Commissioner Of Income Tax ( Exemptions), 3Rd Floor, Kailashheights, Lal Kothi, Tonk Road, Jaipur v. M/S Rajasthan Cricket Association, North Block, Sms Stadium,Ambedkar Circle, New Vidhan Sabha, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 236 / 2016 Commissioner of Income Tax ( Exemptions), 3rd Floor, KailashHeights, Lal Kothi, Tonk Road, Jaipur ----Appellant Versus M/s Rajasthan Cricket Association, North Block, SMS Stadium,Ambedkar Circle, New Vidhan Sabha, Jaipur ----Respondent Connected With D.B. Income Tax Appeal No. 252 / 2017 Commissioner of Income Tax (Exemptions), 3rd Floor Kailash Heights Lal Kothi Tonk Road, Jaipur. ----Appellant Versus M/s Rajasthan Cricket Association, North Block Sms Stadium, Ambedkar Circle, New Vidhan Sabha Jaipur. ----Respondent D.B. Income Tax Appeal No. 257 / 2017 Commissioner of Income Tax (Exemptions), 3rd Floor Kailash Heights Lal Kothi Tonk Road, Jaipur. ----Appellant Versus M/s Rajasthan Cricket Association, North Block, Sms Stadium, Ambedkar Circle, New Vidhan Sabha, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sameer Jain with Mr. Daksh PareekFor Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 21/11/2017 1. In all these appeals common question of law and facts areinvolved hence they are decided by this common judgment. 2.By way of appeal no.236/2016, the appellant has assailedthe judgment and order of tribunal whereby tribunal has allowedthe appeal of the assessee. Appeal No.252/2017 & 257/2017 havebeen filed against the order of tribunal whereby the appeal of thedepartment was dismissed and appeal of the assessee was partlyallowed for statistical purposes. 3.This court while admitting the appeals framed followingsubstantial question of law:- Appeal No.236/2016 admitted on 6.12.2016 “1. Whether on facts and circumstances ofthe case the Hon’ble ITAT was correct inlaw in restoring registration u/s 12AAnotwithstanding assessee institution arehaving non-charitable/ commercial objectsand activities contrary to the Sec. 2(15) ofthe Income Tax Act, which defines thecharitable purpose in special, restrictedand qualified sense? 2. Whether on the facts and thecircumstances of the case the Hon’ble ITATwas correct in law in allowing 12AAregistration notwithstanding that the factthat, the substantial changes were made inthe original object more specifically inclause (s) and (u) which were absent atthe time of granting registration u/s 12Aand basis on which Registration Authorityhas approved the registration? 3. Whether on the facts and in thecircumstances of the case the Hon’ble ITATwas correct in law in holding that thechanges can be made in the objects as perthe respective Governing act i.e., Rajasthan Sports (Registration, Recognitionand Regulation of Association) Act, 2005contrary to the provisions of the IncomeTax Act 1961, i.r.o. 12AA registration?” Appeal No.252/2017 admitted on 29.8.2017 “i) Whether on the facts and in thecircumstances of the case and in law, theHon’ble ITAT is right in allowingexemption u/s 11 of the IT Act, 1961 inspite of the fact that the proviso toSection 2(15) is invoked in the case ofassessee as the activities of the assesseebeing run on commercial basis and therebeing no element of charity? ii) Whether on the facts and in thecircumstances of the case and in law, theHon’ble ITAT is right in holding that theassessee is liable to claim depreciation ofRs.2,16,62,215/- on the assets whichwere claimed as application u/s 11 at thetime of purchase?” Appeal No.257/2017 admitted on 29.8.2017 Appeal No.252/2017 admitted on 29.8.2017 “i) Whether on the facts and in thecircumstances of the case and in law, theHon’ble ITAT is right in allowingexemption u/s 11 of the IT Act, 1961 inspite of the fact that the proviso toSection 2(15) is invoked in the case ofassessee as the activities of the assesseebeing run on commercial basis and therebeing no element of charity? ii) Whether on the facts and in thecircumstances of the case and in law, theHon’ble ITAT is right in holding that theassessee is liable to claim depreciation ofRs.2,16,62,215/- on the assets whichwere claimed as application u/s 11 at thetime of purchase?” Appeal No.257/2017 admitted on 29.8.2017 “i) Whether on the facts and in thecircumstances of the case and in law, theHon’ble ITAT is right in allowingexemption u/s 11 of the IT Act, 1961 inspite of the fact that the proviso toSection 2(15) is invoked in the case ofassessee as the activities of the assesseebeing run on commercial basis and therebeing no element of charity? ii) Whether on the facts and in thecircumstances of the case and in law, theHon’ble ITAT is right in allowing theexpeses of Rs.6,15,32,225/- incurred onthe acquisition of the capital asset whenthe association has been held as non-charitable? holding that the assessee is liable toclaim depreciation of Rs.2,16,62,215/- on the assets which were claimed asapplication u/s 11 at the time ofpurchase?” 4.The facts of the case are that a return declaring total ofRs.Nil for the assessment year 2008-09 was filed by the assesseeon 29.9.2008. Thereafter, the case was selected for scrutiny andwhile framing the assessment under section 143(3) of the IncomeTax Act 1961 (hereinafter referred to as the Act) the assessingofficer denied exemption claimed under section 11 for want offresh registration, thereby the assessing officer computed netincome of Rs.4,07,58,505/-. The assessing officer treated thegross receipts as income from business. Aggrieved by this, theassessee preferred an appeal before ld. CIT(A) who afterconsidering the submission partly allowed the appeal. However, hesustained the income computed by the Assessing Officer atRs.4,07,58,505/-. 