India news November 30, 2011

'Tax exemptions for 2011 ICC World Cup unjustified'

India's Parliamentary Standing Committee on Finance has called the tax exemption of Rs 45 crore (approximately US$8.67 million) granted to the ICC for the 2011 World Cup "unjustified and devoid of merit", and recommended that the Department of Revenue review the exemption.

In a report tabled in India's Parliament on Tuesday, the committee said, "regarding tax exemption of about Rs 45.00 crore granted to International Cricket Council (ICC) on the revenue generated from the recently concluded World Cup cricket tournament, the Committee are not convinced about the tenability of the tax exemptions given to the ICC, as the World Cup received huge sponsorships and was patronised by the corporate sector in a big way.

"Therefore, the Committee are of the considered view that the tax exemption granted to ICC using discretionary powers under the provisions of general exemption for international sporting events was unjustified and devoid of merit. The Committee recommend that the tax exemption granted to ICC be reviewed by the Department of Revenue."

The recommendation was one of several recommendations/observations contained in the committee report, which was tabled by sports minister Ajay Maken in response to a question about the inquiries into the various allegations against the BCCI, most of them over the running of the IPL.

The committee was also scathing in its criticism of the Income Tax Department, saying it had been inconsistent in taxing the BCCI and called for a probe of the department. "The inordinate delay and gross inaction in finalising assessment cannot but reinforce the Committee's desire seeking a thorough probe into the whole gamut of this issue, bringing out clearly the culpability of the tax officials concerned with granting exemptions and finalising assessments in this case."

The BCCI was not spared either. The committee stated that the Indian board needs to improve its functioning so that it can preempt the kind of controversies and allegations that have arisen out of the IPL, and recommended that an investigation into the awarding of media rights for the tournament be instituted.

"With regard to reported irregularities in award of media rights and commercial contracts executed in the course of the IPL, considering the serious irregularities and offences, the Committee would like the investigating agencies to look into all matters relating to breach of law, and identify and punish all those persons responsible for the same without further loss of time."

The board has already been sent 19 show-cause notices over foreign exchange violations involving amounts totalling approximately Rs 1077.43 crore, and been asked to pay Income Tax aggregating Rs 375.16 crore. Service tax show-cause notices totalling Rs. 159.12 crore have also been sent to a number of stakeholders and service providers of the IPL.

Tariq Engineer is a senior sub-editor at Cricinfo