Director Of Income Tax (Exemption v. Gujarat Cricket Association

C/TAXAP/268/2012 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 268 of 2012 With R/TAX APPEAL NO. 152 of 2019With R/TAX APPEAL NO. 317 of 2019With R/TAX APPEAL NO. 318 of 2019With R/TAX APPEAL NO. 319 of 2019With R/TAX APPEAL NO. 375 of 2019With R/TAX APPEAL NO. 358 of 2019With R/TAX APPEAL NO. 359 of 2019With R/TAX APPEAL NO. 360 of 2019With R/TAX APPEAL NO. 333 of 2019With R/TAX APPEAL NO. 334 of 2019With R/TAX APPEAL NO. 335 of 2019With R/TAX APPEAL NO. 336 of 2019With R/TAX APPEAL NO. 337 of 2019With R/TAX APPEAL NO. 338 of 2019With R/TAX APPEAL NO. 339 of 2019With R/TAX APPEAL NO. 340 of 2019With R/TAX APPEAL NO. 320 of 2019WithR/TAX APPEAL NO. 321 of 2019With R/TAX APPEAL NO. 374 of 2019WithR/TAX APPEAL NO. 675 of 2019With R/TAX APPEAL NO. 123 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/- andHONOURABLE MR.JUSTICE A.C. RAO Sd/- =============================================================== DIRECTOR OF INCOME TAX (EXEMPTION) Versus GUJARAT CRICKET ASSOCIATION =============================================================== Appearance: MR. M.R. BHATT, LD. SR. COUNSEL WITH MS MAUNA M BHATT, LD. COUNSEL for the Appellants in all the Tax Appeals. MR. J. P. SHAH, LD. SR. COUNSEL WITH MR.MANISH J SHAH, LD. COUNSEL for the Gujarat Cricket Association MR. S.N. SOPARKAR, LD. SR. COUNSEL WITH MR. B.S. SOPARKAR, LD. COUNSEL for the Baroda Cricket Association MR. TUSHAR HEMANI, LD. SR. COUNSEL WITH MS. VAIBHAVI PARIKH, LD. COUNSEL for the Saurashtra Cricket Association. =============================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALAand HONOURABLE MR.JUSTICE A.C. RAO Date : 27/09/2019 COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1.Since the issues raised in all the captioned tax appeals preferred at the instance of the Revenue are the same,those were heard analogously and are being disposed of by this common judgment and order. 2.In the tax appeals captioned above, the respondent-assessee are the three Cricket Associations, namely, (I) Gujarat Cricket Association (ii) Baroda Cricket Association and (iii) Saurashtra Cricket Association. 3.In the following tax appeals, the respondent-assessee is the Gujarat Cricket Association; “(i)Tax Appeal No.268 of 2012;(ii)Tax Appeal No.317 of 2019;(iii)Tax Appeal No.318 of 2019;(iv) Tax Appeal No.319 of 2019;(v) Tax Appeal No.375 of 2019;(vi) Tax Appeal No.333 of 2019;(vii) Tax Appeal No.334 of 2019;(ii)Tax Appeal No.317 of 2019;(iii)Tax Appeal No.318 of 2019;(iv) Tax Appeal No.319 of 2019;(v) Tax Appeal No.375 of 2019;(vi) Tax Appeal No.333 of 2019;(vii) Tax Appeal No.334 of 2019; (viii) Tax Appeal No.335 of 2019; (ix) Tax Appeal No.336 of 2019;(x) Tax Appeal No.337 of 2019;(xi) Tax Appeal No.338 of 2019;(xii) Tax Appeal No.339 of 2019;(x) Tax Appeal No.337 of 2019;(xi) Tax Appeal No.338 of 2019;(xii) Tax Appeal No.339 of 2019; (xiii) Tax Appeal No.340 of 2019;” 4.In the following tax appeals, the respondent-assessee is the Baroda Cricket Association. “(i)Tax Appeal No.320 of 2019 (ii)Tax Appeal No.321 of 2019 (iii)Tax Appeal No.374 of 2019 (iv)Tax Appeal No.675 of 2019 5.In the following tax appeals, the respondent-assessee is the Saurashtra Cricket Association; “(I)Tax Appeal No.152 of 2019; (I)Tax Appeal No.358 of 2019; (II)Tax Appeal No.359 of 2019; (III)Tax Appeal No.360 of 2019; (IV)Tax Appeal No.123 of 2014;” Tax Appeal No.268 of 2012 6.We propose to first take up the Tax Appeal No.268 of 2012. (xiii) Tax Appeal No.340 of 2019;” 4.In the following tax appeals, the respondent-assessee is the Baroda Cricket Association. “(i)Tax Appeal No.320 of 2019 (ii)Tax Appeal No.321 of 2019 (iii)Tax Appeal No.374 of 2019 (iv)Tax Appeal No.675 of 2019 5.In the following tax appeals, the respondent-assessee is the Saurashtra Cricket Association; “(I)Tax Appeal No.152 of 2019; (I)Tax Appeal No.358 of 2019; (II)Tax Appeal No.359 of 2019; (III)Tax Appeal No.360 of 2019; (IV)Tax Appeal No.123 of 2014;” Tax Appeal No.268 of 2012 6.We propose to first take up the Tax Appeal No.268 of 2012. 7.This tax appeal under Section 260A of the Income Tax Act, 1961 (for short “the Act, 1961”) is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, 'A' Bench, Ahmedabad in the ITA No.93/Ahd/2011 for the A.Y.2004-05. This tax appeal was admitted vide order passed by this Court dated 19[th] July, 2012 on the following substantial question of law; “Whether the Hon'ble ITAT has erred in not taking cognizance of the latest amendment in the nature of the proviso to section 2(15) of the I.T. Act inserted with effect from 01/04/2009?” 8.The facts giving rise to this tax appeal may be summarized as under; 8.1The assessee, namely, Gujarat Cricket Association (for short “the GCA”) is a society registered under the Societies Registration Act, 1860. The GCA came to be registered with the Registrar of Societies vide the Registration Certificate dated 10[th] July, 1984. Later, the GCA was notified under Section 10(23) of the Act, 1961 vide notification dated 30[th ]March, 1999 from A.Y. 1999-2000 to 2001-2002 by the Government of India, Ministry of Finance, Department of Revenue. 