Indian Kanoon - Search engine for Indian Law

9.1 In order to understand the real nature of receipts from BCCI, it is vital to understand the background of these receipts. The documents relied upon to understand these receipts are the (A) Annual Reports of BCCI, (B) the written submission given by BCCI to its AO during its own assessment proceeding on TV subsidy or IPL subvention, (C) minutes of AGMs of BCCI wherein decisions on TV subsidy or IPL subvention to State Cricket Associations (hereinafter referred to as SCAs) were taken, (D) the accounting of these receipts by the appellant as well as other SCAs in their books etc. It is also important to see the decision making process at BCCI. All these are vital pieces of information in order to understand the correct nature of receipts from BCCI to SCAs. These sources that would help to understand the nature of receipts from BCCI are discussed below. It would be pertinent to mention here that the proceedings of BCCI before the AO of BCCI referred in the order were available with the appellant. Secondly the appellant itself had submitted the minutes of AGMs of BCCI during the appellate proceedings of the appellant for AY 2011-12. Thirdly the Annual reports of the BCCI are public documents and are available on its website. In short all the document referred herein under were available with the appellant. Especially during the appellate proceedings for AY 2011-12.

9.9 (D) Treatment by Baroda Cricket Association, Saurashtra Cricket Association and GCA in respect of funds received from BCCI 9.9.1 It is noticed that based on the same Annual Report, same minutes of the AGMs of the BCCI, the receipts from BCCI to SCAs have been reflected differently in their financial statements by at least three SCAs that have presence in the state of Gujarat viz. Baroda Cricket Association, Saurashtra Cricket Association and the appellant. The treatment given by the appellant is already under consideration. Baroda Cricket Association (BCA) for A.Y.2012-13 and Saurashtra Cricket Association for A.Y.2012-13 have filed appeals before me. During the appellate proceedings this issue was also discussed with the AR of GCA. It was observed that Baroda Cricket Association has treated the TV Subsidy received from BCCI as corpus and has treated IPL Subvention received from BCCI in the income and expenditure account unlike GCA. Further BCA has also offered sale of tickets of ODI as its income and have paid taxes on the same. The Saurashtra Cricket Association on the other hand has reflected Subvention received from BCCI as its income from other sources. Similarly, the TV Subsidy received from BCCI is also shown under the head income from ITA Nos: 1257/Ahd/13, 3303/Ahd/16, 3304/Ahd/16, 408/Ahd/17 (Assessment years: 2009-10, 2010-11, 2011-12 and 2012-13) ITA Nos: 336 and 337/Ahd/2015 and 2957/Ahd/2014, (Assessment years: 2009-10, 2011-12, 2010-11) ITA Nos: 2839, 2840 and 2841/ Ahd/ 2017 (Assessment years: 2012-13, 2013-14 and 2014-15) other sources and has not treated the same as corpus like GCA. Saurashtra Cricket Association has reflected the amount received from BCCI under the Infrastructure Scheme as its corpus whereas GCA has taken this amount to balance sheet but not as corpus. 9.9.2 Thus, it can be seen that within Gujarat the three Cricket associations which are full members of the BCCI have treated the TV Subsidy, the IPL Subvention and the funds received under the Infrastructure Subsidy Scheme in different ways and manners. The treatment given by other SCAs i.e. outside of Gujarat is not known. The judgment of hon'ble ITAT Chennai in the case of Tamil Nadu Cricket Association is silent on corpus issue (referred later). BCCI has also not bothered to find out whether the treatment given by the various cricket associations in their audited accounts is right or wrong. In its AGMs, BCCI have resolved again and again to send the funds under the TV Subsidy or IPL Subvention to SCAs only when the audited accounts of SCAs would reach the BCCI. So it cannot be said that BCCI was unaware that differential treatment was given by various Cricket Associations to these receipts. It can be seen from the various Annual Reports of BCCI, minutes of AGMs of BCCI as well as the submissions of BCCI in its own assessment proceedings that there has been a consistency in the stand taken by BCCI. The consistency has been on the matter that 70% of the receipts from sale of media rights and IPL activities belong to SCAs and not to BCCI. The consistency is on the matter that both the receipts have emerged out of combined efforts of BCCI & SCAs. The consistency is on the issue that both the receipts are from commercial activities and finally the consistency on the issue that both the receipts are simply transferred to SCAs as TV subsidy and IPL subvention. There is no whisper of 'corpus' in the AGMs of BCCI except for one. It is the SCAs who have treated them in different manner in their own financial statements. This is evident from the para above. However, this does not mean that the nature of receipt, changes, even if the three SCAs in Gujarat are giving separate treatment to these receipts as per their convenience or understanding. Thus, I hereby hold that the TV subsidy and IPL subvention is the revenue receipt of the appellant. The activity of selling of media rights by the BCCI & SCAs and the activity of conducting the IPL are the activities that are in the nature of trade, commerce or business within the meaning of proviso to section 2(15) of the Act.

