Commercial greed may have cost BCCI tax sops

Last Updated 23 July 2010, 10:28 IST

'Let Us Share,' a book that offers the common man a peek into the investigative and decision making mechanisms of the department, however, does not name BCCI.
Instead, it narrates the story of 'ABC' and the its pact with a company for selling media rights.

"A media rights agreement between ABC (alluding to BCCI) and 'PQR' (a company) for coverage of its events which comprised TV rights, radio rights and broadband internet etc used the phrase 'exploit any and all commercial opportunities of any nature whatsoever'.

"Use of this phrase indicated that the very foundation of agreement was based on commercial exploitation and benefits," the I-T department said in the book, which would be released tomorrow by Finance Minister Pranab Mukherjee on the occasion of the Income Tax day.

Let Us Share was first published last year.

Top department officials confirmed that the pages do indeed talk about its probe in the financial dealings of the top cricketing body of the country.

"The [tax] exemption was disallowed for the year 2007-08 as it was held that the BCCI is no longer promoting cricket as a charitable activity and is now primarily a commercial entity," Minister of State for Finance S S Palanimanickam had informed Rajya Sabha earlier this year.

The department's assessment officer in Mumbai observed that "there was a complete commercialisation of cricket...amd under the philosophy 'acts indicate the intention' it was clear that the BCCI was not acting as a charitable organisation."

"The tax effect in this case (exemption to BCCI) was Rs 118.03 crore (2007-08). The assessing officer further noted that ABC generated a huge surplus through media rights and sponsorship and held that ABC was now primarily a commercial entity.

"The conduct of certain activities and receipt of income from these activities clearly showed that these activities were totally commercial and there was no element of charity in the conduct of ABC (BCCI)," the department said in its 277- page book which lends an insight into techniques and procedures used by I-T men to check tax evasion.

Indicating that BCCI resisted the idea of holding any cricket tournament without its affiliation such as the Indian Cricket League (ICL), the department said, "ABC's rules were very stringent and it imposed a blanket ban on unapproved tournaments, thus stifling the promotion of the game of cricket.

"The ABC exercised complete control over the revenue of tournaments and was not interested in the promotion of cricket. The ABC had not developed any infrastructure nor had it built any stadium or other amenities for promotion of the game," it said.

"ABC generated a huge surplus from media rights and sponsorship, only a small percentage of the surplus money was spent on promoting cricket, the balance being shared with players over and above the fees paid to them as per the terms of the agreement with them at a very high percentage of 26 per cent of gross receipts," the department said.

The department has called this initiative of taking the second edition of the book being taken to the public domain as similar to the philosophy that is being practiced under the Right to Information Act.

(Published 23 July 2010, 10:28 IST)

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