CAG bowls Indian Cricket

By Vijay Kumar

The humiliation in the world Cup, though recaptured a little with the win against BanglaDesh is not really wiped off for Indian Cricket. Now the CAG is after them. In his report to Parliament yesterday, the CAG has bowled the worst possible bouncers against Indian Cricket and two of its finest batsmen, Sunil Gavaskar and Sachin Tendulkar. The CAG also found fault with the Dalmia’s Cricket Association of Bengal and Pawar’s BCCI.

Highlights from the CAG report.

In West Bengal, DIT (Exemption), Kolkata charge, assessment of Cricket Association of Bengal (CAB), for the assessment years 1979-80 to 1983-84 was completed after scrutiny in July 2002. (Assessee had not filed income tax returns for any of these years.) Assessments for these years under section 144 underwent several revisions. Audit scrutiny of assessment records pertaining to the assessment years 1979-80 to 1980-81 and 1982-83 to 1983-84 revealed that the assessee was not notified under section 10 (23) for these years.

Further, exemption under section 11 was also not available for these years as the same was effective from September 24, 1984 only. However, audit noticed that the assessee had claimed and was allowed exemptions under section 11(1) and 11(2).

In West Bengal, DIT (Exemption), Kolkata charge, assessment of Cricket Association of Bengal (CAB), for the assessment years 1991-92 to 1993-94 was completed after scrutiny in March 2000. Scrutiny of assessment records pertaining to the assessment years 1991-92 to 1993-94 revealed that neither was 75 per cent of the income applied for the purpose of games or sports, nor was the assessing officer informed of the same as required under section 11 (2). Further, utilization of unspent income (as required under section 11[2]) within 10 years i.e. up to assessment years 2001-02, 2002-03 and 2003-04 could also not be established as the department had not maintained the register, as prescribed by the Board’s instruction No. 1559 dated 23 April 1984, in order to check the accumulation of income and its proper utilization.

In Maharashtra, DIT (Exemption), Mumbai charge, assessments of the Board of Control for Cricket in India (BCCI), for the assessment years 2002-03 and 2004-05 were completed in summary manner in December 2002 and August 2005 respectively. Assessee had claimed exemption under section 11. Audit scrutiny revealed that out of accumulations of Rs. 87.26 crore as created pertaining to the assessment years 2002-03 and 2004-05, assessee had invested only Rs. 30.43 crore during the two years. Thus, funds accumulated during assessment years 2002-03 and 2004-05 by the assessee were not commensurate with the accretion to the investments in the Balance Sheet. As a result, there was shortfall, in the investments made, amounting to Rs. 56.83 crore. As such, assessee was not eligible for claiming exemption to the extent of shortfall in investments made under section 11. Omission had resulted in under assessment of income by Rs. 28.32 crore in the assessment year 2002-03 and by Rs. 28.51 crore in the assessment year 2004-05 with total tax effect of Rs. 20.09 crore including interest.

In Andhra Pradesh charge, it was noticed that Sports Authority of Andhra Pradesh (SAAP), Government of Andhra Pradesh, disbursed Rs. 3.62 crore to sports personalities as awards/ incentives during the period from April 2001 to March 2006. However, tax was not deducted at source from the amounts disbursed. Tax not deducted together with interest and penalty thereon was to the extent of Rs. 2.61 crore.

In Maharashtra, DIT (E) Mumbai charge, assessments of the Board of Control for Cricket in India (BCCI) for the assessment years 1999-2000 and 2000- 01 were completed after scrutiny in March 2002 and March 2003 respectively, and for assessment years 2002-03 and 2004-05 in summary manner in December 2002 and August 2005 respectively. Audit noticed that

++ Interest income amounting to Rs. 4.05 crore pertaining to the assessment years 1999-2000 and 2000-01 was credited to various funds without treating the same as income. Similar interest income was held as taxable by the assessing officer in respect of the same assessee in scrutiny assessment for assessment year 2001-02 completed in March 2004 and for assessment year 2003-04 completed in March 2006. The omission resulted in short levy of tax of Rs. 1.90 crore.

++ Assessee, while making payments to players/umpires during the assessment years 1999-2000, 2000-01, 2002-03 and 2004-05, had deducted certain amounts and credited these to the Benevolent Fund without treating the same as income. Similar deductions from the payments made to players/umpires were held as taxable by the assessing officer in respect of the same assessee in scrutiny assessment for assessment year 2001-02 completed in March 2004 and for assessment year 2003-04 completed in March 2006. The omission resulted in short levy of tax of Rs. 27.86 lakh.

Audit on Sachin Tendulkar revealed that aggregate deduction of Rs. 8.89 crore was allowed on foreign remittance received by him on account of sport endorsement i.e. advertisements and publicity activities as detailed below:

Irregular exemption under section 80 RR

As the income was not derived from the profession of sportsman, allowance of deduction was not in order. Department's argument that the assessee had derived it in the capacity of artist was not acceptable, as the assessee had received this income in the capacity of a model which cannot be construed as an artist for purpose of this section. It was further observed that during scrutiny assessment in March 2006 for assessment year 2003-04, deduction under section 80RR was not allowed by the assessing officer on similar grounds. Thus, incorrect allowance of deduction under section 80RR for the assessment years 1998-99 to 2002-03 and 2004-05 amounting to Rs. 8.87 crore resulted in short levy of tax of Rs. 3.62 crore.

Irregular exemption under section 80 RR – Sunil Gavaskar