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2022 (4) TMI 1426 - AT - Income TaxNon accounting income from betting amount paid by the punters and disbursement of prize money/dividend - whether the collections made from punters by totalizators/book keepersfor participating in horse races and disbursement of prize money/dividend to them are diverted at source or not? - HELD THAT:- We notice that an identical issue has been examined by Hyderabad bench of Tribunal in the case of Hyderabad Race Club [2008 (9) TMI 1024 - ITAT HYDERABAD] and the same has been decided against the assessee. However, the coordinate bench in the assessee’s own case relating to assessment year 2010-11 has restored the issue to the file of the A.O, after considering the decision rendered by Hyderabad bench in the case of Hyderabad Race Club - Thus we restore this issue to the file of the A.O. for examining it afresh in accordance with the directions given in assessment year 2010-11. Disallowance made u/s 40A(3) - HELD THAT:- This issue also requires to be restored to the file of the A.O. as the applicability of provisions of section 40A(3) of the Act would depend upon the decision taken by the A.O. with regard to the first issue discussed above, viz., whether there is diversion of income or not. The question of application of provisions of sec.40A(3) will not apply, if the assessing officer accepts the contention of the assessee that there is diversion of income and expenditure. Accordingly, we restore this issue in both the years to the file of the A.O. CIT(A) has enhanced the total income of the assessee - Whether reasonable opportunity to the assessee as per provisions of section 251(2) provided? - HELD THAT:- As we notice that the AO has committed an error in computing the total income, i.e., as against the total income of Rs.4.16 crores, he has computed the total income at Rs.4.06 crores. We notice that the Ld CIT(A) has not enhanced any income as alleged by the assessee. In any case, the assessee has not pointed out the specific issue, which has resulted in enhancement of income as alleged in the above said ground. Accordingly, we dismiss the grounds relating to this issue. Disallowance u/s 40(a)(ia) - subsidy Payment - HELD THAT:- We are of the view that the disallowance made by A.O. u/s 40(a)(ia) of the Act in respect of subsidy expenditure is not in accordance with law and the Ld. CIT(A) was not justified in confirming the said addition. Accordingly, we set aside the order passed by the Ld. CIT(A) on this issue and direct the A.O. to delete the disallowance. Addition u/s 40(a)(ia) of contribution made to the turf authority - As said amount represents contribution made by the assessee to conduct an event. Hence, there is merit in the contention of the assessee that the above said contribution would not attract any of the TDS provisions. Accordingly, we set aside the order passed by the Ld. CIT(A) on this issue and direct the A.O. to delete this disallowance. Addition u/s 40(a)(ia) for dope testing charges - as per assessee it is a case of mere reimbursement of expenses given to Bangalore Turf Club and (b) the payments made to non-residents for services rendered outside India is not liable for deduction of tax at source u/s 195 - We notice that the submission that the dope test is carried outside India is not emanating from the orders passed by the tax authorities. With regard to the claim that it is only reimbursement of expenses incurred by Bangalore Turf club, in our view, it requires to be examined as to whether the Bangalore Turf club was liable to deduct tax at source from the payments made to the laboratories and if so, whether it has deducted tax at source. If the AO had accepted in the hands of Bangalore Turf club that the dope test charges are not liable to tax deduction at source or if the Bangalore Turf club has already deducted TDS, then, in our view, there is no requirement for the assessee to deduct TDS on such kinds of reimbursements. We notice that relevant facts have not been brought on record. We notice that the assessee has submitted before Ld CIT(A) that the AO has accepted the contention in AY 2014-15 that the assessee is not liable to deduct TDS on such kind of reimbursements. In view of non-availability of relevant facts, we are of the view that this issue requires fresh examination at the end of AO. Accordingly, we restore the issue of disallowance made u/s 40(a)(ia) of the Act in respect of Dope Testing Charges to the file of the AO for examining it afresh after affording adequate opportunity of being heard to the assessee. Assessee appeal partly allowed for statistical purposes.
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