Ita/32/2018 Of The Commissioner Of Income Tax (Exemptions) v. M/S.kerala Cricket Association

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. FRIDAY, THE 26 DAY OF JULY 2024 / 4TH SRAVANA, 1946 ITA NO. 182 OF 2019 AGAINST THE ORDER DATED 08.02.2018 IN ITA NO.428/COCH/2016 OFINCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH(ASST.YEAR 2012-13) APPELLANT/RESPONDENT/REVENUE: THE COMMISSIONER OF INCOME -TAX (EXEMPTIONS)KOCHI BY ADVS.SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTSRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENTSRI.JOSE JOSEPHSRI.P.K.RAVINDRANATHA MENON (SR.)(R-348) RESPONDENT/APPELLANT/REVENUE: M/S.KERALA CRICKET ASSOCIATIONKCA COMPLEX, SASTHANKOVIL ROAD, THYCAUD P.O., TRIVANDRUMBY ADVS.SRI.SUNIL NAIR PALAKKATSRI.K.N.ABHILASH THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON26.07.2024, ALONG WITH ITA.NO.32/2018 AND ITA NO.215/2019, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA No.182-2019ITA No.32-2018&ITA No.215-2019 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. FRIDAY, THE 26 DAY OF JULY 2024 / 4TH SRAVANA, 1946 ITA NO. 32 OF 2018 AGAINST THE ORDER DATED 18.12.2017 IN ITA NO.78/COCH/2015 &C.O. 08/COCH/2015 OF INCOME TAX APPELLATE TRIBUNAL,COCHINBENCH(ASST.YEAR 2010-11) APPELLANT/APPELLANT/RESPONDENT/REVENUE: THE COMMISSIONER OF INCOME TAX (EXEMPTIONS)KOCHI. BY ADVS.SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPSRI.JOSE JOSEPHSRI.P.K.RAVINDRANATHA MENON (SR.)(R-348) RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: M/S.KERALA CRICKET ASSOCIATIONKCA COMPLEX, SASTHANKOVIL ROAD,THYCAUD P.O., TRIVANDRUM. BY ADVS.SRI.K.N.ABHILASHSRI.SUNIL NAIR PALAKKAT THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON26.07.2024, ALONG WITH ITA.182/2019 AND CONNECTED CASES, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA No.182-2019ITA No.32-2018&ITA No.215-2019 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. FRIDAY, THE 26 DAY OF JULY 2024 / 4TH SRAVANA, 1946 ITA NO. 215 OF 2019 AGAINST THE ORDER DATED 08.02.2018 IN ITA NO.429/COCH/2016 OF INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH(ASST.YEAR 2013-14) APPELLANT/RESPONDENT/REVENUE: THE COMMISSIONER OF INCOME TAX (EXEMPTIONS)KOCHI. BY ADVS.SRI.KMV.PANDALAISRI.CHRISTOPHER ABRAHAMSRI.JOSE JOSEPHSRI.P.K.RAVINDRANATHA MENON (SR.)(R-348) RESPONDENT/APPELLANT/ASSESSEE: KERALA CRICKET ASSOCIATIONKCA COMPLEX, SASTHAMKOVIL ROAD, THYCAUD P.O., THIRUVANANTHAPURAM. BY ADVS.SRI.K.N.ABHILASHSRI.SUNIL NAIR PALAKKAT THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON26.07.2024, ALONG WITH ITA.182/2019 AND CONNECTED CASES, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA No.182-2019ITA No.32-2018&ITA No.215-2019 JUDGMENT Dr. A.K.Jayasankaran Nambiar, J. ITA NO. 215 OF 2019 AGAINST THE ORDER DATED 08.02.2018 IN ITA NO.429/COCH/2016 OF INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH(ASST.YEAR 2013-14) APPELLANT/RESPONDENT/REVENUE: THE COMMISSIONER OF INCOME TAX (EXEMPTIONS)KOCHI. BY ADVS.SRI.KMV.PANDALAISRI.CHRISTOPHER ABRAHAMSRI.JOSE JOSEPHSRI.P.K.RAVINDRANATHA MENON (SR.)(R-348) RESPONDENT/APPELLANT/ASSESSEE: KERALA CRICKET ASSOCIATIONKCA COMPLEX, SASTHAMKOVIL ROAD, THYCAUD P.O., THIRUVANANTHAPURAM. BY ADVS.SRI.K.N.ABHILASHSRI.SUNIL NAIR PALAKKAT THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON26.07.2024, ALONG WITH ITA.182/2019 AND CONNECTED CASES, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA No.182-2019ITA No.32-2018&ITA No.215-2019 JUDGMENT Dr. A.K.Jayasankaran Nambiar, J. In all these IT. Appeals preferred by the revenue, the challenge isto the finding of the Income Tax Appellate Tribunal, Cochin Bench, onthe issue as to whether the income received by the Kerala CricketAssociation during the assessment years 2010-11, 2012-13, and 2013-14 would partakeof the nature of exempted income going by theprovisions of Section 2(15) of the Income Tax Act (for short 'the IT Act).It would appear that in the assessment for the assessment year 2010-11, the