Income Tax Exemption Can’t Be Revoked Just Because BCCI Makes Profits in IPL : ITAT

BCCI (Mumbai ITAT) (ITA No 3301/Mum/2019)

Facts:

1. The Board Of Cricket Control of India (BCCI), which is a society registered under the Tamil Nadu Societies Registration Act, had a registration under Section 12A of the Income Tax Act, as a charitable institution.

2. Later, in 2018, the Society filed an application for fresh registration in terms of the changes in its memorandum of association effected on the basis of the Justice Lodha committee recommendation.

3. This was rejected by the Principal Commissioner.  The application was rejected on the basis that IPL activities are in the nature of commercial activities and cross the threshold for exemptions in proviso to Section 2(15), which defines “charitable activities”.

4. The proviso to Section 2(15) provides that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade.

5. Challenging this, the BCCI approached the ITAT.

ITAT held as below:

1. Even though IPL may be more profitable, BCCI is entitled to tax exemptions as long as the primary objective of BCCI to promote cricket remains intact.

2. Improvising the rules of the game, adding entertainment value to it and making it economically attractive, may be a purist’s nightmare but the same factors can also be viewed as radical and innovative ideas to popularise a game- the very raison d’être of an institution like this assessee, and that is how we view it.

3. The ITAT held that the Principal Commissioner erred in applying the proviso of Section 2(15) at the stage of application for registration.