The BCCI may have to pay a heavy price following the current controversy over investments in IPL franchises. Senior officials in the Income-Tax department in Mumbai said that ongoing developments in the IPL have reinforced their stand that that the BCCI has become more of a commercial organisation while promoting cricket is only incidental to its scheme of things.
Even as sources said that Thursday’s inquiry into IPL finances was more the outcome of a spat between minister of state for external affairs Shashi Tharoor and IPL chief Lalit Modi, it would lead to them developing a strong case for denying tax exemption to the BCCI.
The BCCI has already appealed against the department’s December order taxing its income of Rs 274.86 crore for the period 2006-07. This translated into a tax of Rs 120 crore plus penalty. “In the past, exemptions were granted on the grounds that promoting cricket was a charitable activity. This is not the case now and the IPL has proved it once again,” an I-T official said.
Sources said the I-T department recently adjusted Rs 90 crore owed to the BCCI as refunds towards its dues. “The BCCI’s appeal is before the I-T commissioner for appeals. The source of funds in some of the IPL franchises are not clear. The funds for IPL Kochi have come from Dubai. The question is not about just tax evasion, but we need to go into the source of funds too. The conduct of the IPL clearly shows that it’s a purely business venture with scant respect for the sport of cricket,” an I-T official said. “Acts indicate the intention.”
The exemption for the BCCI from being taxed was there till 2006-2007 and was withdrawn after the cricket body amended its Memorandum and Rules twice. The added objectives included establishing coaching academies and holding 20-over matches. “The characteristics of volume, frequency and regularity of the activities accompanied by profit motive on the part of the assessee have been held to indicate an intention to continue the activity as business,” the department had said while denying exemption to the BCCI.
“We had maintained that the money generated is shared between the BCCI and players and not spent on creating infrastructure. The investigations will certainly throw up some financial details that will prove our stand,” the official said.
Courtesy: Times of India