assessing authority found that the income earned by theassessee Cricket Association would be hit by the proviso to Section2(15), and therefore, the assessee Cricket Association would not beentitled to the benefit of the exemption. In the appeals preferred by theassessee Cricket Association before the First Appellate Authority, theFirst Appellate Authority found that the proviso to Section 2(15) of theIT Act could not apply to deny the benefit of exemption to the assessee.This view of the First Appellate Authority was sustained by theAppellate Tribunal in the appeal carried by the revenue. ITA No.182-2019ITA No.32-2018&ITA No.215-2019 2. For the assessment years 2012-13 and 2013-14, which are thesubject matters of ITA.No.182 of 2019 and ITA.No.215 of 2019respectively, while the assessing authority had granted the benefit ofexemption to the assessee Cricket Association, the revenue hadinitiated suo motu revision proceedings, which culminated in an orderof the Commissioner of Income Tax denying the benefit of exemption tothe assessee Cricket Association for those years. 3. In further appeals carried by the assessee before the Tribunal,the Tribunal followed its own earlier order for the assessment year2010-11 and allowed the appeal and the claim for exemption preferredby the assessee Cricket Association. 4. Although in these appeals substantial questions of law havebeen raised by the revenue with regard to the correctness of thefindings of the Appellate Tribunal recognising the entitlement forexemption under Section 2(15) of the IT Act read with Section 12AA ofthe IT Act, the learned Standing counsel for the revenue Sri. JoseJoseph brings to our notice the judgment of the Supreme Court inAssistant Commissioner of Income Tax (Exemptions) v. ITA No.182-2019ITA No.32-2018&ITA No.215-2019 Ahmedabad Urban Development Authority[(2023) 4 SCC 561] =[(2022) 449 ITR 1], wherein, with specific reference to incomesearned by State Cricket Associations, the Supreme Court observes asfollows at paragraph 237 and 238: 4. Although in these appeals substantial questions of law havebeen raised by the revenue with regard to the correctness of thefindings of the Appellate Tribunal recognising the entitlement forexemption under Section 2(15) of the IT Act read with Section 12AA ofthe IT Act, the learned Standing counsel for the revenue Sri. JoseJoseph brings to our notice the judgment of the Supreme Court inAssistant Commissioner of Income Tax (Exemptions) v. ITA No.182-2019ITA No.32-2018&ITA No.215-2019 Ahmedabad Urban Development Authority[(2023) 4 SCC 561] =[(2022) 449 ITR 1], wherein, with specific reference to incomesearned by State Cricket Associations, the Supreme Court observes asfollows at paragraph 237 and 238: “237. Recent trends have shown that media rights,especially broadcasting and digital media rights haveyielded colossal revenues to the BCCI. The modeladopted in the last 10 years or so has been to auctionmedia rights in respect of events over a 3 or 5-year period.As discussed previously, these media rights are eventsover a 3 or 5-year period. As discussed previously, thesemedia rights are not per se owned by BCCI, which is butan association of persons or agglomerate of all the StateCricket Association. The stadia which form the venue forthese cricket matches (in relation to which media rightsare transferred or licensed) are owned by the StateCricket Associations. According to the BCCI itself, theState Associations can well bargain and enter intoarrangements for the sale of such media rights. However,to obtain better terms, and gain bargaining leverage acentralized form of sale of such rights has been agreedand adopted by which the BCCI auctions these rights onbehalf of the State Associations. All State Associations puttogether are entitled to 70% of the revenue - i.e., theproceeds of sale of the media rights. This may or may notbe in proportion to the events hosted by each or some ofthe cricket associations. Yet, this forms part of thearrangement by which the consideration flowing fromsuch commercial rights has been agreed to be sharedamongst all members of the BCCI. These rights areapparently commercial. 