Indian board hit with $81 million tax demand

The Indian cricket board (BCCI) has been hit with a tax demand for Rs361 crore (US$ 81 million) in outstanding taxes for the three financial years starting 2003-04.

The board had not paid any taxes as it had thought it would be not be liable, but tax official was quoted as saying that the "exemption was refused in 1997 as it was not a notified sports organisation."

The BCCI has never been exempt, although it has an application for exemption for the four years from 1998-99 pending with the Income Tax Appellate Tribunal.

The board's accounts for 2004-05 state that an "application for exemption under section 10(23) is pending before the tax authority for and from financial year 1998-1999 to 2001-2002. Pending receipt of approval, no provision for income tax has been made in respect of the surplus income of these years." It adds that no provision had been made for the year the accounts covered either.

Niranjan Shah, the BCCI's secretary, told Daily News & Analysis, that as far as he was aware "we are covered under sections 11 and 12(A) of the Income Tax Act, which exempts us from tax." But that exception only applies to charities.

"We are currently engaged in several litigations with the income tax department and winning cases one by one," Shah added. "Besides, under section 11, we are protected by a circular issued by the Central Board of Direct Taxes that included BCCI under the definition of a charitable trust."