As per the Income Tax Appellate Tribunal (ITAT) ruling, the Board of Control for Cricket in India (BCCI) is entitled to income tax exemption by registering under Section 12A of the Income Tax Act as the object of the Board is to promote cricket.
The BCCI was registered as a charitable institution in 1996. In 2018, it filed an application for fresh registration for changes in its Memorandum of Association (MoA) effected based on the Justice Lodha committee recommendation. The Board amended the MoA to undertake Indian Premier League (IPL) and other commercial activities.
The Principal Commissioner rejected the application. It was held that the IPL tournaments are like commercial activities and aimed at generating revenue in the garb of promoting cricket.
Challenging this, the BCCI approached ITAT. The Mumbai bench of ITAT held that merely because the IPL tournament is structured in such a manner to make it more popular, resulting in more monetary gains, the primary objective of promoting cricket is not lost. Just because the IPL or other tournaments are more entertaining and mobilises greater financial resources, the fundamental aim of popularising cricket is not diluted.
Improvising the game rules, making it more economically attractive and adding entertainment to the game can be viewed as innovative ideas to promote the game.
The Board also argued that the income tax department was mistaken in fact and law denying its registration under Section 12AA of the Income Tax Act. Under Section 12 A, the trust has to inform the principal commissioner about any change in activities within 30 days. The income tax department referred to the IPL as a change in activity.
The tribunal, however, stated that if there is a lack of genuineness of activities or any other factors, it is open to the income tax authorities to cancel the registration, which is not in this case.
For any clarifications/feedback on the topic, please contact the writer at namita.shah@cleartax.in
I’m a chartered accountant and a functional CA writer by profession. Reading and travelling in free time enhances my creativity in work. I enjoy exploring my creative side, and so I keep myself engaged in learning new skills.