5.Counsel for the department-appellant Mr. Sameer Jaincontended that the registration was granted to the presentrespondent after going through amending Act, bye-laws andmemorandum as on 17.02.1987 and 12AA registration wasgranted on 25.11.1998. However, after the registration, they havechanged certain clauses in the bye laws and procedure for theexpenses and income which is detrimental to the provisions of theIncome Tax Act. 5.1He further contended that after following procedure on27.12.2010, registration under Section 12AA was cancelled, however same was set aside by the tribunal on 13.7.2012.However, Tax appeal No.255/2012 came to be disposed of on23.1.2013 and department was allowed to proceed further afresh. 5.2He has taken us to the provisions of Section 2 (15) of theIncome Tax Act and the proviso which was amended w.e.f.1.4.2009 which provides as under:- Section 2(15) of the Income TaxAct,1961 “charitable purpose” includes relief ofthe poor, education, yoga, medicalrelief, preservation of environment(including watersheds, forests andwildlife)andpreservationofmonuments or places or objects ofartistic or historic interest, and theadvancement of any other object ofgeneral public utility.the poor, education, yoga, medicalrelief, preservation of environment(including watersheds, forests andwildlife)andpreservationofmonuments or places or objects ofartistic or historic interest, and theadvancement of any other object ofgeneral public utility. Section 2(15) of the Income TaxAct,1961 “charitable purpose” includes relief ofthe poor, education, yoga, medicalrelief, preservation of environment(including watersheds, forests andwildlife)andpreservationofmonuments or places or objects ofartistic or historic interest, and theadvancement of any other object ofgeneral public utility.the poor, education, yoga, medicalrelief, preservation of environment(including watersheds, forests andwildlife)andpreservationofmonuments or places or objects ofartistic or historic interest, and theadvancement of any other object ofgeneral public utility. Provided that the advancement of anyother object of general public utilityshall not be a charitable purpose, if itinvolves the carrying on of any activityin the nature of trade, commerce orbusiness, or any activity of renderingany service in relation to any trade,commerce or business, for a cess orfee or any other consideration,irrespective of the nature of use orapplication, or retention, of the incomefrom such activity; 5.3He also taken us to the provision of Section 12AA of theIncome Tax Act and Form 10A under Rule 17A of the Income TaxRules 1962 which reads as under:- “Procedure for registration. 12AA. (1) The Principal Commissioneror Commissioner, on receipt of anapplication for registration of a trust orinstitution made under clause (a) or clause (aa)[or clause (ab)] of sub-section (1)] of section 12A, shall— (a) call for such documents orinformation from the trust or institutionas he thinks necessary in order tosatisfy himself about the genuineness ofactivities of the trust or institution andmay also make such inquiries as he maydeem necessary in this behalf; and (b) after satisfying himself about theobjects of the trust or institution and thegenuineness of its activities, he— (i) shall pass an order in writingregistering the trust or institution; (ii) shall, if he is not so satisfied, passan order in writing refusing to registerthe trust or institution, and a copy ofsuch order shall be sent to theapplicant : Provided that no order under sub-clause (ii) shall be passed unless theapplicant has been given a reasonableopportunity of being heard. (1A) All applications, pending before thePrincipal Chief Commissioner or ChiefCommissioner on which no order hasbeen passed under clause (b) of sub-section (1) before the 1st day of June,1999, shall stand transferred on thatday to the Principal Commissioner orCommissioner and the PrincipalCommissioner or Commissioner mayproceed with such applications underthat sub-section from the stage at whichthey were on that day. (2) Every order granting or refusingregistration under clause (b) of sub-section (1) shall be passed before theexpiry of six months from the end of themonth in which the application wasreceived under clause (a) or clause (aa)[or clause (ab)] of sub-section (1) ofsection 12A. (3) Where a trust or an institution hasbeen granted registration under clause(b) of sub-section (1) or has obtainedregistration at any time under section12A [as it stood before its amendmentby the Finance (No. 2) Act, 1996 (33 of1996)] and subsequently the Principal Commissioner or Commissioner issatisfied that the activities of such trustor institution are not genuine or are notbeing carried out in accordance with theobjects of the trust or institution, as thecase may be, he shall pass an order inwriting cancelling the registration ofsuch trust or institution: (3) Where a trust or an institution hasbeen granted registration under clause(b) of sub-section (1) or has obtainedregistration at any time under section12A [as it stood before its amendmentby the Finance (No. 2) Act, 1996 (33 of1996)] and subsequently the Principal Commissioner or Commissioner issatisfied that the activities of such trustor institution are not genuine or are notbeing carried out in accordance with theobjects of the trust or institution, as thecase may be, he shall pass an order inwriting cancelling the registration ofsuch trust or institution: Provided that no order under this sub-section shall be passed unless such trustor institution has been given areasonable opportunity of being heard.