8.2In the absence of renewal of the notification under Section 10(23) of the Act, the GCA preferred an application for registration under Section 12AA of the Act, 1961. The registration under Section 12AA of the Act came to be granted by the DIT (Exemption), Ahmedabad vide its order dated 16[th ]April, 2003, i.e., from A.Y.2004-05 onwards. 8.3A show-cause notice dated 26[th] September, 2010 came to be issued upon the GCA under Section 12AA(3) of the Act, calling upon the GCA to show cause why the registration granted under Section 12AA of the Act should not be cancelled from 2004-05 onwards. 8.4The Commissioner, after hearing the assessee, cancelled the registration under Section 12AA for the period from A.Ys.2004-05 till the date of his order, i.e. 6[th] December, 2010 in exercise of his powers under Section 12AA(3) by invoking the Proviso to Section 2(15) of the Act, 1961 inserted by the Finance Act, 2010 with effect from 1[st] April, 2009. The Commissioner, while cancelling the registration of the assessee held that the activities of the trust were commercial in nature. The relevant observations in the order passed by the Director of Income Tax (Exemption), Ahmedabad are quoted herein below; “The legislature in its wisdom has introduced section 12AA of the I.T. Act, 1961 by the Finance Act No.2, 1996 w.e.f 1.4.1997 i.e. A.Y.1997-98 onwards which requires the Commissioner to be satisfied with the objects of the Trust and the genuineness of its activities. As a logical corollary of the provisions of Section 12AA of the Act, the Commissioner has to examine the objects of the Trust by their reference to the definition of “charitable purpose” along with the newly inserted proviso to charitable purpose in Section 2(15) of the Act w.e.f 1.4.2009. In fact there is a mutual, symbiotic relationship between the two provisions, namely section 2(15) and section 12AA of the I.T. Act, 1961. The definition of “charitable purpose” in section 2(15) of the Act is the engine which drives the machinery of the provisions of Section 12AA of the Act. Thus it is clear that even as per pre-amended section 2(15) of the I.T. Act, the GCA is not entitled for registration u/s 12A of the I.T. Act as per ratio of judgments of Hon. Courts as discussed above. When this is the position even as per pre-amended section 2(15) of the I.T. Act, there remains no case at all for continuation of registration u/s 12A after the amendment of section 2(15) by Finance Act 2008 as applicable from A.Y.2009-10 which, inter alia, clearly applicable to sports associations and is not applicable to educational institutions. In view of this, registration allowed to GCA u/s 12A of the I.T. Act stands withdrawn from A.Y.2004-05 onwards. The Ld. Counsel has further submitted that GCA has no contract with any party from which the funds are credited by BCCI coupled with the fact that GCA has no enforceable rights to receive any portion of TV rights which have been received by BCCI and the corpus donation received at the sweet will of BCCI may be in furtherance of the objects of that Institution namely BCCI. I am constrained to state that there is no merit in the argument of the Id. Counsel. It goes without saying that BCCI is a huge money spinning machine in the field of Cricket. It is following practice of giving some portion of its TV rights to certain Cricket Associations in the country including the GCA. BCCI also has commercial transactions like receipts of TV rights, IPL matches etc. This commercial chain further percolates down to the State Associations like GCA which shows the receipts of TV rights as corpus donations. This accounting procedure is incorrect as it is purely commercial receipt which falls within the ambit and scope of newly inserted proviso to section 2(15) of the I.T. Act w.e.f. 1/4/2009. It partakes the character of tax avoidance device clearly attracting the decision of Constitution Bench (5 Judges) of the Apex Court in McDowell and Co. Ltd. Vs. CTO (1985) 154 ITR 148 (SC) which fortifies the cancellation of registration of GCA. In this landmark case, their Lordships have held that tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning (Per Ranganath Misra at Pg.171 of the order). A critical analysis of Receipts and Expenditure of GCA shows that there Is huge generation of income of Rs.16,37,747.54,(-)Rs.70,50,486.28and(-) Rs.5,91,708.94 in F.Ys. 2006-07, 2007-08 and 2008-09 respectively after meeting out only a nominal expenditure on promotion of sports of Rs.67,76,530/-, Rs.15,16,311/and Rs.24,90,579/ in F.Y.2006-07, 2007-08 and 2008-09 respectively. There is capital expenditure of Rs.11,37,64,313/~,Rs.6,63,80,215.80and Rs.1,99,23,701/ in F.Y. 2006-07, 2007-08 and 2008-09 respectively. It is reiterated that this capital expenditure cannot be considered as charitable expenditure for promotion of sports as It is simply an act of business organization to enhance its Infrastructure and income earning apparatus. Thus the expenditure on promotion of sports as percentage .of total receipts has further declined further in F.Y.2008-09. If GCA was really a charitable organization, it should have acted as such and instead of earning huge income, it should have ensured as under: (a) There should have been no ticket for watching cricket matches