Tuesday, August 2, 2011

Billion dollar IPL pays peanuts as tax

State cricket bodies may lose tax exemption
 
NEW DELHI: The Income Tax department has started examining income and expenditure accounts of cricket associations affiliated to the Board of Control for Cricket in India (BCCI) in seven metros of Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Bangalore and Ahmedabad.

This move is to ascertain if they are engaged in commercial activities. The surveys are a precursor to withdrawal of income tax exemption enjoyed by these sporting bodies, akin to what the department had done against BCCI in 2008.


The finance ministry had withdrawn I-T exemption to BCCI from the financial year 2007-08 after the apex cricket body had amended its rules and added new objectives in its memorandum that included setting up coaching academies and conducting IPL Twenty-20 tournaments.


The commercial ventures of BCCI had brought it a windfall income of more than Rs 1,000 crore annually, a part of which was shared by IPL teams and state cricket associations.


A senior I-T official said the surveys of state cricket associations were going on for the last two months and a decision to withdraw I-T exemption would be taken within this year. "None of them are engaged in charitable work. They are purely commercial in nature," he said.


Though the BCCI and the tax department is engaged in a legal battle with the case of withdrawal of I-T exemption still pending before a tax tribunal, the government is firm in its resolve to put all other affiliated state cricket associations at par with BCCI. The latter had so far refused to pay income tax arguing that it was a charitable organization and hence exempted from paying taxes.


In case of BCCI, the finance ministry had last year clarified that it had disallowed tax exemption after it found that the apex sports body was "no longer promoting cricket as a charitable activity and was now primarily a commercial entity". The Rs 1,000 crore income generated by BCCI included media rights of more than Rs 600 crore, surplus from tours, interest on bank deposits of over Rs 1,100 crore and income from other sources. Before the IPL Twenty-20 was launched, the total annual income of BCCI was less than Rs 700 crore.


In order to bring sporting bodies such as BCCI under the tax net, the I-T department had in 2008-09 issued a notification and clubbed everybody associated with the sports as professionals, same as those rendering technical services.


The notification had asked BCCI to ensure that "all sportsperson, Indian or foreign, besides coaches, trainers, umpires, referees, team physicians, physiotherapists, event managers, commentators, anchors and columnists must be levied TDS at 10%," and treated as any other professionals for tax purposes.


-TOI


BCCI, IPL dodged crores in taxes



NEW DELHI: The Indian Premier League may be billed as a $1 billion brand but the government got peanuts by way of taxes as the finances of both Board of Control for Cricket in India and various franchisees are obscured by puzzling revenue-income gaps and elaborate tax dodges.

BCCI filed returns to the income tax department showing "nil" income for 2008-09 and earnings of

Rs 14.86 crore for 2009-10. Yet, gross revenues earned by the cricket board from IPL for assessment year 2009-10 works out to be Rs 661 crore.

On tax dues not realized, the Central Board of Excise and Customs' evidence is telling. CBEC realized Rs 94.32 crore by way of service tax with Rs 91 lakh as interest from 2007-10. But as many as 102 showcause notices as on February 1, 2011, raising a demand for service tax of Rs 160 crore, yielded a mere Rs 5 crore.


Data provided by the revenue department to Parliament's standing committee on finance shows IPL franchises filed paltry sums as tax deducted at source for 2010-11. India Cements, owners of Chennai Super Kings, filed Rs 12.91 crore, Rajasthan Royal's Jaipur Cricket Pvt Ltd Rs 4.53 crore, Deccan Chargers

Rs 5.53 crore, King's XI Punjab's KPH Cricket Rs 4.25 crore, Kolkata Knight Riders Rs 5 crore, GMR's Delhi Daredevil's Rs 2.44 crore and Royal Challengers Rs 5.92 crore.

With teams being investigated for suspected hawala operations and round tripping, the committee, headed by former finance minister and BJP leader Yashwant Sinha, has asked for tax assessments for BCCI-IPL and its franchisees to be taken up on "priority" and finalized by the income tax department in coordination with investigating agencies like the Enforcement Directorate.


Not only did the committee conclude that investments in most franchisees were highly layered through intermediaries located in Mauritius, Bahamas and British Virgin Islands, it noted that the scope of official investigations had been broadened to "include strong possibilities of money having been moved illegally through the hawala channel".


In its report due to be presented to Parliament, the committee pointed to a sharp jump in losses after IPL Season 1, saying "loss of crores of rupees ranging from Rs 5 crore in case of Royal Challengers to more than Rs 87 crore in case of Deccan Chargers occurred during year 2009-10".


Similarly, teams such as "Mumbai Indians, Chennai Super Kings and Deccan Chargers, which incurred zero losses during the year 2008-09, have come out with a figure of hefty losses during the financial year of 2009-10".




-TOI

House panel doubts BCCI's 'trust' in Modi



NEW DELHI: Parliament's standing committee on finance has refused to buy Board of Control for Cricket in India's argument that it trusted sacked IPL whiz Lalit Modi over finances and contract, holding that it was hard to believe that BCCI could have been so naive.

In a report due to be presented to Parliament, the committee headed by former finance minister and BJP leader Yashwant Sinha held that neither BCCI nor the IPL governing council formally delegated any specific decision-making powers to Modi but still allowed him to take decisions.


BCCI admitted that it trusted Modi and was led up the garden path. But the committee was somewhat sceptical and noted, "It is difficult to believe that a body consisting of such experienced and knowledgeable people like IPL council and BCCI would be so naive as to fall in this trap."


The committee wondered how the Board failed to take note of irregularities despite the media being full of reports about Modi's excesses, and why the council chose to meekly endorse the flashy ex-IPL chief's actions.




As the Board failed to ensure Modi and various franchises abided by laws and regulations and given the "serious irregularities and offences reported to have been committed in the conduct of IPL", the committee said it would like investigative agencies to proceed against those guilty of abetting the wrongdoings.


BCCI could not absolve itself of its responsibilities and the explanation that Modi had a five-year tenure and so was not questioned did not convince the committee. Neither did its plea that it had not corrected the situation with the governing council terms valid for a year and needing renewal thereafter wash with the committee. 

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Those who have power to change things don't bother to;and those who bother don't have the power to do so .................but I think It is a very thin line that divides the two and I am walking on that.Well is pure human nature to think that "I am the best and my ideas unquestionable"...it is human EGO and sometimes it is very important for survival of the fittest and too much of it may attract trouble.Well here you decide where do I stand.I say what I feel.

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