Chennai, February 5, 2013- Income tax authorities have reopened old cases involving the Indian cricket Boardand slapped taxes totalling about Rs. 2,300 crore for seven years after terming all its activities as “commercial”, forcing the world’s richest cricket body against the wall.
Tax assessment cases under the scanner are from 2003-04 to 2009-10, and the Board of Control for Cricket in India (BCCI) has, over the years, even paid a portion of that amount, totalling about Rs. 1,000 crore during this period, under protest and has at the same time appealed to tax authorities.
The BCCI, which discussed this contentious issue at a working committee meeting here on Monday, has contended that it distributes about 70 per cent of its income – both from media rights as well as the Indian Premier League (IPL) – amongst its affiliated associations and players, said Board sources.
It has argued that only the amount that is left with it (30 per cent) should be taxed and not the entire income.
But tax authorities have considered almost all the income as commercial in nature, particularly after the launch of the lucrative IPL.
Also, BCCI has pointed out that it has unfairly being burdened with double taxation. Its affiliated state associations contend that they too have to pay tax on the share of money that they receive from the BCCI generated from television rights and the IPL.
Sources said on Monday that a committee has been constituted specifically to look into the matter and seek legal advice to wriggle out of the hole the BCCI finds itself in.
“The committee is being headed by BCCI treasurer Ajay Shirke, and it will try to find and suggest ways and means to settle these tax-related issues. The committee has been given two weeks’ time to give its report to the Board,” a source told Mail Today.
BCCI president N Srinivasan, who chaired the working committee meeting, had disclosed to Mail Today in July last year that the tax authorities had reopened old tax assessments, putting the Board in bother.
The government had granted BCCI tax exemption, under Section 11 of the Income Tax Act, on the ground that promoting cricket was a ‘charitable activity’ under Section 2 (15).
However, when the BCCI amended its objectives in 2006 -and apparently inadvertently forgot to inform the tax authorities -to contribute to athletes/other sports federations, like the National Sports Development Fund (NSDF), the government withdrew the facility from the day of the change, June 1, 2006.
Interestingly, the BCCI, which was then headed by Sharad Pawar, had contributed Rs. 50 crore to the NSDF. Now, the BCCI is questioning the sports ministry over the expenditure of that amount.
The source said that the tax authorities have told BCCI that since it signs all contracts, it has to pay the tax on all its income, which it has termed commercial in nature.
The tax authorities are particularly citing the commercial angle of the IPL , which is one of the biggest sources of income for the BCCI.
“Also, since the franchises pay a certain percentage of the money for buying players, that money is being taxed,” said the source.
“Mr Srinivasan explained all these issues at the meeting today. His presentation claimed that authorities have also taxed the amount that the BCCI had alleged that Jagmohan Dalmiya had misappropriated,” he claimed.
That money related to the 1996 World Cup, hosted by India, Pakistan and Sri Lanka. The BCCI has since withdrawn the case against Dalmiya, who was present at the meeting on Monday.