so that more and more youth, students and common man are able to watch these matches. Instead there are costly tickets for general public for watching these important Cricket Matches and true to its character as an out and out commercial organisation. (b) GCA should have allowed the free use of its Cricket ground for conducting tournaments and also popularizing the game of Cricket in the state of Gujarat for the common man. (a) There should have been no ticket for watching cricket matches so that more and more youth, students and common man are able to watch these matches. Instead there are costly tickets for general public for watching these important Cricket Matches and true to its character as an out and out commercial organisation. (b) GCA should have allowed the free use of its Cricket ground for conducting tournaments and also popularizing the game of Cricket in the state of Gujarat for the common man. viii)It is further seen from the Auditor’s Report for F.Y. 2006-07 dated 20/8/07 (Page 2), 2007-08 dated 11/8/98 (Page 11) and 2008-09 dated 23/7/09 (Page 7) that TV rights received from BCCI are amounting to Rs.17,58,00,000/-,Rs.6,83,46,038/ and Rs.20,69,60,338/- respectively have been shown as CORPUS. The accounting practice followed by GCA by treating TV rights received from BCCI as corpus is incorrect. This is purely a commercial receipt which falls within the ambit and scope of aforesaid proviso to section 2(15) of the I.T. Act, 1961. From the above discussion, it is quite clear that there is huge generation of revenue of Rs.2,52,96,831/-, Rs.1,80,04,862/- and RS.3,98,07,027/- in F.Ys.2006-07, 2007-08 and 2008-09 respectively after meeting out small expenditure on promotion of Sports of Rs.67,76,530/-, Rs.15,16,311/- and Rs.24,90,796/- in F.Ys.2006-07, 2007-08 and 2008-09 respectively giving a percentage of expenditure on promotion of Sports at 26.78%, 8.42% and 6.25% for the aforesaid three financial years respectively. In other words, GCA is not spending much of the revenue generated for the promotion of Sports. This is a clear violation of the educative object of GCA as is seen from thesubmission of the Id. Counsel above. From the reasons mentioned above, it is quite manifestly and palpably evident that the entire character and focus of GCA has become totally commercial with the object of earning revenue and it is no more a charitable organization. As stated above, the facts and ratio of the decision of the Uttarakhand High Court in the case of Queens’ Educational Society (supra) call for withdrawal of registration allowed to GCA u/s 12AA of the I.T. Act, 1961 even with pre-amended section 2(15) of the I.T. Act, 1961. Furthermore, a fortiori, with the amendment u/s 2(15) of the I.T. Act, 1961 by the Finance Act, 2008 w.e.f. A.Y.2009~10, GCA has lost the status of charitable organisation. Its activities, proprio vigore, are being carried on commercial lines. GCA, though, was granted registration in principle by this Office Order dated 16/4/03, did not carry out any activity which has charitable object and also by invoking Doctrine of Just Cause in the light of the observations of Hon Supreme Court in 259 ITR, 1 (SC) (supra), I strongly conclude that the activities of GCA are not genuine charities and are being carried out with Pure commercial considerations bereft of any element of charity. Accordingly, the registration granted earlier vide this Office Order dated 16.4.2003 is cancelled w.e.f 16.4.2003 i.e. A.Y.2004-05 onwards.” 8.5The assessee, being dissatisfied with the order passed by the Director of Income Tax (Exemption), cancelling the registration, preferred an appeal before the Income Tax Appellate Tribunal, 'A' Bench, Ahmedabad. The ITAT allowed the appeal preferred by the GCA. While allowing the appeal, the ITAT observed as under; 8.5The assessee, being dissatisfied with the order passed by the Director of Income Tax (Exemption), cancelling the registration, preferred an appeal before the Income Tax Appellate Tribunal, 'A' Bench, Ahmedabad. The ITAT allowed the appeal preferred by the GCA. While allowing the appeal, the ITAT observed as under; “We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the tribunal decision cited by the Ld. A.R. In the present case, the registration of the assessee was cancelled by the DIT(E) on this basis that the main source of income of the assessee is derived form sponsorship, bank interest, annual subscription, incomefromICCmatches,incomefrom trophy/tournament matches, scrap sale, rental income and sale of tickets. It is observed by him that none of these sources of income has any nexus with the education of the cricketers. He also observed that in fact, the assessee has been engaged itself in transaction of commercial nature. He also observed that the assessee has been carrying its activities with a commercial motive. He has decided the issue on this basis that as per the amended provisions of Section 2(15) of the Income Tax Act, 1961. In the case of Vidarbha Cricket Association (supra) also, registration was cancelled u/s.12AA(3) of the Act on the basis of amended provisions of Section 2(15) of the Act and under these facts, the issue has been decided by the tribunal in favour of the