(4) Without prejudice to the provisionsof sub-section (3), where a trust or aninstitution has been granted registrationunder clause (b) of sub-section (1) orhas obtained registration at any timeunder section 12A [as it stood before itsamendment by the Finance (No. 2) Act,1996 (33 of 1996)] and subsequently itis noticed that the activities of the trustor the institution are being carried out ina manner that the provisions of sections11 and 12 do not apply to exclude eitherwhole or any part of the income of suchtrust or institution due to operation ofsub-section (1) of section 13, then, thePrincipalCommissionerortheCommissioner may by an order inwriting cancel the registration of suchtrust or institution: Provided that the registration shallnot be cancelled under this sub-section, if the trust or institutionproves that there was a reasonablecause for the activities to be carriedout in the said manner.” FORM NO. 10A [See rule 17A] Application for registration of charitable or religious trust or institution under [clause(aa) of sub-section (1) of section 12A] of the Income-tax Act, 1961 To, The [***] Commissioner of Income Tax ……………………………………………………. Sir, I…………………………………………..on behalf of …………………………………...hereby apply for the registrationof the said trust / institution under section 12A of the Income -tax Act, 1961. The followingparticulars are furnished herewith: 1. Name of the *trust / institute in full [ in block letters] ………………………...…………………….……..……………….……………………….………………………. 2. Address 3. Name(s) and address(es) of author(s) / founder(s) 4. Date of creation of the trust or establishment of the Institution 5. Name(s) and address(es) of trustee(s) / manager(s) I also enclosed the following documents: 1. (a) *Original / Certified copy of the instrument under which the trust / institution was created/ established together with a copy thereof. (b) *Original / Certified copy of document evidencing the creation of the trust or theestablishment of the institution, together with a copy thereof. [The original, if enclosed, will bereturned ]. 2. Two copies of the accounts of the *trust / institution for the latest *one/two/three years. I undertake to communicate forthwith any alteration in the terms of the trust, or in the rulesgoverning the institution, made at any time hereunder. Date……………….………………………………. Signature………………………………..Designation………………………………..Address Address *Strike out whichever is not applicable. 5.7He contended that unless the provision of clause which is mandatory is complied, the registration deemed to be cancelled. 5.8He has taken us to the order of the AO where AO observedas under:- “(1) Amendments in objects:- Assessee contended that amendment in 2005are nothing but a redrafting/modify the mainobjects keeping in mind the changingscenario,sociotechno,economic,advancement so to effectively manifest themain objects. The argument of the assessee is notacceptable as actual picture of the originalobjects and modified objects are as under:- Date……………….………………………………. Signature………………………………..Designation………………………………..Address Address *Strike out whichever is not applicable. 5.7He contended that unless the provision of clause which is mandatory is complied, the registration deemed to be cancelled. 5.8He has taken us to the order of the AO where AO observedas under:- “(1) Amendments in objects:- Assessee contended that amendment in 2005are nothing but a redrafting/modify the mainobjects keeping in mind the changingscenario,sociotechno,economic,advancement so to effectively manifest themain objects. The argument of the assessee is notacceptable as actual picture of the originalobjects and modified objects are as under:- Objects as per memorandum ad rules ofObjects of 2005Association-1999Objects of the Association:- Following are the(a) To promote, organize, manage and controlobjections of this association:-the game of cricket within its jurisdiction.(A) To create, foster ad maintain friendly andcordial relationship through tournaments andcompetitions connected therewith and tocreate a healthy spirit in the country throughthe medium of Cricket.(B) To instill the spirit of sportsmanship(b) To select teams to represent the Associationdeserving students at lending schools andin any tournament, championship or fixture,colleges and members of other institutions andlocal or otherwise, and to incur an pay theto develop a good standard physique of theexpenses thereof.students and to foster the apirit ofsportsmanship and instill the ideal of Cricketamongst students of colleges and schools andmembers of affiliated clubs and otherinstitutions and educate them in the game. (c) To select teams to represent the Association(c) To arrange proper training/coaching for thein a tournament championship, or fixtures localbenefit of cricketers, to provide suitableor otherwise.coaches and to acquire and maintain playgrounds and cricket nets, etc. either directly orthrough District Cricket Association etc.