CRICKET BY CHARITY - Atul Jhunjhunwala

 

The year is 2008. The inaugural IPL series was held in India. People had no idea that this one event would be a game-changer for the BCCI.

Yes, IPL became the enormous Indian celebration that everyone couldn't get enough of. As a result, the BCCI, which was already wealthy, became one of the wealthiest sports organisations in the world! And you know what money can do. It draws tax collectors. They'll take a cut wherever there's money.

So the protracted struggle between the BCCI and the Income Tax Authorities began.

However, First and foremost. How Does BCCI Work?

In 1928, the Board of Control for Cricket in India was established. Yes, long before India's independence. The board was established in order for the Indian cricket team to be recognised by the International Cricket Council. It operates under the authority of the Central Government. However, it is a private organisation that controls virtually every element of cricket in India.

Interestingly, BCCI has been registered as a charitable trust since 1996. But what kind of charitable work does the BCCI do? Cricket in the country is being promoted and advanced by the BCCI, without a doubt. However, when the IPL was launched in 2008, this became a source of dispute.

The BCCI amended its charter in response to a proposal from the Justice Lodha Committee and clearance from the Supreme Court. A company's purpose of existence is determined by its Memorandum of Association or charter. The BCCI had modified it to cover IPL and other commercial operations. The Income Tax authorities saw that the BCCI was making a lot of money from IPL matches. So it shouldn't be a charitable trust, should it? 

The BCCI paid nearly Rs. 3,500 crores in taxes to the Income Tax authorities between 2008 and 2018. However, the board was clearly dissatisfied with the outcome. It was even more dissatisfied when it was refused re-registration as a charitable trust in 2018. However, the Income Tax Department stated that because it was now conducting for-profit operations (IPL matches), it could no longer be referred to be a charity trust. Also, hasn't the BCCI's charter been changed? 

The BCCI was not going to take this argument silently. It filed an appeal with the Income Tax Appellate Tribunal, claiming that IPL matches should not be considered commercial activities. They might be making a lot of money. What's the big deal? They are set up to promote cricket. The cash raised will be used to promote cricket.

This line of argument has been accepted by the Income Tax Appellate Tribunal. Furthermore, the profitability of BCCI is measured on a yearly basis. When the receipts for a charity trust surpass the threshold, BCCI is required to pay back taxes for those years. This is something that must be done on a yearly basis. But that doesn't take away their right to be referred to as a charitable trust.

As a result, the BCCI has been able to maintain its charity status. But don't you believe the border between charitable organisations and other for-profit businesses is becoming increasingly blurred as a result of this ruling? There are several corporations that have been formed to promote one or more causes. Shouldn't they, like BCCI, be granted 'charitable' status?