A ‘charity’ no longer, BCCI slapped with Rs684 crore tax demand

Amid the ongoing income-tax investigations into the Indian Premier League (IPL) and its franchisees, the revenue department has slapped a tax demand of Rs684 crore on the Board of Control for Cricket in India (BCCI), with tax authorities not in favour of granting exemptions sought by the board for the past two tax years.

Reports today said the tax department has asked BCCI to pay Rs118 crore for assessment year 2007-08, Rs421 crore for 2008-09 and Rs145 crore for 2009-10 under section 11 of the Income Tax Act. The demands were raised after the department recently withdrew tax exemptions to the cricket body, stating that it ''no longer promoted cricket as a charitable activity''.

Section 11 exempts charitable activities from taxation, and promotion of sports has historically been covered under this. But the benefit was withdrawn from the assessment year 2007-08 following changes made in the objectives of BCCI in 2007.

The changed objectives included establishing coaching academies and holding 20-over matches, now famous as the IPL, a hugely successful BCCI property that completed its third season this year.

When BCCI refused to pay tax as demanded, the Central Board of Direct Taxes (CBDT) instructed its field formation to adjust tax dues against the refund claims made by the cricket body. As a follow-up action, I-T authorities this year adjusted Rs92 crore from the BCCI's previous years' refunds.

On the issue of withdrawal of tax exemption, through a clarification issued earlier this year, the CBDT had said that it had disallowed exemption as it found that the BCCI was primarily engaged in commercial activities.