(D) To arrange, supervise and regulate visits of(d) To maintain general control of the game ofteams.cricket under the jurisdiction and take decisionin all matters concerning the game either whenreferred to by affiliated association or otherparties.(E) To arrange and manage tournaments or (e) To establish and maintain a library of books, leagues at least one’s in a year and to arrangeperiodicals and publications on sports in generalregular nets for practice.and cricket in particular, and to diffuseknowledge of cricket and deals ofsportsmanship.(F) To improve, control, regulate and manage all(f) To install keenness for the game of crickettournaments and matches.and foster the apirit of sportsmanship instudents of schools, colleges and universitiesand members of affiliated units and thus enablethem to develop their ability and caliber.(G) To maintain a library.(g) To encourage the formation of DistrictCricket Association in such areas of Rajasthan asthe Association may deem fit. (District as perGovernment Rules)(H) To engage coaches to coach deserving(h) To acquire by all lawful means, movable andpersons in the department of Cricket.immovable properties on behalf of theAssociation and to sell, manage, hire, lease out,exchange, dispose of or otherwise deal with allor any of its properties and/or any incomeaccruing there from.(I) To engage persons as professional cricketers(I) To initiate and pursue such actions as may beand to pay remuneration or honorarium toconsidered for the fulfillment of the objects ofthem, if necessary.the Association.(J) To collect funds for purposes of the(j) To initiate and pursue such actions as mayassociation at to utilized much funds by thebe considered for the fulfillment of the objectspermission of Manager & Trustee of theof the Association.Association for the fulfillment of the objects ofthe Association.(K) To invest money and funds of the(k) To maintain a panel of approved cricketassociation in such authorized securities and inumpires and coaches and to take all such stepssuch manner as may be decided upon by theas may be necessary for efficient umpiring and Man Committee of the association from timecoaching.to time.(L) To hold and maintain the laws of Cricket and(l.) To take such action as may be necessary t co-the regulations of the Board of Control forordinate the activities of affiliatedCricket in India.units/association and their members in relationto the Association and amongst themselves.(m) To arrange, stage participate in any match ofcricket for the benefit of any cause as theassociation may deem fit.(n) To stage matches and to subscribe income tofunds for philanthropic purposes i.e. for helpinga disabled and/or diseased player of any game,athlete or any other deserving individual, forrelief of a persons, localities village/villages,town suffered from natural calamities like flood,famine, fire etc.(o) To award scholarships to needy andpromising young cricketers.(P) To stage or organize Test and/or othermatches, official or unofficial, allotted to theassociation by the Board of Control for Cricket inIndia or by any other body controlling cricket inIndia as the association may deem expedientand on such ground/field as the association maydeem fit or expedient. (q) To appoint representative or representativesof the association on the Board of Control forCricket in India and in other conferences,Seminars and work shops connected with thegame of Cricket. (r) To employ personnel and staff and to pay tothem and other persons in return for theirservices rendered to the association, salaries,wages gratuities, pensions Honorarium,compensations, any ex-gratia payments and/ orprovident fund and to remove or dismiss suchemployees.(s) To receive monies and donations from anypersons clubs associations or institutions andtu utilize and/or invest the same in anymanner and for any purpose as per thedecision of the Executive Committee.(t) To give financial assistance to the memberDistrict for such purposes as may be decidedupon by the Association from time to time.(u) To invest monies and funds of theassociation in authorized securities or in anyway and manner as may be decided upon fromtime to time.(v) To maintain and enforce the spirit ofimpartially in formation of committees,selection players of the team/teams, places ofstage of matches, delegation of powers of thefunctionaries of the Association, and ininvestment of association funds. Considerationson the basis of regions etc. will be totallydiscouraged.(w) To establish/maintain harmony ofrelationship with the Rajasthan State SportsCouncil, Central and State Ministers of games and sports, with other related institutions andpersons.(x) To engage persons as professional cricketersand to pay remuneration or honorarium tothem, if necessary.(y) To frame, add, delete, alter, maintain andenforce rules for the control and governance ofthe game under its jurisdiction and to maintaindiscipline amongst players, officials and districtsunder its jurisdiction.(z) To encourage the sports and sports person ofevery section of society without anydiscrimination and generally to do all other acts,deeds, matters and things as are incidental inthe object of the Association or as theAssociation may deem conducive to theattainment of the objects specified above. From the above table it is evident that it cannot be said that there is no substantialamendment in the constitution of theassessee. Therefore, there are no merits inthe contention of the assessee.” 