TMI Blog2006 (12) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on the initial exemption of Rs. 2,500 and cost of winning ticket while calculating TDS under s. 194BB. (2) That the CIT(A) was wrong to confirm the demand of Rs. 4,25,775 under s. 201(1) and interest of Rs. 40,085 under s. 201(1A). The same may be deleted." 2. Rival contentions have been heard and record perused. Brief facts of the case are that the assessee, the Delhi Race Club (1940) Ltd. is engaged in development, promotion and conducting of horse races in Delhi. Its activities include inter aha the arranging of wagering or betting in horse races. The punters who have the winning tickets are paid the winnings after deduction of TDS. While scrutinizing the TDS return, the AO noted that the assessee had distributed amongst the winn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at source. 4. By the impugned order, CIT(A) confirmed the action of the AO for short deduction of tax and interest thereon. 5. Aggrieved by the above order of the CIT(A), the assessee is now in appeal before us. It was contended by the learned Authorised Representative Shri Shashi Bhushan Gupta that no tax shall be leviable in respect of winning from horse race where the amount received from such winning does not exceed Rs. 2,500. According to learned Authorised Representative, the AO should have computed the amount of winning liable to deduction pf tax at source, after deduction of Rs. 2,500 on each and every such winnings. With respect to deduction of investment made by the punter while computing the amount of winning from which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson is Rs. 2,500 or less. Circular No. 515 of CBDT dt. 30th May, 1988 also clarifies for non-deduction of tax in respect of winnings from horse races up to the amount of Rs. 2,500. Only where such winnings exceed Rs. 2,500, tax is to be deducted at source at specified rates. Meaning thereby tax is to be deducted only on the amount of winnings in excess of Rs. 2,500. Merely because winning amount exceeds Rs. 2,500, the Department cannot ask for not allowing the initial deduction of Rs. 2,500 while computing the winning amount qualifying for deduction of tax at source. If the winning is Rs. 2,500, no deduction of tax is to be made. If the winning exceeds Rs. 2,500, tax is to be deducted on excess amount only. 8. Issue regarding deduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case under consideration are in pari materia, respectfully following the same, we direct the AO to allow deduction of floor limit of Rs. 2,500 from each winning from horse race, claimed by assessee. However as per the amendment brought in by the Finance Act, 1992 w.e.f. 1st April, 1992, the amount of exemption was revised from Rs. 5,000 to Rs. 2,500. The claim of assessee at Rs. 2,500 during the asst. yr. 2001-02 under consideration, was therefore justified. 10. The second plea of the assessee is that amount of investment made by the punters in respect of all horse races is to be deducted from the amount of winnings for arriving at the figure qualifying for deduction of tax at source. Whereas the contention of the Department is that per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, tax is required to be deducted only from the net income arising out of the horse race to the punter; from any particular race after deducting the investment made by the punter in purchasing all the tickets relating to such horse race. The CBDT has also accepted the said proposition in its Circular No. 240, but has directed that investment in such tickets alone which fetched the winnings money should be deducted. However, if all the tickets purchased by a punter in a particular horse race club be linked up together and if there be regular machinery with the turf club authorities to take into consideration all the tickets purchased in connection with one horse race, then the entire amount of investment on all the horses irrespective of w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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