In another blow to cricket federations in the country, Income Tax department has slapped show-cause notices to seven of them, affiliated to the Board of Control for Cricket in India (BCCI), just before withdrawing tax exemption to them. This will put these sporting bodies at par with any other corporate entity.

The I-T action follows examination of accounts of these state associations -in the seven metros of Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Bangalore and Ahmedabad - for which the scrutiny exercise had begun six months ago.

Sources said tax exemption was already withdrawn from Ahmedabad and Delhi could be the next. Show cause is a process where an assessee is given one last opportunity before taking it off the charitable organization list.

I-T exemption was withdrawn from BCCI in 2008 when the Central Board of Direct Taxes (CBDT), under the finance ministry, said the sports body was engaged in commercial activity by organising Indian Premier League Twenty-20 matches and selling advertisement space and broadcasting rights and making profit.

The income that BCCI makes out of IPL tournament, estimated to be more than Rs 1,000 crore every year, is shared by team franchises and state cricket associations. This is one of the grounds on which the government has decided to treat all state associations as commercial enterprises similar to BCCI.

CBDT had withdrawn I-T exemption from BCCI from the financial year 2007-08 after the apex cricket body amended its rules and added new objectives in its memorandum that included setting up coaching academies and conducting IPL T-20 tournament.

A senior I-T official, who was part of the surveys carried out against state cricket associations, said the decision to withdraw tax exemption was taken after it was found that "none of them were doing any charitable work. All there activities were purely commercial in nature".

BCCI has approached a tax tribunal against the government order. However, cricket federations stand little chance against the withdrawal order since the I-T department had in 2008-09 issued a notification and clubbed everybody associated with BCCI as professionals, same as those rendering technical services.

The notification had asked BCCI to ensure that "all sportspersons, Indian or foreign, besides coaches, trainers, umpires, referees, team physicians, physiotherapists, event managers, commentators, anchors and columnists must be levied TDS at 10%," and treated as any other professional.
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