Irregular tax exemptions given to cricket associations: CAG

Government auditor CAG today slammed the Income Tax Department for extending irregular exemptions to four cricket affiliates of BCCI, resulting in short-levy of tax of over Rs 37 crore.

The Comptroller and Auditor General (CAG) in its report tabled in Parliament said the I-T Department allowed irregular exemptions on income from TV rights given to four Cricket Associations engaged in commercial activity, which led to short levy of tax of Rs 37.23 crore.

"I-T Department allowed exemption in four... cases for income received from TV rights from BCCI in cases of Saurashtra Cricket Association, Baroda Cricket Association, Kerala Cricket Association and Maharashtra Cricket Association resulting in short levy of tax of Rs 37.23 crore," it said in a report tabled in Parliament.

The CAG said under Section 2 (15) of the Income Tax Act, a public utility activity cannot be treated as "charitable" if it involves carrying out of any activity in the nature of trade, commerce or business.

Referring to the Saurashtra Cricket Association case, CAG said the body has collected TV subsidy of about Rs 35 crore in three years, but spent only a small amount on promotion and development of sport, accumulating Rs 19.44 crore.

"This resulted in under-assessment of Rs 19.44 crore with short levy of tax of Rs 8.45 crore," it said.

Pointing out another instance, the official auditor said that the I-T Department allowed irregular exemptions to 30 Trusts involving tax effect of Rs 59.61 crore, where voluntary contributions received without specific directions were taken to corpus fund instead of treating as income.

"We observed that AOs (assessing officers) allowed treatment of voluntary contribution received without specific directions as income in corpus fund of the assessees in 30 cases. This resulted in non-levy of tax of Rs 59.61 crore," it said. 

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