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Around Rs 3,200 crore of the magical figure is locked in arbitration or with tax authorities, but the BCCI believes these are ‘receivables’. On the flip side, if things don’t go BCCI’s way, it will have to cough up only around Rs 1,200 crore to the media companies, marketing firms, and those franchisees whose contracts it cancelled.
While the scale of ‘disputed sum’ would hint at financial mismanagement, the cricket board’s treasurer Ajay Shirke is confident of recovery. “We definitely believe that the amount which is locked in arbitration and with the tax authorities are receivables. The only issue that is in arbitration is our case with Nimbus for the television rights. Our claim is based on legitimate bank guarantees,” said Shirke.
The report clearly outlines that BCCI is involved in over half-a-dozen arbitration cases where it has claimed an aggregate of Rs 2,226 crore from various parties involved. BCCI also thinks it is being wrongly taxed because it should be exempted from paying taxes. For 2011-12, the BCCI paid almost Rs 1,000 crore in tax “under protest”. It expects a refund of entire Rs 973 crore in taxes in subsequent financial years.
As for the tax wrangle, Shirke said they have a genuine claims for a write-off. “As far as taxes are concerned, there has been an amendment in the Income Tax Act in 2009 and we were told that we no longer enjoyed the tax exemption. But we still maintain that we are exempted from taxation and the matter is now sub-judice. Though we paid some tax ‘under protest’ in the last financial year, we stick to our claim.
Above all, the BCCI has a TDS credit with the income tax authorities, amounting to over Rs 600 crores. So our position is very safe and sound,” he added.
An analysis of BCCI’s locked income reveals that in some instances BCCI has made counter claims against those it is in arbitration with to neutralise the claims. For example in its arbitration proceedings with Jaipur IPL Cricket which has claimed Rs 118.81 crore from BCCI, the board has made a counter-claim of Rs 1,422.14 crore.
In its arbitration with Zee Entertainment Enterprises over DLF-Abu Dhabi Cup held during 2006-07, Zee has claimed Rs 480.40 crore towards losses due to cancellation of contract.
However, BCCI has filed a counter claim of Rs 450.10 crore against Zee. Then BCCI expects media rights income from Nimbus Communications worth Rs 347.30 crore for which it has made provisions in its balance sheet. “The board is confident of receiving the entire balance of Rs 347.30 crore from Nimbus,” it said.
Three times ICC
“It is our endeavour to always maintain the right checks and balances and add to our financial strengths,” said the treasurer.
If the ‘locked income’ is added to its actuals, BCCI’s kitty for 2011-12 was roughly thrice the revenue generated by the ICC. In that period, they generated an annual income of Rs 1,168 crore, combining the surplus from IPL, CLT20, media rights and sponsors.