238. In the light of these, the Court is of the opinionthat the ITAT – as well as the High Court fell into error inaccepting at face value the submission that the amountsmade over by BCCI to the cricket associations were in the ITA No.182-2019ITA No.32-2018&ITA No.215-2019 nature of infrastructure subsidy. In each case, and forevery year, the tax authorities are under an obligation tocarefully examine and see the pattern of receipts andexpenditure. Whilst doing so, the nature of rightsconveyed by the BCCI to the successful bidders, in otherwords, the content of broadcast rights as well as thearrangement with respect to state associations (either inthe form of master documents, resolutions or individualagreements with state associations) have to be examined.It goes without saying that there need not be an exactcorrelation or a proportionate division between the receiptand the actual expenditure. This is in line with theprinciple that what is an adequate consideration forsomething which is agreed upon by parties is a matterbest left to them. These observations are not however, tobe treated as final; the parties' contentions in this regardare to be considered on their merit.” 5. In the light of the aforesaid observations of the Supreme Court,we are of the view that the present appeals need to be remanded to theAppellate Tribunal for a fresh adjudication on the facts, especially withregard to whether or not the amount made over to the assesseeCricketAssociation by the Board for Control of Cricket in India (BCCI) were inthe nature of infrastructure subsidy or business income. We, therefore,set aside the impugned orders of the Income Tax Appellate Tribunal andremand the matter to the Tribunal for a fresh determination of the issuein the light of the observations of the Supreme Court in AhmedabadUrban Development Authority (supra).The Income Tax AppellateTribunal shall consider the matter afresh as above and pass final orders ITA No.182-2019ITA No.32-2018&ITA No.215-2019 in the appeal within an outer time limit of six months from the date ofreceipt of a copy of this judgment. We make it clear that all contentionsraised by either side in the appeals before the Tribunal, are left open tobe considered by the Tribunal at the time of hearing of the appeals. Sd/- DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/- SYAM KUMAR V.M. JUDGE mns ITA No.182-2019ITA No.32-2018 &ITA No.215-2019 APPENDIX OF ITA NO.182/2019 PETITIONER ANNEXURES ANNEXURE -A TRUE COPY OF THE ORDER OF THE ASSESSINGOFFICER U/S 143(3) DATED 30.12.2014 ANNEXURE -B TRUE COPY OF THE ORDER OF THE COMMISSIONEROF INCOME TAX (EXEMPTIONS) U/S 263 O THE ITACT DATED 22.07.2016 ANNEXURE -C COPY OF THE ORDER OF THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH IN ITA 428AND 429/COCHI/2016 DATED 08-02-2018 ANNEXURE A1 A COPY OF THE PAPER BOOK PREPARED BY THECOUNSEL OF THE RESPONDENT ITA No.182-2019ITA No.32-2018 & ITA No.215-2019 APPENDIX OF ITA 32/2018 PETITIONER ANNEXURES Annexure A TRUE COPY OF THE ORDER OF THE ASSESSINGOFFICER U/S.143(3) DATED 26/3/2013 Annexure B TRUE COPY OF THE ORDER OF THE COMMISSIONEROF INCOME TAX (APPEALS) DATED 24/2/2014 Annexure C COPY OF THE ORDER OF THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH IN ITA 78/COCH/2015 DATED 18/12/2017 ANNEXURE A1 A COPY OF THE PAPER BOOK PREPARED BY THECOUNSEL OF THE RESPONDENT ITA No.182-2019ITA No.32-2018 &ITA No.215-2019 APPENDIX OF ITA 215/2019 PETITIONER ANNEXURES ANNEXURE A TRUE COPY OF THE ORDER OF THE ASSESSINGOFFICER U/S. 143(3) DATED 18.03.2015. ANNEXURE B TRUE COPY OF THE ORDER OF THE COMMISSIONEROF INCOME TAX (EXCEPTIONS) U/S 263 OF THEIT ACT DATED 22.07.2016. ANNEXURE C COPY OF THE ORDER OF THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH IN ITA 428AND 429/COCH/2016 DATED 08.02.2018.