assessee. The relevant para is para 7, 8 & 9 of the Tribunaldecision which are reproduced below: “7. In this view of the matter, we may now examine the reasons put forth by the Commissioner in this case to cancel registration already granted to the assessee under section 12A of the Act. In this direction, we have carefully perused the impugned order, wherein the Commissioner has primarily examined the application of revised definition of charitable purpose under section 2(15) as amended by the Finance Act, 2003 with effect from 1.4.2009. The ultimate conclusion of the Commissioner in paragraph 17 of the impugned order is pertinent, which is reproduced as under- "17. In view of the amended provisions of sec. 2(15), it Is seen that assessee’s activities can no longer be regarded as charitable activities. Especially the proviso to sec. 2(15) is violated by assessee and hence, it cannot be regarded as a charitable society engaged In charitable purposes. I have duly considered the nature of activities, the sources of income, the activities on which expenditure was made, surplus generated existence of profit motive, commercial exploitation of assets, fees and Charges collected, nature of other income and other activities and case law before coming to a final conclusion, the assessee Vidarbha Cricket Association cannot be held to be an organization meant for charitable purposes in view of the above findings. 18.In the result, the deemed registration benefit under section 12AA as claimed and enjoyed by the assessee is hereby withdrawn/cancelled from assessment year 2009-10 onwards. 8.On a perusal of the aforesaid, It is clearly established that as per the Commissioner, the activities of the assessee do not qualify to fall within the meaning of charitable purpose as per proviso to section 2(15) inserted with effect from 1.4.2009. Quite clearly, as we have observed earlier, such an objection cannot be the 18.In the result, the deemed registration benefit under section 12AA as claimed and enjoyed by the assessee is hereby withdrawn/cancelled from assessment year 2009-10 onwards. 8.On a perusal of the aforesaid, It is clearly established that as per the Commissioner, the activities of the assessee do not qualify to fall within the meaning of charitable purpose as per proviso to section 2(15) inserted with effect from 1.4.2009. Quite clearly, as we have observed earlier, such an objection cannot be the basis of invoke section 12AA(3) so as to cancel the registration already granted to the assessee under section 12A of the Act. In our considered opinion registration already granted to the assessee could not have been re-visited by the Commissioner on the basis of the reasoning aforesaid, since his power to cancel registration under section 12AA(3) was confined to the examination as to whether the activities of the assessee society/association are genuine or that the same are not being carried out in accordance with the stated objects. In the light of the discussion emerging form the order of the Commissioner in our considered opinion, action taken by the Commissioner does not fall within the parameters of section 12AA(3) of the Act and, therefore, the impugned order is bad in law. 9. At this stage, we may hasten to add that we are not commenting on the merits of the issue as to whether the activities of the assessee fall within the meaning of expression charitable purpose as per section 2(15) as amended with effect from 1.4.2009. The only point decided in the appeal is to the effect that it was not within the scope and ambit of section 12AA(3) for the Commissioner to have examined the applicability of the amended section 2(15) of the purposes of invoking his powers of cancellation provided in section 12AA(3) of the Act. At this stage, we may also state that the issues raised by the Commissioner in the impugned order are not beyond the powers of the revenue to examine, so however, the same can only be examined in the appropriate proceedings, such as assessment proceedings in the present case. Our decision is resting only on the foundation that the impugned order passed by the Commissioner is not permissible in view of the limited powers available to him under section 12AA(3) of the Act. However it would be open for the A.O. to consider the issues raised in the impugned order, if so advised, in the course of the relevant assessment proceedings." 5. Since the present case also, registration has been cancelled by DIT(E) on the basis of amended provisions of Section 2(15) of the Income tax Act,1961, we are of the considered opinion that the action taken by DIT(E) does not fall within the permissible limits of Section 12AA(3) of the Income tax Act, 1961 and therefore, the impugned order is bad in law. We also add that we are not commenting on the merits of the issue as to whether the activities of the assessee falls within the meaning of charitable purpose as per Section 2(15) of the Income tax Act, 1961 as amended and we are only deciding this aspect of matter that the order passed by the DIT(E) u/s 12AA(3) is bad in law. This issue raised by the DIT(E) is not permissible in view of the limited powers available to him U/s. 12AA(3) of the Income tax Act, 1961. However, it would be open for the A.O. to consider all the issues raised in the impugned order, if so advised, in the course of relevant assessment proceedings 6. In view of our discussion in the above para, we set aside the order of DIT(E) u/s. 12AA(3) of the Income Tax Act, 1961 and restore the registration granted to the assessee u/s.12A of the Income tax Act, 1961.” 