assessee is that the Commissioner erred in exercising his jurisdiction u/s. 12AA(3) of the Act in the absence of any factual or legal justification.
(2.) IN brief, the relevant facts can be summarized as follows. The assessee is constituted by a Memorandum of Association and registered under the Societies Registration Act, 1860 on 30th March, 1968. The assessee also obtained registration under the Bombay Public Trust Act, 1950 in 1977. Assessee was registered with the Commissioner of Income -tax, Pune u/s. 12A(a) of the Act as a 'charitable institution' vide order dated 09.12.1991. The main objects of the appellant association, as revealed by the Memorandum of Association placed at pages 5 to 12 of the Paper Book, inter alia, include promotion, development and control of the game of cricket and generally improve the standards of the game in the specified areas of the State of Maharashtra. The objects of the appellant are contained in clause 4 of the Memorandum of Association, and the same read as under: - -
The objects of the Association shall be as under: - -
(a) To encourage physical education, foster and maintain friendly and cordial relationship through sport tournaments and competitions in connection therewith and to create a healthy spirit in the country through the medium of sports in general and cricket in particular.
(b) To instil the spirit of sportsmanship in deserving students attending schools and colleges and members of other institutions and to develop a good standard of physique of the students and to foster the spirit of sportsmanship and instil the ideal of cricket amongst students of schools and colleges and members of affiliated clubs and institutions and to educate them in the game.
(c) With a view to accomplish the objects aforesaid, to help encourage promote, develop and control the game of cricket and generally to improve the standard of the game.
(d) To select teams to represent the Association in any tournament, championship or fixture, local or otherwise.
(e) To arrange, supervise and regulate visits of teams.
(f) With a view to accomplish the objects: - -
(i) To arrange and manage among other things league and/or any other tournament.
(ii) To improve, control, regulate and manage all tournaments and marches.
(iii) To start and maintain a journal devoted to sport in general and cricket in particular.
(iv) To maintain a library of books, periodicals and other literature on sport in general and cricket in particular.
(v) To engage coaches to coach deserving persons in the various departments. of the game.
(vi) To engage person or persons as professional cricketer or cricketers and to pay remuneration or honorarium to them.
(vii) To start or sponsor and/or to subscribe to funds for the benefit of cricketers or their families."
In sum and substance, the activities of the assessee revolve around promotion and development of the game of cricket in the specified areas of Maharashtra.
On 07.08.2009, the Commissioner issued a notice, copy of which has been placed in the Paper Book at page 1, requiring the assessee to show -cause as to why the registration granted to it u/s. 12A(a) of the Act on 09.12.1991 be not withdrawn. As per the Commissioner, assessee was promoting sports activity on a commercial basis by holding various tournaments of BCCI, viz., Ranji Trophy Matches, World Cup Trial Matches, Twenty -Twenty Tournaments, etc. for which BCCI was making payments to assessee, and therefore, assessee was hit by the amendment to section 2(15) of the Act by the Finance Act, 2008 w.e.f. assessment year 2009 -10, whereby a proviso was inserted, which implied that a 'charitable purpose' in the nature of "advancement of any other object of general public utility" shall no longer be considered as a 'charitable purpose' if it involves carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration irrespective of the nature of use or application or retention of income from such activity. According to the Commissioner, the activities of the assessee fell for consideration in the aforesaid prescription contained in the proviso to section 2(15) of the Act, as amended by the Finance Act, 2008. Subsequently, the impugned order reveals the Commissioner issued further notices in continuation on 09.08.2009, 17.12.2009, 30.12.2009, 11.01.2010, 27.07.2010 and 09.03.2012. In the course of hearings before him, the Commissioner also confronted the assessee that certain amendments to the objects clause after the grant of registration in 1991 were made by the assessee and not intimated to the Department and therefore on this count also assessee was show -caused as to why the registration granted u/s. 12A(a) of the Act be not withdrawn. In sum and substance, the Commissioner has proceeded to cancel the registration granted u/s. 12A(a) of the Act on two grounds, namely, (i) that the activities of the assessee are in the nature of trade, commerce or business and are accordingly hit by the amendment to section 2(15) of the Act made by the Finance, Act, 2008 w.e.f. assessment year 2009 -10 whereby the proviso was inserted; and, (ii) non -intimation of changes in the objects clause by the assessee to the Department.
(3.) IN the course of proceedings before the Commissioner, assessee resisted the action of the Commissioner. It has been pointed out by the learned counsel for the assessee that detailed submissions on various dates were made before the Commissioner, copies of which have also been furnished in the Paper Book filed before us. The Commissioner was not satisfied with the explanations rendered by the assessee and he has ultimately cancelled the registration granted to the assessee u/s. 12A of the Act from assessment year 2009 -10 onwards. In coming to such conclusion, the Commissioner has held that the entire character and focus of assessee has become "totally commercial with an eye on profits" and therefore it no longer remains a charitable organization. Against such decision of the Commissioner, assessee is in appeal before us.;