TMI Blog2015 (3) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... ay. We are, therefore, of the considered view that the total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated under Section 115BB of the Act. The order passed by the Tribunal holding that the loss sustained in business can be set off against betting and gambling income and only the net income is to be taxed u/s 115BB, which affirmed the order of the Commissioner of Income Tax (Appeals), is liable to be set aside. Accordingly, the order passed by the Tribunal is set aside. - Decision of the assessee in its own case [2015 (1) TMI 439 - MADRAS HIGH COURT] followed - Decided in favour of assessee. - T.C.A. NO. 407 OF 2008 - - - Dated:- 24-2-2015 - The Honourable Mr. R.Sudhakar And The Honourable Mr.R.Karuppiah JJ. For the Appellant : Mr. T.Ravikumar For the Respondent : Dr.Anitha Sumanth JUDGMENT (DELIVERED BY R.SUDHAKAR, J.) Aggrieved by the order passed by the Tribunal in dismissing the appeal filed by it, the appellant/Revenue is before this Court by filing the present appeal. This Court, vide order dated 25.06.2008, admitted the appeal on the following substantial question of law :- Whether o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. It is fairly stated by the learned counsel on either side that similar issue has been decided by this Court in favour of the appellant/Revenue in the assessee's own case for the assessment year 1998-1999 in T.C.A. No.649 of 2006 dated 10.12.2014. 5. This Court, while considering a similar issue in the case of the very same assessee in the above appeal, while analyzing Section 115-BB and Section 58 (4) of the Act, held as follows :- 6. Before adverting to the merits of the matter, it would be useful to have a look at the provisions referred to by the Tribunal and the authorities below. For better clarity, the said sections are extracted hereunder: Section 58. Amounts not deductible.- (1) to (3) *** (4) In the case of an assessee having income chargeable under the head Income from other sources, no deduction in respect of any expenditure or allowance in connection with such income shall be allowed under any provision of this Act in computing the income by way of any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature, whatsoever: Provided that not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from other sources' along with the other income of an assessee. By inserting a new section 115BB in the Income-tax Act, it has been provided that any income of a casual and non-recurring nature of the type referred to above, shall be charged to income-tax at a flat rate of 40 per cent. This provision will, however, not apply to income from the activity of owning and maintaining race horses. For this purpose, a new sub-section has been added to section 58 to provide that no deduction shall be allowed in respect of any expenditure or allowance in computing the income from the aforesaid sources. What has to be borne in mind is that apart from the general exemption of ₹ 5,000 under section 10(3), no further allowances or deductions are admissible against the gross winnings except in cases where there is a diversion by overriding title as in the case of certain lotteries where a certain percentage has to be foregone to the Government/agency conducting the lotteries. Consequential amendment has also been made in section 197(1)(a) of the Income-tax Act. 31.2. These amendments will apply in relation to the assessment year 1987-88 and subsequent years. Sections 74A(1) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.12.2001 explaining the intent of the legislature in amending Section 115BB of the Act by reducing the rate of tax from 40% to 30% with effect from 1.4.2001, as amended by Finance Act, 2001, dated 1.4.2002. Tax on winnings from lottery, crossword puzzle, etc. 60.1. Under the existing provisions of clause (i) of section 115BB, any income by way of winnings from any lottery or crossword puzzle or race including horse race (not being income from the activity of owning and maintaining race horses) or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, is chargeable to tax at the rate of 40%. 60.2. As a measure of rationalization, the Act has reduced the rate of tax on such winnings from forty per cent to thirty per cent. 60.3. The amendment will take effect from 1st April, 2002, and will, accordingly, apply in relation to the assessment year 2002-2003 and subsequent years. (emphasis supplied) 11. From the above, it is clear that the intent of the legislature, as a measure of rationalization, was to reduce the rate of tax on such winnings from 40% to 30%, with effect from 1.4.2002. Even though the said amendment is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l scrutiny. 14. Further, it is curious to note that the Tribunal, in the penultimate paragraph of its order, while observing that Section 58(4) with its proviso clause does not apply to the assessee's case, the assessee being the owner of horses maintained by him for running in horse races, has held that the A combined reading of Section 115BB and the proviso to section 58(4) along with the CBDT circular no.721 dated 13.09.1995 fortify the action of the Commissioner (Appeals) and we see no justification to interfere with the orders of the Commissioner (Appeals) on this issue. We are at a loss to understand as to how the Tribunal concurred with the decision of the Commissioner of Income Tax (Appeals), while making a diametrically opposite observation that Section 58(4) of the Act is not applicable. 15. We are, therefore, of the considered view that the total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated under Section 115BB of the Act. The order passed by the Tribunal, which affirmed the order of the Commissioner of Income Tax (Appeals), is liable to be set aside. Accordingly, the order passed by the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