8.6The Revenue, being dissatisfied with the order passed by the ITAT has come up with the present appeal. -Submissions on behalf of the Revenue: 6. In view of our discussion in the above para, we set aside the order of DIT(E) u/s. 12AA(3) of the Income Tax Act, 1961 and restore the registration granted to the assessee u/s.12A of the Income tax Act, 1961.” 8.6The Revenue, being dissatisfied with the order passed by the ITAT has come up with the present appeal. -Submissions on behalf of the Revenue: 9.Mr. M.R. Bhatt, the learned senior counsel appearing for the Revenue vehemently submitted that the ITAT committed a serious error in disturbing the order passed by the Director of Income Tax (Exemption), cancelling the registration of the GCA under Section 12AA of the Act. According to Mr. Bhatt, in view of the amendment under Section 2(15) of the Act, the DIT (Exemption) was justified in taking the view that the activities of the GCA cannot be termed as charitable and such activities were commercial in nature with the element of earning profit from the income of sale of tickets, income from the ICC, income from hosting the international cricket matches etc. Mr. Bhatt would submit that the DIT (Exemption) was justified in taking the view that though the BCCI confirmed the payment to the assessee as grant of subsidy, the same was not in the nature of grant. Mr. Bhatt would submit that most of the advertisements through TV telecasting are received by the BCCI, it being the apex body,thus the so-called subsidy given by the BCCI is nothing but some sort of sharing of the advertisement income on account of holding of international test matches and one-day international matches, due to which, the BCCI has amassed huge advertisement income. Mr. Bhatt would submit that the nature of receipt, even though called subsidy by the assessee, was necessarily in the nature of income received by the activity of the assessee. 10.Referring to Section 12AA(3) read with Section 2(15) of the Act, 1961, Mr. Bhatt submitted that even if the activities were carried on in accordance with the arrangement with the other party,the activities, being not charitable, it was hit by Section 12AA(3) of the Act, 1961. Reading genuineness into the activities of the trust and considering the objects of the trust, Mr. Bhatt submitted that the term “genuineness” has been used only to find out whether the institution was charitable or not. Once the institution was held as not for charitable purpose, Section 12AA registration came to be rightly cancelled by the DIT (Exemption). 11.In such circumstances, referred to above, Mr. Bhatt prays that there being merit in this appeal, the same be allowed and the substantial question of law be answered in favour of the Revenue and against the assessee. Submissions on behalf of the respondent-assessee: 12.On the other hand, this appeal has been vehemently opposed by Mr. J.P. Shah, the learned senior counsel appearing for the GCA. Mr. Shah would submit that no error, not to speak of any error of law, could be said to have been committed by the ITAT in quashing and setting aside the order passed by the DIT (Exemption). Mr. Shah would submit that since the inception of the GCA and the date of grant of the registration under the Act, the objects of the Association have remained the same and have not undergone any change to question its genuineness. Mr. Shah would submit that the view of the DIT (Exemption) that the assessee could not be said to be carrying on the charitable activity as per Section 2(15) of the Act is erroneous in law. Mr. Shah would submit that in any event all that the Section 12AA(3) of the Act prescribes for cancellation is the genuineness of the activities of the trust or that the activities are not carried on in accordance with the objects of the trust. 13.Mr. Shah took us through the various objects of the Association and pointed out to the clear distinct words used in Section12AA(1) and 12AA(3) of the Act as well as the first Proviso to Section 2(15) of the Act. Mr. Shah submitted that the grant of registration originally as early as in 2003 clearly indicates the satisfaction of the authorities that the assessee is a public charitable trust under Section 12AA of the Act. Mr. Shah would submit, referring to Section12AA(3) of the Act, that the cancellation of registration granted is permissible in law only under the following circumstances; (I)On the Commissioner recording his satisfaction that the activities of the trust are not genuine or are not being carried out in accordance with the objects of the trust or institution,; thus unless and until the show cause notice issued contained the grounds and materials as prescribed under Section 12AA(3) of the Act, the question of cancellation of registration, per se, does not arise. 