No element of Charity - IT Dept.

The Board of Control for Cricket in India (BCCI) has become totally commercial and all its activities are being carried on commercial lines. Cricket is only incidental to its scheme of things. It is more into prize money for every run or wicket, which is nothing short of a gimmick.’ 

No, this isn’t an ungrammatical anti-BCCI tirade from a rival cricket organisation. It is, rather, what the income-tax department has to say about the BCCI in its assessment order dated December 30 last year while disallowing tax exemptions for the organisation. The exemptions were earlier being granted on the grounds that promoting cricket was a “charitable” activity.

While BCCI’s secretary N Srinivasan told that he had nothing to say on the issue, some BCCI officials said they were considering going in appeal against the order. They, though, didn’t seem too worried over the matter.

The BCCI’s net income for 2006-2007 was Rs 274.86 crore. The I-T assessment order means that the cricket body will have to pay Rs 120 crore as tax plus the yet-to-be-quantified penalty amount.

The exemption from being taxed was there till 2006-2007 and was withdrawn after the BCCI amended its Memorandum and Rules twice (the last being on August 21, 2007). The added objectives included establishing coaching academies and holding twenty-over matches. I-T norms stipulate that the changed objectives should be brought to its notice; this, say I-T officials, was not done by BCCI.

The order says: “The conduct of certain activities and receipt of income from these activities clearly show that these activities are totally commercial and there is no element of charity in the conduct of BCCI.” It is evident that major income arises not from the game of cricket but from the business of cricket, the orderstates, adding: “The characteristics of volume, frequency, continuity 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 order was issued by additional director of exemption (I-T), Rita Kumari Dokania.

The I-T order also says that BCCI’s rules are very stringent and that it imposes a blanket ban on unapproved tournaments, stifling the promotion of the game. “The BCCI is exercising complete control over the revenue of tournaments and is not interested in the promotion of cricket,” the order says.

The money recovered by way of media rights and sponsorship is not only to meet the expenses of organising tournaments but are bound to create a huge surplus. And the surplus generated by the BCCI is shared with players instead of being used for promoting the game, the order says, adding that only 8 per cent is spent on promotion of sports.

The BCCI has not developed any infrastructure nor has it built or constructed any stadium or other amenities. Referring to the IPL, a BCCI wing that organises the hugely popular T-20 tournament, the assessment order says: “Acts indicate the intention.”