London: Accusing the Income Tax Department of being "very lenient" to the Board of Control for Cricket in India (BCCI), a Parliamentary panel on Tuesday said it allowed the cricketing body to "enrich its coffers at the expense of the exchequer".
Headed by former Finance Minister and senior BJP leader Yashwant Sinha, the Standing Committee on Finance has asked the IT department, Reserve Bank of India and Corporate Affairs Ministry to expedite their investigations into the affairs of the BCCI and the Indian Premier League (IPL).
The report of the Committee, which was tabled in Parliament, also regretted that the much-loved cricket -- a gentleman's game -- is getting "sullied and embroiled in transgressions of law off the field".
The BCCI, which sponsored the IPL, has drawn strong criticism on account of allegations of economic and financial wrongdoings, violation of tax laws, Prevention of Money Laundering Act, Company Law and RBI regulations.
Noting that ITD has been very lenient in taxing BCCI, the Committee said, the matters should be "thoroughly probed and an action taken report (be) furnished to the Committee within one month".
It further said that all pending tax assessment case of BCCI should be finalised on the strength of the Department's decision to withdraw exemption originally granted to the cricketing body.
Although the tax exemption granted to BCCI was withdrawn in December 2009 with retrospective effect from assessment year 2007-08, the ITD has not been able to complete scrutiny assessment for some years, the report said.
The Committee said the grounds on which the tax exemption to BCCI was withdrawn seems to be purely 'technical' and 'specious' rather than invoking the determining substantive issue of commercialisation of cricket, which has over the years been turned into a money-spinning business.
"It is a matter of surprise that when the crass commercialisation of cricket was visible to the entire world, the Income Tax Department chose to ignore it. When they finally woke up from their slumber and decided to withdraw the tax exemption, it was on a mere 'technical' ground of promoting other sports," the report said.
The Committee further said that it expects the income tax assessment relating to BCCI-IPL for all the relevant assessment years are taken up on priority and finalised in a coordinated manner after taking necessary inputs from investigating agencies as well.
The Committee, the report said, gathers that investments made by certain IPL franchisees, namely Rajasthan Royals, Kolkata Knight Riders, Kings XI Punjab and Mumbai Indians have been routed from outside Indian through entities located in countries such as Mauritius, Bahamas and British Virgin Island.
"Strangely enough, it was not thought fit by these entities to seek approval from RBI, FIPB or other agencies concerned", the Committee noted.
"The Committee would like the Government to thoroughly investigate the a fore-mentioned violations committed by BCCI and other specified IPL franchises," the report said.
The Committee also observed that investigation carried out by the Registrars of Companies (ROCs) reveal several omissions by the IPL franchise companies in matters such as change of name of company, charging of depreciation, change of object clause, etc.
The report said that "the committee desire that the ROCs and the Ministry of Corporate Affairs should take deterrent action against the defaulting franchises as per the provisions of the Companies Act...,"
It further said that keeping in view the "mis-management" of the administrative and commercial aspects of IPL, the "BCCI as the apex body should look inward and set the affairs of the BCCI right".
They should improve their procedures and practices so that controversies such as in the conducting of IPL are pre-empted and avoided and do not bring a "bad name to the game of cricket".
The Committee also expressed regret that the IPL Council and the BCCI failed to discipline and bring the then Chairman (Lalit Modi) under control.
In fact, the Council "meekly" endorsed and approved the decisions taken by the then Chairman, it said.
On the tax exemption of about Rs 45 crore to International Cricket Council (ICC) on the revenues generated from the World Cup Cricket tournament, the Committee recommended to the Department of Revenue to review its decision on the tax waiver.
In the larger context, the report said, the Committee would like Ministry of Finance to not only expedite finalisation of assessments and investigations on a fast track basis, but also devise a coherent and consistent policy for the future, so that "high profile money spinning" events such as IPL are not kept out of the ambit of taxability.