14.Mr. Shah, thereafter, took us through the Circular No.11 of 2008 issued by the Central Board of Direct Taxes dated 19[th ]December, 2008. The circular was issued in the wake of the insertion of the Proviso to Section 2(15) of the Act, 1961. Mr. Shah would submit that from the reading of the circular, it is evident that the question of rejection of registration under Section 12AA(3) of the Act would arise only in those cases where an entity uses this status of charitable institution with a charitable object of general public utility as a mask or a device to hide the true purpose and that object is nothing other then trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Mr. Shah would submit that in the case on hand, the Revenue has not been able to substantiate with any cogent material to indicate the absence of the genuineness of the activities. Mr. Shah would submit that the erroneous misconception in the mind of the Revenue is that by conduct of matches, the GCA could be said to have exhibited a sense of business or commercial character. In such circumstances, referred to above, Mr. Shah prays that there being no merit in this appeal, the same be dismissed and the substantial question of law, on which, this tax appeal has been admitted, may be answered in favour of the assessee and against the Revenue. 15. Mr. Shah in support of his submissions, has placed strong reliance on a decision of the Madras High Court in the case of Tamil Nadu Cricket Association vs. Director of Income Tax (Exemptions) & Ors., (2014) 360 ITR 633 (Mad.). 16.Mr. Bhatt, the learned senior counsel appearing for the Revenue, in rejoinder, brought to the notice of this Court that the decision of the Madras High Court in the case of Tamil Nadu Cricket Association (supra), on which strong reliance is sought to be placed on behalf of the assessee, has been challenged by the Revenue before the Supreme Court . The Supreme Court is yet to hear the appeal preferred by the Revenue. ANALYSIS 17.Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the ITAT committed any error in passing the impugned order. Income Tax (Exemptions) & Ors., (2014) 360 ITR 633 (Mad.). 16.Mr. Bhatt, the learned senior counsel appearing for the Revenue, in rejoinder, brought to the notice of this Court that the decision of the Madras High Court in the case of Tamil Nadu Cricket Association (supra), on which strong reliance is sought to be placed on behalf of the assessee, has been challenged by the Revenue before the Supreme Court . The Supreme Court is yet to hear the appeal preferred by the Revenue. ANALYSIS 17.Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the ITAT committed any error in passing the impugned order. 18.Section 12AAof the Act prescribes the procedure for registration. As per this, on receipt of the application for registration, the Commissioner is to call for such documents or information from the trust or institution in order to satisfy himself about the genuineness of the activities of the trust or institution. The Section further empowers the Commissioner to make such enquiry as he deems necessary in this regard. Once the Commissioner is satisfied or convinced about the objects of the trust or institution and the genuineness of the activities of the trust, he has to pass an order in writing registering the trust or institution; if he is not so satisfied, he has to pass an order in writing refusing to register the trust or institution. 19.Section 12AA(3)of the Act inserted with effect from 01.10.2004 under the Finance (No.2) Act, 2004 and the amendment inserted by Finance Act, 2010, with effect from 01.06.2010 therein empowering the Commissioner to cancel the registration granted under the stated circumstances, reads as under:- “Provision inserted under Finance Act, 2004: Section 12AA(3):- Where a trust or an institution has been granted registration under clause (b) of sub-section (1) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution. Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.“ 20.After the amendment in the year 2010, Section 12AA(3)of the Income Tax Act reads as follows: "Section 12AA(3):- Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section12Aas it stood before its amendment by the Finance(No.2) Act, 1996 (33 of 1996) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard." 21.Thus in contrast to Section 12AA(1)(b)of the Income Tax Act, 1961, where the grant of registration requires the Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard." 21.Thus in contrast to Section 12AA(1)(b)of the Income Tax Act, 1961, where the grant of registration requires the satisfaction about the objects of the trust as well as the genuineness of the activities, for the cancellation of the registration under Section 12AA(3), all that it is insisted upon is the satisfaction as to whether the activities of the trust or institution are genuine or not and whether the activities are being carried on in accordance with the objects of the trust. Thus, even if the trust is a genuine one i.e., the objects are genuine, if the activities are not genuine and the same not being carried on in accordance with the objects of the trust, this will offer a good ground for cancellation. Thus, in every case, the grant of