New Delhi: The Income Tax department has begun a scrutiny of tax records and finances of more than 25 state cricket associations in the country to probe whether these bodies are eligible to enjoy tax exemptions on their income.
The department, which has entrusted the job to a special investigations unit in Delhi, has found that in the last five years the charter and definition of some of the cricket associations engaged to promote the Gentleman`s game has changed and has taken the shape of a structured corporate entity.
Sources said that while such a change in the character of a body is totally legal and can be charted out for better functioning of the association, the I-T has a mandate to carry out a scrutiny of accounts and activities to check if the charitable purposes for which taxes were forgone are still adhered too.
"In many cases, the I-T department had no information that the state cricket association has changed its structure. Some were found to have registered themselves as `private limited`. Hence, a scrutiny of the past five years of tax returns and other finances became necessary," I-T sources said.
The department has also begun issuing notices to some of the cricket boards asking for documents and financial statements even as it has gathered data on them through electronic and other modes of surveillance.
These associations are registered under section 25 of the Companies Act which makes them eligible for tax exemptions under the provisions of section 11 of the Income Tax Act.
There are 27 cricket associations affiliated with the BCCI at present and once the scrutiny is complete, the I-T plans to send the reports to respective tax collection ranges for raising of appropriate demands, if any, sources said.
According to latest data, the I-T department had demanded over Rs 413 crore as tax from the world`s richest cricket body, the Board of Control for Cricket in India (BCCI) as per its income assessment for the year 2009-10 of which over Rs 41 crore has been paid by the body.
The BCCI is also contesting the taxman`s claim of withdrawing the exemption from paying tax under the charitable organisation category as per an 2009 order of the assessing office in Mumbai.
Tax assessment of the BCCI for the financial years 2010-11, 2011-12, computation of exemption income as enjoyed by the cricket board, probe against various editions of the T20 Indian Premiere League (IPL) and various state cricket associations is now being conducted by the Central tax unit of the I-T.