Maharashtra Cricket Association vs Income Tax Dept: ITAT Orders Fresh Review

Pune ITAT has set aside the exemption granted to the Maharashtra Cricket Association (MCA) under Sections 11 & 12 for AY 2010-11, and remanded the matter for fresh adjudication in light of the Supreme Court's AUDA judgment. 

Here is what exactly happened

MCA, a trust registered under Section 12A since 1991, had declared NIL income, claiming it had applied its income for charitable purposes. The AO, however, wasn't convinced. He denied exemption by citing the cancellation of MCA's 12A registration, and argued that their activities were commercial in nature post the amendment to Section 2(15). He taxed grants received from BCCI, interest income, and other receipts, assessing MCA's income at ₹25.66 crore.

The first appeal swung in MCA's favour. The CIT(A)/NFAC restored the exemption, treating BCCI grants as capital receipts and held that MCA was still registered under 12A, as restored by the ITAT. He accepted that income was applied for charitable purposes.

But the Revenue wasn't ready to walk back to the pavilion just yet. In its appeal, it highlighted that the CIT(A) failed to consider the landmark AUDA ruling. delivered by the Supreme Court in October 2022. In that judgment, the SC held that State Cricket Associations operate commercially-with large revenue streams from media and broadcast rights via BCCI, and that such receipts must be carefully scrutinized.

Interestingly, although the AUDA ruling predated the CIT(A)'s order by nearly a month, it was never referred to in the decision.

The ITAT noted that similar issues in MCA's own cases for AYs 2011-12 & 2012-13 were already sent back for re-evaluation.

So, for consistency and in light of the SC verdict, the Tribunal remanded the case back to CIT(A) with clear directions: reconsider the case afresh, factor in AUDA, and give both parties a fair chance to present their case.

Official copy of the judgment has been attached