registration as well as the cancellation of registration rests on the satisfaction of the Commissioner on findings given on the parameters given in Sections 12AA(1)and12AA(3)of the Act, as the case may be. 22.The registration of the trust under the Act, confers certain benefits from taxation under the provisions of the Act. The conditions under which the income of the trust would be exempted under the provisions of the Act are clearly laid down underSection 11as well as in Section 12 of the Act. Section 11of the Act specifically points out the circumstances under which the income of the trust is not to be included in the total income of the previous year of the person. So too, Section 12of the Act on the income derived from the property held for the charitable or religious purposes. 23.Thus, when the assessee is in receipt of income from the activities, which fits in with Sections 11and 12of the Act as well as from the sources which do not fall strictly with the objects of the trust, would not go for cancellation of registration under Section 12AAof the Act on the sole ground that the assessee is in receipt of income which does not qualify for exemption straight away by itself. All that ultimately would arise in such cases is the question of considering whether Section 11of the Act would at all apply to exempt these income from liability. These are matters of assessment and has nothing to do with the genuineness of the activity or the activities not in conformity with the objects of the trust. As rightly pointed out by learned Senior counsel appearing for the assessee, as is evident from the reading of Circular No.11 of 2008 dated 19.12.2008, the object of the insertion of the first proviso to Section 2(15)of the Act was only to curtail the institution, which under the garb of 'general public utility', carry on business or commercial activity only to escape the liability under the Act thereby gain unmerited exemption under Section 11of the Act. 24.The sum and substance of the submissions canvassed by Mr. J.P. Shah, the learned senior counsel appearing for the assessee, may be summed up thus; (I)The Gujarat Cricket Association is an affiliated member of the BCCI which controls and regulates all the cricket activities in India. (ii)The only source of income for the Gujarat Cricket Association is the receipt of some amount from the BCCI on account of the tournament subsidy. (iii)The Gujarat Cricket Association is a non-profit organization and applies its surplus for the promotion of the game of cricket, and that its objects prohibit the distribution of any surplus amongst its members. (iv)All the members of the Executive Committee hold honorary position in the Gujarat Cricket Association. (v)The Gujarat Cricket Association has produced a number of excellent cricketers of international repute and the same was achieved by nurturing the talent irrespective of the cast, creed, status, religion etc. It also provides support to one another facet of the game of cricket, i.e. umpiring. (ii)The only source of income for the Gujarat Cricket Association is the receipt of some amount from the BCCI on account of the tournament subsidy. (iii)The Gujarat Cricket Association is a non-profit organization and applies its surplus for the promotion of the game of cricket, and that its objects prohibit the distribution of any surplus amongst its members. (iv)All the members of the Executive Committee hold honorary position in the Gujarat Cricket Association. (v)The Gujarat Cricket Association has produced a number of excellent cricketers of international repute and the same was achieved by nurturing the talent irrespective of the cast, creed, status, religion etc. It also provides support to one another facet of the game of cricket, i.e. umpiring. (vi)The Gujarat Cricket Association has a self-sustaining model and promotes cricket in the State of Gujarat without any support, aid, grant or subsidy from any Government. (vii)The Gujarat Cricket Association has constructed a world class infrastructure facility by modernizing the entire Motera Stadium at Ahmedabad. (viii) The Gujarat Cricket Association provides medical aid to its players, remuneration to Coaches, Physiotherapists, Doctors etc. (ix) It organizes various programmes to encourage the game of cricket. (x)On the ground booking charges, it was submitted that only in the special cases, it has charged exclusively for the purpose of playing cricket matches. (xi)The Ranji Trophy and other matches are open to public viewing and no tickets are sold. (xii)On the international matches, charge is levied, but the same would be a nominal charge as it would be impossible to manage the affairs if the viewing is free of cost. 26.On income from the advertisement etc., it was submitted that the assessee has to maintain the stadium for the whole year and whereas, the international matches are played only once or twice in a year or may be in two years, the cost of maintenance of the stadium is as high as compared to the charges for transfer of interstate rights. 27.All the funds are used for building up infrastructure for promotion of cricket and for the purpose of development of players and for the promotion of the game and no funds are being utilized for personal purpose of any of the members of the Association. 