Gujarat cricket bodies not liable to pay income tax: HC Ahmedabad, Nov 1 (PTI) The High Court has upheld anexemption granted to the Gujarat Cricket Association (GCA) andtwo other cricket bodies in the state from income tax, sayingtheir activities, unlike those of the BCCI, are not commercialin nature.
A division bench of Gujarat High Court, Justices J BPardiwala and A C Rao, last week upheld the Income TaxAppellate Tribunal's order justifying the exemption granted toGCA, Baroda Cricket Association and Saurashtra CricketAssociation, as they are registered as charitable trusts underthe Societies Registration Act.
'It is not in dispute that the three Associations havenot distributed any profits outside the organization,' the HCsaid.
'The profits, if any, are plowed back into the veryactivities of promotion and development of the sport ofcricket and, therefore, the assessees cannot be termed to becarrying out commercial activities in the nature of trade,commerce or business,' the order stated.
'It is not correct to say that as the asseseesreceived share of income from the BCCI (Board of Control forCricket in India), their activities could be said to be theactivities of the BCCI. Undoubtedly, the activities of theBCCI are commercial in nature,' it said.
'The activities of the BCCI are in the form ofexhibition of sports and (it) earns profit out of it. However,if the Associations host any international match once in ayear or two at the behest of the BCCI, then the income of theAssociations from the sale of tickets etc... would not portraythe character of commercial nature,' ruled the court.
'It would not be correct to say that a member body canbe held liable for taxation on account of the activities ofthe apex body,' the court said.
The state cricket associations had claimed that theyare engaged in several non-commercial activities of promotingthe sport as well as maintaining necessary infrastructure.
The issue reached the high court in 2012 after theIncome Tax Department canceled exemption registration of thethree cricket bodies, which meant they became liable to paytax.
The department claimed the activities of these trustswere commercial in nature.
'BCCI is a huge money-spinning machine....It isfollowing practice of giving some portion of its TV rights tocertain Cricket Associations in the country including the GCA.
BCCI also has commercial transactions like receipts of TVrights, IPL matches,' the IT Department's order had stated.
The cricket associations approached the AppellateTribunal which set aside the order of the IT Department.
The department then knocked on the doors of the highcourt which upheld the tribunal's decision. PTI PJT PD KRK KRK