5.9He also contended that the clauses which are amended arevery detrimental and is changing the original purpose of the objectof the trust and now jurisdiction under the same cannot bemisused in any manner whatsoever. 6.In that view of the matter, he contended that the view takenby the AO is required to be upheld. 6.1He drew our attention to clause (iii) which reads as under:- “(iii) As regards the plea that there is nomandatory requirement to intimate thechange, it is mentioned that it is for theassessee to take a decision to intimate thechange and also apply for fresh registration. Itis the basic principle of law that registration isgranted on the basis of the objects of aninstitution. If there is change in the objectsthe registration would not survive. After suchan event if the institution does not want tocommunicate the changes, the onlyconsequences is that the benefit of registrationwill not be available. It is not necessary thatevery society should be registered under ITAct. It can function without getting registeredunder the IT Act, 1961. It is only when aninstitution wants to avail exemption ascharitable institution that registration isrequired under the IT Act, 1961. (iv) Most of the objects were amended andadded many new objections were added asindicated in the above table. Perusal of theabove amended/substituted objects showsthat the change is very substantive. Objects clause (s) is as under:- “To receive monies and donations from anypersons clubs associations or institutions andto utilize and/or invest the same in anymanner and for any purpose as per thedecision of the Executive Committee.” Further object clause (u) is as under:- (iv) Most of the objects were amended andadded many new objections were added asindicated in the above table. Perusal of theabove amended/substituted objects showsthat the change is very substantive. Objects clause (s) is as under:- “To receive monies and donations from anypersons clubs associations or institutions andto utilize and/or invest the same in anymanner and for any purpose as per thedecision of the Executive Committee.” Further object clause (u) is as under:- “To invest monies and funds of the associationin authorized securities or in any way andmanner as may be decided upon from time totime.” The above two objects at S.No. (s) & (u) arenot covered by the definition of ‘charitable’ asper provision of Section 2(15) of the I.T. Act,1961. Further, assessee can invest or depositthe money as per provisions of section 11(5)only. But the above clauses of the assessee “inany manner” and “in any way and manner asmay be decided upon from time to time” arenot as per provisions of Income Tax Act, 1961. (v) The same issue has also been decided byHon’ble ITAT “B” Bench Mumbai, in the case ofthe Board of Control for Cricket in India(BCCI), Mumbai v/s Income Tax Officer in ITANo. 1285/Mum/2010 vide order dated30.03.2012 held as under- “We are of the opinion that the registrationgranted under section 12A, on 12[th] Feb, 1966,and the benefits flowing therefrom, cannot beextended to the amended objects of thesociety unless the DIT examinhes the sameand comes to a conclusion that theregistration under section 12A, can beextended to the revised objects, memorandumand by-laws. It would be illogical to hold thatonce an institution is registered under section12A, no matter whatever may be the changesin the objects, rules and regulations, for anynumber of times, the institution should begiven the benefit of section 11 to 13 of theAct, in view of the original registration grantedunder section 12A. In our opinion, theassessee society should approach theregistering authority with the changes andamendments so that the authorities couldexamine as to whether the amendments inquestion meet the requirement of law.” In view of the above, it is clear that theobject, on the basis of which registration wasgranted, has been amended. As such the verybasis of registration has been removed.Further, some objects are not charitable at allas discussed above and therefore, theregistration should not survive.” 6.2He contended that the following income which is received by the assessee through Commercial Activity reads as under:- (4) Commercial Activity:- Besides that, it is seen that the activities ofthe RCA is commercial. It is judiciallyaccepted proposition that where profit makingis the predominant object of the activity, thetrust would lose exemption as a charitabletrust. No doubt, it would be impossible for persons in charge of a trust or institution toso carry out activity that the expenditurebalances the income and there is no resultingprofit. But certainly, if the consideration ischarged at market rate, than it can not besaid that there is an element of charity. % ofprofit involved in the charging for the servicesis major factor which will decide whether thesame is tainted with commerciality or charity. In the context of sports, promoting cricketwould be a charitable activity if it did notinvolve any element of trade, commerce orbusiness. The conduct of certain activities andreceipt of income from these activities clearlyshows that these activities are totallycommercial and there is no element of charityin the conduct of RCI. Perusal of the relevantdetails clearly shows that the activities fall inthe definition of ‘Business’. The facts of A.Y.2008-09 are indicative of the intention of theRCA that RCA is engaged in minting money invariety of ways. In the context of sports, promoting cricketwould be a charitable activity if it did notinvolve any element of trade, commerce orbusiness. The conduct of certain activities andreceipt of income from these activities clearlyshows that these activities are totallycommercial and there is no element of charityin the conduct of RCI. Perusal of the relevantdetails clearly shows that the activities fall inthe definition of ‘Business’. The facts of A.Y.2008-09 are indicative of the intention of theRCA that RCA is engaged in minting money invariety of ways. Annual Accounts for the F.Y. 2007-08 forincome under following heads:- India V/s Pakistan (One day international) Income from Advertisement 2,92,50,000/-Income from Canteen3,15,000/-Income from Tickets4,66,32,500/-T.V. Subsidy6,83,46,048/-Sale of Advertisement10,00,000/- Further, during the course of assessmentproceedings of A.Y. 2008-09, it is found bythe A.O. that the assessee has let out hotelsituated near SMS Stadium on followingconsideration. “The RCA will receive fees of Rs.75,000/-(Rupees Seventy Five thousand Only) permonth from the service provider as for grantof facilities to the service provider. This sum shall be enhanced by @ 15% per year foreach subsequent year.” On going through the agreement madebetween Rajasthan Cricket Association andHotel Radiant Star Hospitalities Pvt. Limited,Jaipur, it is seen that the activity of the RCA isbeing done on commercial basis. With the above discussion it is clear that theactivities of the trust are not being carried outin accordance with the objects of he trust asregistered by the department on 25.11.1988.The registration u/s 12A of the I.T. Act, 1961granted to the assessee from the A.Y. 2005-06 and onwards is therefore, withdrawn. 6.3The same is of commercial nature and required to be taxed. 6.4He further contended that in view of the observations madeby the tribunal, this amendment was mandatory in view ofprovisions under the Rajasthan Sports (registration, Recognitionand Regulation of Association) Act, 2005 and the judgment ofDelhi High Court in Mool Chand Khairati Trust reported in 377 ITR650 which is sought to be relied upon by the tribunal was inrelation to medicine, cannot be applied in the present case. 6.5He also relied upon the decision of the Allahabad High Courtin Allahabad Agricultural Institute vs. Union of India reported in(2007) 291 ITR 116 (All.) where Division Bench of Allahabad HighCourt while considering the matter observed as under:- “10. The argument is misconceived. Theregistration is granted by the Commissioner. Itcan be cancelled by the Commissioner underSection 12-AA(3) However, the words of thatstatutory provision show that it applies wherethe objects of the trust or institution remainthe same on paper, but the actual activities ofregistration is granted by the Commissioner. Itcan be cancelled by the Commissioner underSection 12-AA(3) However, the words of thatstatutory provision show that it applies wherethe objects of the trust or institution remainthe same on paper, but the actual activities of “10. The argument is misconceived. Theregistration is granted by the Commissioner. Itcan be cancelled by the Commissioner underSection 12-AA(3) However, the words of thatstatutory provision show that it applies wherethe objects of the trust or institution remainthe same on paper, but the actual activities ofregistration is granted by the Commissioner. Itcan be cancelled by the Commissioner underSection 12-AA(3) However, the words of thatstatutory provision show that it applies wherethe objects of the trust or institution remainthe same on paper, but the actual activities of such trust or institution are contrary to thesaid objects or are fictitious or fraudulent ornot genuine or not within the scope of thoseobjects However, where the objects of thetrust or institution, which were the basis ofgrant of registration, are altered after suchgrant of registration, the very foundation ofthe registration having been removed by avoluntary act of the assessee, the registrationwould not survive. The immediate intimationrequired to be given by the assessee to theCommissioner of Income Tax is perhapsmerely to enable him to keep his(Commissioner's) records updated. If, for thesake of argument, it is assumed that theintimation is required to be given to enable theCommissioner to exercise the power ofcancellation, even then where the petitionershad failed to give such intimation, they cannotbe permitted, in the discretionary jurisdictionunder Article 226of the Constitution of India,to plead the defence that the Commissionerhas not cancelled the registration. Further, in asituation where the objects of the trust orinstitution have been altered wholesale afterthe grant of registration and intimation of thealteration has not been given to theCommissioner the order of the assessingauthority on the assumption that theregistration, which was granted on the basis ofa particular representation, held out by theassessee no longer survives or holds good,would not call for interference by this Court inexercise of its equitable and discretionaryjurisdiction To sum up, we are unable toexercise our discretion to enable the assesseeto continue to utilize and enjoy the registrationdespite the wholesale change in the objectswithout giving its immediate intimation to theCommissioner. 