IT dept slammed for not levying Rs 37 cr on 4 cricket associations

CAG says Saurashtra Cricket Association received TV subsidy of Rs 8.02 c, Rs 13.81 cr and Rs 13.34 cr from BCCI

The Comptroller & Auditor General (CAG) has pulled up the Income Tax Department (ITD) for irregular exemptions to four cricket associations engaged in commercial activities on their income from television rights, leaving the exchequer poorer by Rs 37.23 crore. “ITD allowed exemption for the income received from TV rights from the Board of Control for Cricket in India in the cases of Saurashtra Cricket Association, Baroda Cricket Association, Kerala Cricket Association and Maharashtra Cricket Association, resulting in soft levy of tax of Rs 37.23 crore,” CAG said in its Parliamentary report.

CAG specifically gave details of the Saurashtra Cricket Association. It said the association received TV subsidies of Rs 8.02 crore, Rs 13.81 crore and Rs 13.34 crore from the BCCI during the assessment years 2007-08, 2009-10 and 2010-11 respectively on organising various tournaments. Besides, the body had also generated advertisement sales income of Rs 1.12 crore during the one-day match on November 14, 2008 at Rajkot. However, only 1.5 per cent of gross receipts were spent for the promotion and development of sports, while it accumulated Rs 19.44 crore.

“This resulted in the under-assessment of Rs  19.44 crore with short levy of tax at Rs  8.45 crore,” the report said.  

The CAG observed that these exemptions were given, despite the IT Department in Ahmedabad not allowing exemption to the Gujarat Cricket Association in similar cases from the assessment year 2009-10.
 
Pointing out other instances, the official auditor said that the IT Department allowed irregular exemptions to 30 trusts, impacting tax to the tune of Rs  59.61 crore. These were instances of voluntary contributions, received without specific directions, by trusts and assessing officers concerned treated them as corpus funds and not as income.  

“We observed that assessing officers allowed treatment of voluntary contributions received without specific directions as income in corpus funds for the assessees in 30 cases. This resulted in non-levy of tax of Rs  59.61 crore,” it said.