Income Tax Department very lenient on BCCI - Standing Committee Report to Parliament
THE Standing Committee on Finance headed by former FM, Yashwant Sinha, in its latest report to Parliament on evasion of Income Tax, Service Tax and FEMA violations, has remarked, "The Committee are thus constrained to conclude that the Income Tax Department has been very lenient on BCCI, allowing them to enrich their coffers at the expense of the exchequer. The Committee would therefore like this matter to be thoroughly probed and an action taken report furnished to the Committee within one month of the presentation of this Report. In the meantime, the Committee desire that all the pending tax assessments in respect of BCCI should be finalized on the strength of the Department's decision to withdraw exemption originally granted to BCCI."
The Committee further observed,
It is a matter of surprise that when the crass commercialization of cricket was visible to the entire world, the Income Tax Department chose to ignore it. When they finally woke up from their slumber and decided to withdraw the tax exemption, it was on a mere ‘technical' ground of promoting other sports.
It is thus quite evident that the Income Tax Department has been rather inconsistent in bringing BCCI into the taxability net. The inordinate delay and gross inaction in finalizing assessments cannot but reinforce the Committee's desire seeking a thorough probe into the whole gamut of this issue, bringing out clearly the culpability of the tax officials concerned with granting exemptions and finalizing assessments in this case.
The Committee gather that for the IPL tournament, the BCCI have filed returns to the Income tax Department showing ‘nil' income for the year 2008-09 and an income of Rs. 14.86 crore for the year 2009-10, whereas their gross revenue earned from IPL during the assessment year 2009-10, as furnished by the Department of Revenue, works out to an amount of Rs. 661.78 crore. The revenue figures for 2010-11 have not been made available to the Committee. On the other hand, the IPL franchisees have returned huge losses for the assessment years 2008-09 and 2009-10. Most of them have returned losses for the year 2010-11 as well. In this regard the Committee have been informed that the CBDT has constituted a committee comprising of the concerned Chief Commissioners of Income Tax to ensure that uniform view is taken by the assessing officers on different aspects of assessment of IPL revenues. The Committee would expect that the income tax assessments relating to BCCI-IPL as well as the franchisees and other entities connected with IPL for all the relevant assessment years are taken up on priority and finalized in a coordinated manner after taking necessary inputs from the investigating agencies as well. The Committee should be apprised of the assessments thus made and the quantum of taxes realized therefrom.
Service Tax:
The Committee find that the Central Board of Excise and Customs (CBEC) have realized an amount of Rs. 94.32 crore by way of service tax together with interest of Rs. 91.63 lakh from IPL during the period 2007 to 2010. Further, as the BCCI-IPL were liable to pay service tax on franchisee fees, Business Consultancy Services, sale of space for advertisement, game right etc. a total of 102 show cause notices (as on 1 February, 2011) demanding service tax of Rs. 160.28 crore have been issued to them, out of which only Rs. 5 crore has been paid. The Committee are not able to understand why such a paltry sum of Rs. 5 crore has been deposited against the demand of Rs. 160.28 crore in view of the fact that this service tax would have been realized by BCCI from the concerned agencies such as franchisees, vendors and media etc. The Committee desire that the adjudication of the service tax demands should be made expeditiously and they be apprised of the quantum of tax realized therefrom as well as the amount of interest and penalty levied thereupon.
(From the 38 th Report of the Standing Committee on Finance of the 15th Lok Sabha)