Section 10(23 ) l Games and Sports Bodies
Circular No. 398 was issued by the Central Board of Direct Taxes on 17 October 1984. Its subject is Section 10(23 ) l Games and Sports Bodies.
This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.
Holds that the three conditions in section 10(23) are cumulative. That clause exempts the income of an association or institution established in India whose object is the control, supervision, regulation or encouragement in India of cricket, hockey, football, tennis or other games or sports notified by the Central Government. The conditions are that it applies its income, or accumulates it for application, solely to the objects for which it is established; that no part of its income is distributed to its members except as grants to an affiliated association or institution; and that it is for the time being approved for the purpose by the Central Government by general or special order. The Board says approval satisfies only the third condition; the first two must be satisfied as well, and this is to be established by filing copies of audited accounts before the Income-tax Officer. An updated list of notified games and sports is enclosed.
The question was whether approval by the Central Government was by itself enough for exemption, and the Board settled that it is not.
SECTION 10(23 ) l GAMES AND SPORTS BODIES
124. Conditions specified under clause (23) whether cumulative conditions and all of them have to be satisfied before approved association or institution is granted exemption
Section 10(23) provides for the grant of exemption from tax to any income of an association or institution established in India having as its object the control, supervision, regulation or encouragement in India of the games of cricket, hockey, football, tennis or such other games or sports as the Central Government may specify in this behalf from time to time by notification in the Official Gazette.
The exemption is subject to the fulfilment of three conditions as under :
(i) the association or institution applies its income, or accumulates it for application, solely to the objects for which it is established;
(ii) no part of the income of the association or institution is distributed in any manner to its members except as grants to any association or institution affiliated to it; and
(iii) the association or institution is, for the time being, approved for the purpose of this clause by the Central Government by general or special order.
The updated list of the games and sports notified under section 10(23 ) is enclosed [here printed at Sl. No. 126, p. 1.240].
2. The three conditions enumerated in the preceding paragraph are cumulative. Therefore, approval of the association or institution by the Central Government will amount to fulfilment of only one of the three conditions. The first two conditions will also have to be satisfied in order that the approved association or institution is eligible for exemption from tax under section 10(23). This requirement will have to be satisfied by filing copies of audited accounts before the Income-tax Officer.
Circular : No. 398 [F. No. 190/23/82-IT(A-I)], dated 17-10-1984.
In the assessment of a sports association where exemption is questioned despite Central Government approval, and when audited accounts are called for.
Source: the Income Tax Department’s own published text — its page for this instrument.