13. The appellate authority, where the appealof the petitioner against the assessment orderdated 26.12.2006 is pending, has not yetgranted an interim order. Prima facie, when aperson deliberately makes an alteration in theobjects or in the memorandum of association,it will be presumed that the alteration hasbeen made because some change is required.Alterations are not made for the fun of it. Thusthe petitioners will therefore be under a heavyburden to demonstrate similarity if they wish to press such a plea. We have no reason todoubt that if pressed, this aspect whether thealteration of the objects does or does not takethe activities of the petitioners nowpermissible under the new objects outside thescope of the original objects will be consideredby the appellate authority on the next datewhile considering whether the petitioners havea prima facie case for grant of an interimorder.” 6.6He further contended that taking into consideration thedepartment was right in cancelling the registration. 6.7Regarding depreciation, he has relied upon the decision ofthis court in ITA No.262/2017 and other connected appeals (CITvs. Mahima Shiksha Samiti) decided on 3.10.2017 wherein it hasbeen held as under:- “14. On depreciation he has relied upon thejudgment in Commissioner of Income Tax-II,Jodhpur vs. Krishi Upaj Mandi Samiti (2016)388 ITR 605 wherein it has been held asunder:- 6.6He further contended that taking into consideration thedepartment was right in cancelling the registration. 6.7Regarding depreciation, he has relied upon the decision ofthis court in ITA No.262/2017 and other connected appeals (CITvs. Mahima Shiksha Samiti) decided on 3.10.2017 wherein it hasbeen held as under:- “14. On depreciation he has relied upon thejudgment in Commissioner of Income Tax-II,Jodhpur vs. Krishi Upaj Mandi Samiti (2016)388 ITR 605 wherein it has been held asunder:- “4. The assessee is a charitable institutionregistered under Section 12-A of the Act of1961 and 100% capital expenditure wasavailed by it against the asset concerned i.e.a building. Section 32(1) of the Act of 1961provides for depreciation in respect ofbuilding, plant and machinery owned by theassessee and used for business purposes.Income of a charitable trust like the presentassessee derived from the depreciable headsis also liable to be computed on commercialbasis, however, while doing so it is to be keptin mind that ultimately assessee is acharitable institution and its income for taxpurposes is required to be determined bytaking into consideration provisions ofSection 11 of the Act of 1961 after extendingnormal depreciation and deductions from itsgross income. In computing the income of acharitable institution/trust depreciation of assets owned by such institution is anecessarydeductiononcommercialprinciples, hence, the amount of depreciationhas to be deducted to arrive at the incomeavailable. 5. In view of the discussions made above, wefind ourselves in agreement with the viewtaken by Bombay High Court in Director ofIncome Tax v. Framjee Cawasjee Institute(supra) and in CIT v. Institute of BankingPersonnel (supra). The substantial questionframed in the instant matter, thus, isanswered in the terms that the Income TaxAppellateTribunalrightlyalloweddepreciation claimed by the assessee oncapital assets for which capital expenditurewas already given in the year underconsideration.” 14.1 Decision of Punjab and Haryana HighCourt in Commisioner of Income Tax vs.Market Committee, Pipli (2011) 330 ITR 16wherein it has been held as under:- 7. The Karnataka High Court in Commissionerof Income Tax, Karnataka v. Society of theSistersofSt.Anne.MANU/KA/0045/1983MANU/KA/0045/1983 :[1984] 146 ITR 28 drawing support fromMadras High Court in Rao Bahadur CalavalaCunnan Chetty Charities (supra) had recordedthat if depreciation is not allowed as anecessary deduction for computing theincome of a charitable institution then thecorpus of the trust for deriving the incomecannot be preserved and that the amount ofdepreciation debited to the account of acharitable institution is to be deducted toarrive at the income available for applicationto charitable and religious purposes. Thisdecision was followed by Madhya PradeshHigh Court in CIT v. Raipur Pallottine SocietyMANU/MP/0335/1989MANU/MP/0335/1989 :[1989] 180 ITR 579. Similar view was takenby Gujarat High Court in CIT v. Seth ManilalRanchhoddasVishramBhawanTrustMANU/GJ/0026/1992MANU/GJ/0026/1992 :[1992] 198 ITR 598 by relying upon theaforesaid decisions. We are in respectfulagreement with the view taken by Madras,M.P., Karnataka, Gujarat and Bombay High Courts referred toabove. No contrary viewhas been brought to our notice. Courts referred toabove. No contrary viewhas been brought to our notice. 