IT dept slaps Rs.2300 crore tax demand on BCCI

[b555]

IT dept slaps Rs.2300 crore tax demand on BCCI, Board looks for legal loopholes Income tax authorities have reopened old cases involving the Indian cricket Board and 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. "When I was Board treasurer (2005 to 2008), our returns were accepted and tax exemption [for BCCI being a society] was given till 2006. Subsequently, for some reason or the other, all these assessments have been reopened," Srinivasan had said. 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. Source : http://indiatoday.intoday.in/story/bcci-it-tax-income-tax-cricket-ipl/1/248917.html

[Lord]

[Clarke]

the fock, how much ???

[Marut]

So no "gifts" are going from BCCI to IT dept every year.

[gs]

Srinivasan must have pissed off someone at the IT board. A backhand deal involving lots of cash is probably on at the moment.

[Malcolm Merlyn]

Nothings going to happen.They are too powerful.They can probably whip up a fan frenzy againist the IT department for trying to destroy Indian Cricket and IT department will be running scared.

[G_B_]

The bcci will simply move to court This reminds me of the time when the government tried to tax Vodafone. We all know how that ended.

[ganeshran]

Why shouldnt the BCCI pay tax on its earnings from the IPL? The rest of its expenses can still be written off since it has the responsibility of ensuring development of cricket in the country, but surely the IPL is purely a for-profit operation.

[Cevno]

Government trying to reduce the already bloated deficit before budget and finance the Mega spending Food security bill before Elections. :giggle:

[Marut]

Srinivasan must have pissed off someone at the IT board. A backhand deal involving lots of cash is probably on at the moment.

Ditto!

[rkt.india]

Why shouldnt the BCCI pay tax on its earnings from the IPL? The rest of its expenses can still be written off since it has the responsibility of ensuring development of cricket in the country' date=' but surely the IPL is purely a for-profit operation.[/quote'] Are BCCI and IPL babus paid for their designations? Until, they are paid or getting benefits, I do not see it called for-profit operation. Even money from IPL is used for development of the game.

[Mariyam]

The bcci will simply move to court This reminds me of the time when the government tried to tax Vodafone. We all know how that ended.

That case was slightly different. The GoI claims that Vodafone hid their true profits and under reported profits. It is a case of Tax Avoidance. The verdict has a direct bearing on how the GoI has to deal with other multinationals like Kraft Foods and a few others who the GoI accuses of similar ploys. The case against the BCCI is not of avoidance per se. Its just that the BCCI is showing the profits under headers which are ( or at least were) non taxable. There was a statute, which said that BCCI works for the betterment of Cricket in India (ha!) and hence cannot be taxed. The following has been rescinded a couple of years ago. In fact, this tax that BCCI are supposed to pay up is for last 7-8 years. Don't exactly get the parallel that you are trying to draw.

[G_B_]

That case was slightly different. The GoI claims that Vodafone hid their true profits and under reported profits. It is a case of Tax Avoidance. The verdict has a direct bearing on how the GoI has to deal with other multinationals like Kraft Foods and a few others who the GoI accuses of similar ploys. The case against the BCCI is not of avoidance per se. Its just that the BCCI is showing the profits under headers which are ( or at least were) non taxable. There was a statute, which said that BCCI works for the betterment of Cricket in India (ha!) and hence cannot be taxed. The following has been rescinded a couple of years ago. In fact, this tax that BCCI are supposed to pay up is for last 7-8 years. Don't exactly get the parallel that you are trying to draw.

Its an issue of double taxation. You cant tax state units and the central BCCI committee profits. You do realize that the bulk of the bcci profits get passed onto the affiliate state associations. That IMO is the core issue. The BCCI should not be taxed. Its affiliates though should be taxed (and are) I point i am trying to make is that the BCCI will simply appoint good lawyers and defeat the government in court. Similar to what Vodafone did. Though even with Vodafone, double taxation was an issue. Plus lets all be honest, there is tremendous infrastructure building going on in Indian cricket. So many new grounds. Its the BCCI which provides a lot of the funds to the state associations.

[StriKe]

The bcci will simply move to court This reminds me of the time when the government tried to tax Vodafone. We all know how that ended.

Can you link me to some article about it ?

[yoda]

What's with our IT department coming back for taxes owned some 9 years ago? Seems like some babus didn't get their boxes of cash.

[veer]

2300 CR in taxes?? holy mother of god.....!! wonder what was revenue from all these years..

[gs]

What's with our IT department coming back for taxes owned some 9 years ago? Seems like some babus didn't get their boxes of cash.

Exactly!! WTF was the IT dept doing for 9 freakin years?!?!?

[Marut]

Exactly!! WTF was the IT dept doing for 9 freakin years?!?!?

IT does not bother as long as the officers are getting their due.:giggle: Kejriwal was first up against this sort of thing but not much has changed.