I-T dept may spoil BCCI's IPL party

NEW DELHI: This may dampen the celebrations in the BCCI over the huge success of the Indian Premier League (IPL) Twenty20 cricket. Income-tax authorities are getting ready to invoke the recent changes in the law which would render it difficult for BCCI to avoid paying tax on the ground that it is a ���charitable organisation������ . The amendment to Section 2 (15) of the Income Tax (I-T ) Act seeks to forbid ���charitable organisations��� ��� like the cashrich cricket body from engaging in commercial activities through subsidiaries.

The change forms part of the Finance Act 2008 and the BCCI, with its coffers overflowing after the success of the IPL venture, clearly offers a tempting catch. The amended Section 2 (15) of the I-T Act makes it clear that a charitable organisation cannot avail of tax exemption if it pursues commercial activities .

The law lays down that the tax exemption benefit would not apply to organisations engaged in ���any activity in the nature of trade, commerce or business... for a cess or fee or any other consideration , irrespective of the nature of use or application or retention of income from such activity .������ I-T sources said BCCI does not fit the ���charitable��� ��� bill post-IPL .

���Any charitable institution that enjoyed tax exemption earlier but was engaged in commercial activities such as the recent IPL venture may now be taxed on income generated out of activities that are not of charitable nature,������ a senior official said spelling out the department���s stand.

Sources say that taxmen will soon contact all IPL franchisees for details of payments they have made to BCCI, along with players. The Mumbai zone of income-tax has got into action, and others are expected to follow suit. IPL chairman Lalit Modi couldn���t be reached for his reaction but a top official from BCCI dismissed the threat saying : ���BCCI is a non-profit making organisation. Whatever money is generated through television rights, international matches and IPL, will be distributed equally among the state associations.������

Its IPL venture is estimated to have fetched BCCI more than Rs 350 crore by way of auction proceeds, franchisee fees, and television and advertising rights.The tax department is trying to ascertain whether the IPL and the franchisees made a payment to BCCI and to the players respectively by deducting tax at source (TDS).