(Emphasis supplied) 10.7 From above minutes the position becomes clear in respect of to whom these receipts belong to 70% is that of SCAs and 30% is that of BCCI. As the receipts from the sale of ITA Nos: 1257/Ahd/13, 3303/Ahd/16, 3304/Ahd/16, 408/Ahd/17 (Assessment years: 2009-10, 2010-11, 2011-12 and 2012-13) ITA Nos: 336 and 337/Ahd/2015 and 2957/Ahd/2014, (Assessment years: 2009-10, 2011-12, 2010-11) ITA Nos: 2839, 2840 and 2841/ Ahd/ 2017 (Assessment years: 2012-13, 2013-14 and 2014-15) media rights were that of BCCI as well as SCAs, similarly the income from the commercial activity of IPL is the joint income of BCCI and SCA/full/eligible members. It is discernible from the minutes of various AGMs that distribution of the revenue from media rights as well as IPL subvention are part of the same agenda item. The only difference is that the net media rights revenue, is shared by all SCAs as well as an extra share of revenue goes to those SCAs staging the matches whereas the IPL revenue is shared equally amongst all the SCAs. The BCCI keeps 30% of the net revenue with itself. It is discernible from the various Annual Reports of BCCI, minutes of AGMs of BCCI as well as the submissions of BCCI in its own assessment proceedings that there has been a consistency in the stand taken by it. The consistency has been on the matter that 70% of the receipts from sale of media rights and IPL activities belong to SCAs and not to BCCI. The consistency is on the matter that both the receipts have emerged out of combined efforts of BCCI & SCAs; that both the receipts are from commercial activities and finally, that both the receipts are simply transferred to SCAs as TV subsidy and IPL subvention as their share and not as corpus. It is the SCAs who have treated them in different fashion in their own financial statements. However, this does not mean that the nature of receipt changes. 10.8 Therefore, I am of the considered opinion that "receipts from BCCI on account of sale of media rights as well as the receipts from IPL activities are in the nature of revenue income of the GCA/Appellant". These receipts represent 70% of share of the net income. There is no doubt that the receipts are from the activities that are purely in the nature of trade, commerce and business or from activities of rendering any service in relation to any trade, commerce or business, for a cess or fee.

