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CBDT withdraws tax exemption of 4 cricket associations

CAG said under Section 2 (15) of Income-Tax Act, a public utility activity cannot be treated as ‘charitable’.

New Delhi |
January 10, 2014 4:31:47 am

After being pulled up by the Comptroller and Auditor General (CAG) for extending irregular exemptions to four cricket affiliates of the BCCI, the income tax department today withdrew exemptions granted to the regional cricket associations of Saurashtra, Baroda, Kerala and Maharashtra.
According to a statement issued by the finance ministry, the Central Board of Direct Taxes (CBDT) has found that the associations were engaged in commercial activities as per the amended provisions of the Income-Tax Act, 1961.
“Consequently, the scrutiny of assessments in these cases has resulted in the withdrawal of tax exemptions,” the board said.
The CBDT has also reopened past assessments of the four associations to examine the correctness of their claims for income-tax exemption during the periods concerned.
Last month, a report by CAG on charitable trusts and institutions tabled in Parliament, had found irregularities in exemptions given to the four cricket associations with regard to income received from television rights.
The CAG had pulled up the income tax department, pointing out that the income received by these associations from TV rights from the Board of Control for Cricket in India (BCCI) should not have been exempted by the department.
This led to a short levy of taxes to the tune of Rs 37.23 crore, the CAG had said. It had also slammed the department for allowing trusts to register without proper permanent account numbers (PAN) or trust deeds and not following a uniform procedure when it comes to providing exemptions.
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 any activity in the nature of trade, commerce or business.

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