8. In all fairness to the learned Counsel forthe Revenue, reference is made to thejudgment of the Hon'ble Apex Court in EscortLimited's case (supra), on which reliance hasbeen placed by the learned Counsel for theRevenue. The Hon'ble Supreme Court in thatcase was dealing with a case relating to twodeductions both under Sections 10(2)(vi) and10(2)(xiv) of the 1922 Act or both underSections 32(1)(ii) and 35(1)(iv) of the Act.The assessee therein had incurredexpenditure of a capital nature on scientificresearch relating to the business whichresulted into acquisition of an asset. Theassessee had sought to claim a specifiedpercentage of the written down value of theasset as depreciation and at the same timeclaimed deduction, in five consecutive yearsof the expenditure incurred on the acquisitionof the asset. The apex Court observed: Wherea capital asset used for scientific researchrelated to the business of the assessee is alsoipso facto an asset used for the purpose ofthe business, it is impossible to conceive ofthe Legislature having envisaged a doublededuction in respect of the same expenditure,one by way of depreciation under Section 32of the Income Tax Act, 1961 and other by wayof allowance under Section 35(1) (iv) of apart of the capital expenditure on scientificresearch, even though the two heads ofdeduction do not completely overlap andthere is some difference in the rationale ofthe two deductions....It was further recordedthat: There is a fundamental, thoughunwritten, axiom that no Legislature couldhave at all intended a double deduction inregard to the same business outgoing; and, ifit is intended, it will be clearly expressed. Inother words, in the absence of clear statutoryindication to the contrary, the statute shouldnot be read so as to permit an assessee twodeductions.… 9. In the present case, the assessee is notclaiming double deduction on account ofdepreciation as has been suggested bylearned Counsel for the Revenue. The incomeof the assessee being exempt, the assessee isonly claiming that depreciation should be reduced from the income for determining thepercentage of funds which have to be appliedfor the purposes of the trust. There is nodouble deduction claimed by the assessee ascanvassed by the Revenue. Judgment of theHon'ble Supreme Court in Escorts Ltd. andAnr. (supra) is distinguishable for the abovereasons. It cannot be held that double benefitis given in allowing claim for depreciation forcomputing income for purposes of Section 11.The questions proposed have, thus, to beanswered against the revenue and in favourof the assessee. 14.2 Decision of Delhi High Court in Directorof Income Tax (Exemption) vs. IndraprasthaCancer Society (2015) 53 Taxman.com 463wherein it has been held as under:- reduced from the income for determining thepercentage of funds which have to be appliedfor the purposes of the trust. There is nodouble deduction claimed by the assessee ascanvassed by the Revenue. Judgment of theHon'ble Supreme Court in Escorts Ltd. andAnr. (supra) is distinguishable for the abovereasons. It cannot be held that double benefitis given in allowing claim for depreciation forcomputing income for purposes of Section 11.The questions proposed have, thus, to beanswered against the revenue and in favourof the assessee. 14.2 Decision of Delhi High Court in Directorof Income Tax (Exemption) vs. IndraprasthaCancer Society (2015) 53 Taxman.com 463wherein it has been held as under:- 10. The aforesaid paragraph refers to thedecision in the case of Vishwa Jagriti Mission(supra) but ratio was distinguished on theground that in the said case the Court wasconcerned with computation of income of acharitable trust/institution on commercialprinciples and if so whether depreciation onfixed assets used for charitable purposesshould be allowed as a deduction. Theconsensus of judicial opinion on the saidaspect was referred to. It is noticeable that inCharanjiv Charitable Trust (supra) it standsobserved that the Tribunal overlooked the factthat the cost of asset had been allowed as a"deduction" and thereafter depreciation wasbeing claimed. The said case, therefore,appears to be a peculiar one whereindeduction as expenditure and depreciationwas being claimed simultaneously, whilecomputing the taxable income under the head"profits and gains from business". The saiddecision dated 18th March, 2014 does notrefer to the decision in Indian TradePromotion Organisation (supra) which wasdecided on 27th November, 2013. Thejudgment in the case of Indian TradePromotion Organisation (supra) was not citedand referred to. The judgment in the case ofCharanjiv Charitable Trust (supra) is authoredby the same Judge, who has also authoredthe decision in the case of Vishwa JagritiMission (supra) . It is obvious that inCharanjiv Charitable Trust (supra) , theDivision Bench could not have taken a different view on the legal ratio as interpretedin Vishwa Jagriti Mission (supra) . Further, thedecisions in the case of Vishwa Jagriti Missionand Indian Trade Promotion Organisation(supra) being prior in point of time would actas binding precedents and could not havebeen overruled or dissented from by acoordinate Division Bench. 11. By Finance (No. 2) Act of 2014,subsection (6) to Section 11 stands insertedwith effect from 1st April, 2015 to the effectthat where any income is required to beapplied, accumulated or set apart forapplication, then for such purposes theincome shall be determined without anydeduction or allowance by way of depreciationor otherwise in respect of an asset, theacquisition of which has been claimed asapplication of income under this Section inthe same or any other previous year. Thelegal position, therefore, would undergo achange in terms of Section 11(6) , which hasbeen inserted and applicable with effect from1st April, 2015 and not to the assessmentyears in question. The newly enacted sub-section relates to application of income. 14.3 Decision of Punjab & Haryana High Courtin Commissioner of Income Tax vs.