28.The activities of the Association are not carried out on commercial basis. 29.The Registration could not have been cancelled on an erroneous ground that the activities of the assessee are commercial in nature. For invoking Section 12AA read with Section 2(15) of the Act, the Revenue has to show that the activities are not in accordance with the objects of the Association. 30.For achieving its main charitable object, if an institution carries on some commercial activity and there is profit, it cannot be considered to be a business activity, with profit motive, so long as, the profit earned is utilized for the purpose of achieving the main charitable object. 31.The sum and substance of the submissions canvassed on behalf of the Revenue may be summed up thus; (i)It is only logical to hold that the activities of the assessee are no longer falling within the definition of charitable purposes after the amendment of Section 2(15) of the Act w.e.f 1[st] January, 2019. (ii)The assessee, in the name of general public utility, is engaged in business. (iii)Once the activities ceases to qualify as charitable, the same cannot be said to be genuine for the purpose of charity. (iv)Instead of promoting and developing the game of cricket, the assessee could be said to be promoting and developing the game of cricket as an entertainment and the tickets of the international matches are highly priced. The assessee, in such circumstances, could be said to have shifted the activities of the general public utility to commercial activity for generating revenue. (i)It is only logical to hold that the activities of the assessee are no longer falling within the definition of charitable purposes after the amendment of Section 2(15) of the Act w.e.f 1[st] January, 2019. (ii)The assessee, in the name of general public utility, is engaged in business. (iii)Once the activities ceases to qualify as charitable, the same cannot be said to be genuine for the purpose of charity. (iv)Instead of promoting and developing the game of cricket, the assessee could be said to be promoting and developing the game of cricket as an entertainment and the tickets of the international matches are highly priced. The assessee, in such circumstances, could be said to have shifted the activities of the general public utility to commercial activity for generating revenue. 32.We have gone through the entire judgment of the Madras High Court in the case of Tamil Nadu Cricket Association (supra). We are convinced with the line of reasoning assigned by the Madras High Court and the view taken on the subject. It is true that the decision of the Madras High Court has been challenged before the Supreme Court. The Supreme Court has yet to look into the issue and consider whether the view taken by the Madras High Court is the correct proposition of law or not?. However, as on date, the view taken by the Madras High Court on the subject holds the field. We may quote the relevant observations made by the High Court of Madras. “Going by the objects , we find that the trust falls under the head of "any other object of general public utility" and hence falls within the meaning of charitable purpose underSection 2(15)of the Act. Section 2(15)of the Act defines "charitable purpose" as it originally stood at the time of grant of registration as under:- " 'charitable purpose' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility." 23.Section 2(15)was amended underFinance Act,2008, with effect form 1.4.2009 by substituting the following provision which reads s under: "2. Definitions. .... (15) "charitable purpose" includes relief of the poor, education, medical relief, preservation of environment (including waterheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility. Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the 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 the income from such activity;) 24. Section 2(15)as it stood prior to 1983 defined 'charitable purpose' to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. The phrase "not involving the carrying on of any activity for profit" was omitted from the Section by the Finance Act1983, with effect from 01.04.1984, consequent on the amendment to Section 11, where under profits and gains of business in the case of charitable or religious trust and institutions would not be entitled to exemption under that Section, except in cases where the business fulfilled the conditions under Section 11(4). The Section was once again amended by substitution in the year 2008 under 24. Section 2(15)as it stood prior to 1983 defined 'charitable purpose' to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. The phrase "not involving the carrying on of any activity for profit" was omitted from the Section by the Finance Act1983, with effect from 01.04.1984, consequent on the amendment to Section 11, where under profits and gains of business in the case of charitable or religious trust and institutions would not be entitled to exemption under that Section, except in cases where the business fulfilled the conditions under Section 11(4). The Section was once again amended