Cricket bodies run on business lines, not for education: Supreme Court | Cricket News – Times of India
NEW DELHI: Holding that cricket associations are run on business lines, the Supreme Court said that the activities of sports bodies, including the Board of Control for Cricket in India (BCCI), cannot fall within the meaning of ‘education’ to claim tax exemption as they spend insignificant amounts of money on coaching camps or academies.
After analysing the account books of Gujarat Cricket Association and Saurashtra Cricket Association, a bench of Chief Justice U U Lalit and Justices S Ravindra Bhat and P S Narasimha also said that administrative bodies may not come within the ambit of ‘general public utility’ (GPU) to get tax exemption.
The bench said the high court and the Income Tax Appellate Tribunal (ITAT) have erred in coming to the conclusion that the associations are involved in charitable activities and the funds given by BCCI is some sort of a subsidy. The issue of income tax exemptions for sports bodies was part of the order related to GPUs, which also dealt with professional bodies such as the Institute of Chartered Accountants of India, trade agencies as well as state housing and industrial corporations.
“On a close scrutiny of the expenses borne, having regard to the nature of receipts, the expenditure incurred by cricket associations does not disclose that any significant proportion is expended towards sustained or organised coaching camps or academies. Therefore, in the opinion of this court, the ITAT fell into error in not considering the nature of receipts flowing from the BCCI into the corpus of GCA and SCA — as well as other associations,” the bench said.
The associations submitted that the sport of cricket is a form of education, and they operate purely to promote the sport and they should not be considered as pursuing activities in furtherance of trade, commerce or business.
The court, however, said that the term ‘education’ used in Section 2(15) of IT Act means formal schooling and turned down the plea saying, “there is no doubt that the claim of the present sport associations will not fall within ‘education’”.
“It is quite evident that the activities of the cricket associations are run on business lines. The associations own physical and other infrastructure, maintain them, have arrangements for permanent manpower ,” the court said.
Referring to the auction of media rights to broadcast cricket by BCCI and passing on proceeds of sale to state associations which are entitled to 70% of the revenue, the bench said this forms part of the arrangement by which the consideration flowing from such commercial rights has been agreed to be shared amongst all members of the BCCI and these rights are apparently commercial.
“In the light of these, the court is of the opinion that the ITAT, as well as the high courts, fell into error in accepting at face value the submission that the amounts made over by BCCI to the cricket associations were in the nature of infrastructure subsidy. In each case, and for every year, the tax authorities are under an obligation to carefully examine and see the pattern of receipts and expenditure,” it said.
“Whilst doing so, the nature of rights conveyed by the BCCI to the successful bidders, in other words, the content of broadcast rights as well as the arrangement with respect to state associations (either in the form of master documents, resolutions or individual agreements with state associations) have to be examined,” the bench said, added that its observations are not to be treated as final and the parties’ contentions in this regard are to be considered on their merit.
After analysing the account books of Gujarat Cricket Association and Saurashtra Cricket Association, a bench of Chief Justice U U Lalit and Justices S Ravindra Bhat and P S Narasimha also said that administrative bodies may not come within the ambit of ‘general public utility’ (GPU) to get tax exemption.
The bench said the high court and the Income Tax Appellate Tribunal (ITAT) have erred in coming to the conclusion that the associations are involved in charitable activities and the funds given by BCCI is some sort of a subsidy. The issue of income tax exemptions for sports bodies was part of the order related to GPUs, which also dealt with professional bodies such as the Institute of Chartered Accountants of India, trade agencies as well as state housing and industrial corporations.
“On a close scrutiny of the expenses borne, having regard to the nature of receipts, the expenditure incurred by cricket associations does not disclose that any significant proportion is expended towards sustained or organised coaching camps or academies. Therefore, in the opinion of this court, the ITAT fell into error in not considering the nature of receipts flowing from the BCCI into the corpus of GCA and SCA — as well as other associations,” the bench said.
The associations submitted that the sport of cricket is a form of education, and they operate purely to promote the sport and they should not be considered as pursuing activities in furtherance of trade, commerce or business.
The court, however, said that the term ‘education’ used in Section 2(15) of IT Act means formal schooling and turned down the plea saying, “there is no doubt that the claim of the present sport associations will not fall within ‘education’”.
“It is quite evident that the activities of the cricket associations are run on business lines. The associations own physical and other infrastructure, maintain them, have arrangements for permanent manpower ,” the court said.
Referring to the auction of media rights to broadcast cricket by BCCI and passing on proceeds of sale to state associations which are entitled to 70% of the revenue, the bench said this forms part of the arrangement by which the consideration flowing from such commercial rights has been agreed to be shared amongst all members of the BCCI and these rights are apparently commercial.
“In the light of these, the court is of the opinion that the ITAT, as well as the high courts, fell into error in accepting at face value the submission that the amounts made over by BCCI to the cricket associations were in the nature of infrastructure subsidy. In each case, and for every year, the tax authorities are under an obligation to carefully examine and see the pattern of receipts and expenditure,” it said.
“Whilst doing so, the nature of rights conveyed by the BCCI to the successful bidders, in other words, the content of broadcast rights as well as the arrangement with respect to state associations (either in the form of master documents, resolutions or individual agreements with state associations) have to be examined,” the bench said, added that its observations are not to be treated as final and the parties’ contentions in this regard are to be considered on their merit.
For all the latest Sports News Click Here
For the latest news and updates, follow us on Google News.
Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
