In a major relief to the IPL Company, Royal Challengers Sports Pvt Ltd, the Income Tax Appellate Tribunal (ITAT) allowed tax deduction to its’ contribution of 15 crores towards the development of Karnataka Cricket Academy.
The assessee owns a cricket team in the name and style of M/s Royal Challengers, Bangalore which participates in the IPL league matches.
As per an agreement with the Karnataka State Cricket Association (KSCA), the assessee-Company agreed to fund Rs.15.00 Crores and KSCA would fund an amount of Rs.5.00 Crores to the Academy for establishing and operating it. The amount was to be contributed in the following manner by KSCA and the assessee.
Before the appellate authorities, the assessee claimed that the decision rendered by the Tribunal on identical facts under the very same agreement to create Cricket academy should be followed.
Following the decision of the Tribunal for the earlier years, the Tribunal held that “we direct the AO to allow the claim of the assessee for the deduction for a sum of Rs.1.55 Crores. The facts of the case and the agreement under which the payment in question was made are identical to the case decided by the tribunal. In the light of the above-said decision of the Tribunal are of the view that the expenditure in question has to be allowed as deduction. We hold and direct accordingly.”To Read the full text of the Order CLICK HERE