35. Let us take a pause here and examine as to what are the activities of the assessee cricket associations so as to be brought within the ambit of trade, commerce or business. We have seen objects of the association, which are reproduced earlier in our order, and it is not even the case of the revenue that these objects have anything to do with any trade, commerce or business; these objects are simply to promote cricket. The trigger for invoking proviso to Section 2(15), as Shri Soparkar rightly contends, has to an activity of the assessee which is in the nature of trade, commerce or business. However, the case of the revenue authorities hinges on the allegation that the way and manner in which cricket matches are being organized, particularly the IPL matches, the activity of organizing cricket matches is nothing but brute commerce. Undoubtedly, it would appear that right from the time Kerry Packer started his World Series Cricket in 1977, there has been no looking back in commercialization of cricket and the impact of this commercialization has not left ITA Nos: 1257/Ahd/13, 3303/Ahd/16, 3304/Ahd/16, 408/Ahd/17 (Assessment years: 2009-10, 2010-11, 2011-12 and 2012-13) ITA Nos: 336 and 337/Ahd/2015 and 2957/Ahd/2014, (Assessment years: 2009-10, 2011-12, 2010-11) ITA Nos: 2839, 2840 and 2841/ Ahd/ 2017 (Assessment years: 2012-13, 2013-14 and 2014-15) Indian cricket intact. The Indian Premier League and the rules of the game being governed by the dictates of commercial considerations may seem to be one such example of commercialization of Indian cricket. The difficulty for the case of the revenue before us, however, is that these matches are not being organized by the local cricket associations. We are told that the matches are being organized by the Board of Cricket Control of India, but then, if we are to accept this claim and invoke the proviso to Section 2(15) for this reason, it will amount to a situation in which proviso to Section 2(15) is being invoked on account of activities of an entity other than the assessees- something which law does not permit. We are not really concerned, at this stage, whether the allegations about commercialization of cricket by the BCCI are correct or not, because that aspect of the matter would be relevant only for the purpose of proviso to Section 2(15) being invoked in the hands of the BCCI. We donot wish to deal with that aspect of the matter or to make any observations which would prejudge the case of the BCCI. Suffice to say that the very foundation of revenue's case is devoid of legally sustainable basis for the short reason that the commercialization of cricket by the BCCI, even if that be so, cannot be reason enough to invoke the proviso to Section 2(15). We are alive o learned Commissioner (DR)'s suggestion that the cricket associations cannot be seen on standalone basis as the BCCI is nothing but an apex body of these cricket associations at a collective level and whatever BCCI does is at the behest of or with the connivance of the local cricket associations, and that it is not the case that anyone can become a Member of the BCCI because only a recognized cricket association can become a Member of the BCCI. We are also alive to learned ITA Nos: 1257/Ahd/13, 3303/Ahd/16, 3304/Ahd/16, 408/Ahd/17 (Assessment years: 2009-10, 2010-11, 2011-12 and 2012-13) ITA Nos: 336 and 337/Ahd/2015 and 2957/Ahd/2014, (Assessment years: 2009-10, 2011-12, 2010-11) ITA Nos: 2839, 2840 and 2841/ Ahd/ 2017 (Assessment years: 2012-13, 2013-14 and 2014-15) Commissioner's argument that what is being sought to be protected by the charitable status of these associations is the share of these cricket associations from the commercial profits earned by the BCCI by organizing the cricket matches. The problem, however, is that the activities of the apex body, as we have explained earlier, cannot be reason enough to trigger proviso to Section 2(15) in these cases. Whether these cricket associations collectively constitute BCCI or not, in the event of BCCI being involved in commercial activities, the taxability of such commercial profits will arise in the hands of the BCCI and not the end beneficiaries. Even in such a case the point of taxability of these profits is the BCCI and not the cricket associations, because, even going by learned Commissioner's arguments, these receipts in the hands of the cricket associations is nothing but appropriation of profits. What can be taxed is accrual of profits and not appropriation of profits. In any event, distinction between the cricket associations and the BCCI cannot be ignored for the purposes of tax treatment. There is no dispute that the matches were organized by the BCCI, and the assessee cannot thus be faulted for the commercial considerations said to be inherent in planning the matches. As we make these observations, and as we do not have the benefit of hearing the perspective of the BCCI, we make it clear that these observations will have no bearing on any adjudication in the hands of the BCCI. Suffice to say that so far as the cricket associations are concerned, the allegations of the revenue authorities have no bearing on the denial of the status of 'charitable activities' in the hands of the cricket associations before us- particularly as learned Commissioner has not been able to point out a single object of the assessee cricket associations which is in the ITA Nos: 1257/Ahd/13, 3303/Ahd/16, 3304/Ahd/16, 408/Ahd/17 (Assessment years: 2009-10, 2010-11, 2011-12 and 2012-13) ITA Nos: 336 and 337/Ahd/2015 and 2957/Ahd/2014, (Assessment years: 2009-10, 2011-12, 2010-11) ITA Nos: 2839, 2840 and 2841/ Ahd/ 2017 (Assessment years: 2012-13, 2013-14 and 2014-15) nature of trade, commerce or business, and, as it is not even in dispute that the objects being pursued by the assessee cricket associations are "objects of general public utility" under section 2(15). All the objects of the assessee cricket associations, as reproduced earlier in this order, unambiguously seek to promote the cricket, and this object, as has been all along accepted by the CBDT itself, an object of general public utility.