BCCI isn’t engaged in commercial activities as funds generated from IPL are used for promoting cricket: ITAT

Case Details: Board of Control for Cricket in India v. PCIT - [2021] 132 taxmann.com 132 (Mumbai - Trib.)

Judiciary and Counsel Details

• • Pramod Kumar, Vice-President and Ravish Sood, Judicial Member
  • Percy J. Pardiwalla, Sr. Adv., Nitesh Joshi, Sukh Sagar Syal, Advs. and Anil Sathe, CA for the Appellant. 
  • Rahul Raman, DR for the Respondent.

Facts of the Case

Assessee-Board of Control for Cricket in India (BCCI) had been duly granted the registration under section 12A on 12-02-1996. However, it applied for fresh registration as it amended its ‘memorandum of association and rules and regulations to implement the ‘Justice Lodha Committee’ recommendation.

However, its application for fresh registration under section 12A was rejected by the Commissioner of Income (CIT). The CIT opined that BCCI is conducting business for profit by commercial exploitation of the game of cricket through franchisee ownership in terms of the 20-20 format of IPL. Thus, BCCI is squarely covered by the proviso to section 2(15). Hence, its claim of being covered by the last limb, i.e., advancement of any other object of general public utility cannot be held as ‘charitable purpose’. Aggrieved-assessee filed the instant appeal before the Mumbai Tribunal.

ITAT Held

The Mumbai ITAT held that it could not be said that the basic character of popularising cricket is lost just because a sports tournament is structured in such a manner to make it more popular, resulting in more paying sponsorship and greater mobilisation of resources.
It is indeed possible that the predominant object remains the promotion of cricket but that activity is done in a more effective and financially optimal manner. There is no conflict in the cricket becoming more popular and the cricket becoming more entertaining after the introduction of IPL tournament.

As long as the object of promoting cricket remains intact, the assessee cannot be said to be not following the object of promoting cricket, just because the operational model of a cricket tournament, whether IPL or any other tournament, is more entertaining, more economically viable and provides greater economic opportunities to all those associated with that tournament.

All the funds available at the disposal of BCCI, including the additional funds generated by holding IPL tournaments, are employed for promoting cricket, and that really matters. Improvising the game’s rules, 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.
Therefore, the assessee is entitled to the continuance of its registration under section 12A, and the order passed by the CIT stands quashed.