BCCI gets a massive relief from Bombay High Court a day before Champions Trophy 2025
Published - 18 Feb 2025, 04:47 PM | Updated - 18 Feb 2025, 11:36 PM
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The Board of Control for Cricket in India (BCCI) has received a huge amount of relief from the Bombay High Court regarding the tax exemption case from the Income Tax Department. The department had earlier questioned the board's tax exemption status.
The Income Tax Department had earlier made a big claim that the BCCI failed to inform the authorities about the amendments to its Memorandum of Association in 2006 and 2007 resulted in the loss of the tax exemption.
Huge relief for BCCI from Bombay High Court
The Board was earlier granted tax exemption as a charitable organization for the promotion of sports in the country. However, the Income Tax Department claimed that the amendments facilitated commercial activities related to the IPL, which violated the board's fundamentals.
The Minister of State for Finance Pankaj Chaudhary made the remarks in 2023 while replying to a question about whether the board is enjoying the tax exemption in the name of promoting cricket despite being the richest cricket body in the world with an estimated turnover of INR 5300 crore.
"BCCI is claiming exemption under Section 11 of the Income Tax Act, 1961. However, during assessment proceedings, the exemption is being disallowed by the Income Tax department. The matter pertaining to tax exemption of BCCI is sub judice," Chaudhary had said.
BCCI challenged the stance before the Income Tax Appellate Tribunal (ITAT) and later via an Income Tax Appeal and a Writ Petition before the High Court. The board claimed that the amendments didn't change its primary objective of promoting sports.
Bombay High Court examines ITAT order
The ITAT had initially claimed that the advisory letter didn't involve an official order of cancellation. However, it also claimed that the board's tax exemption could not change its objective of amendment.
The Bombay High Court bench, led by Justices M.S. Sonak and Jitendra Jain, examined the ITAT order and concluded it had exceeded its jurisdiction by discussing the merits of the case after ruling the board's appeal non-maintainable.
The court refrained from commenting on the merits but ruled that the Revenue Department had no authority to issue the advisory letter. Bombay High Court ruled that the board's tax-exempt status should be determined through the formal legal process, not based on an advisory.
P.C. Chhotaray and Suresh Kumar defend ITAT's order
Defending the ITAT’s order, advocates P.C. Chhotaray and Suresh Kumar, representing the tax authorities, argued that the communication from the department did not revoke BCCI’s registration.
They explained that it merely informed the board that the registration, originally granted based on its objectives, became obsolete after those objectives were amended. P.C. Chattoray also mentioned about board's failure to comply with its undertaking to inform the Director of Income Tax (DIT).
As a result, the DIT only informed the board of the consequences of modifying its objectives, namely, the loss of registration. Earlier, the Income Tax Department had denied the tax exemption to the Indian board under Section 11 of I-T Act which deals with charitable institutions.
