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M/s. Madras Race Club Versus The Deputy Commissioner of Income Tax, TDS Circle –I, Chennai

2016 (1) TMI 638 - ITAT CHENNAI

TDS u/s 194B - failure to deduct tax from stake money prizes paid to horse owners - Held that:- The lower authorities has applied the provisions of section 194B to the payments made to horse owners as “stake money” on the ground that by insertion of words ‘or card game and other game of any sort’ w.e.f. 1.6.2001, the horse racing income comes under the ambit of ‘other game of any sort’, we find that this issue had arisen in the case of Bangalore Turf Club Ltd. Vs. Union of India and others (2014 .....

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e - I.T.A.Nos.646, 647, 648, 649, 650, 651, 652, 653, 654, 655, 656 and 657/Mds/2015 - Dated:- 28-10-2015 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER For The Appellant : Dr. Anitha Sumanth, Advocate For The Respondent : Dr. Milind Madhukar Bhusari, IRS, CIT ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER These appeals by the assessee are directed against the common order of the Commissioner of Income-tax (Appeals)-17, Chennai dated 31.12.2014 for the above ass .....

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B of the Act in contradiction to Sec.194 BB that specifically deals with horse racing . 4. The authorities ought to have noted that the CBDT Circular No.240 dated 17.5.1978 has clarified the position with regard to tax deducted at source from income by way of winnings on horse racing and erred in not applying the same. 5. The Commissioner of Income Tax (Appeals) erred in distinguishing the Judgment of the Karnataka High Court in the case of Bangalore Turf Club Ltd Vs. Union of India on wholly un .....

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ssessee has been conducting Horse Races in Chennai and the hill station of Ootacamund and collecting the entry fee and betting money from punters and keeps certain portion of the betting amount collected from punters and the same is utilized for payment of stake money to horse owners, administrative cost and other expenses The TDS inspection was carried out in the office premises of the assessee on 14.02.2013. It was found that tax was not deducted on payments of stake money disbursed among the .....

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05.1978. The assessee has also relied on the decision of Supreme Court in the case of Hindustan Coca Cola Beverage (P) Limited vs CIT (2007) 293 ITR 226 wherein it was held that if the payee has already paid tax on the income, recovery of tax cannot be made once again from the tax deductor. The assessee further argued that the stake money will not be covered by sec.194B of the Act also. Not convinced with the reply of the assessee, the AO was of the view that the assessee's case was covered .....

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held that it is a settled principle of law that when two or more clauses appear to deal with the same subject, the one with the latest amendment prevails. This is without prejudice to hold that the activity of breeding and owning differs from the activity of racing and participating in a race for stake money. The activity of participating in the race itself comes under the ambit of the game. The activity of facing for the purpose of stake money could make such stake money assume the character o .....

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see did not furnish necessary proof in support of its claim. The AO further rejected the contention of the assessee that the reopening is not valid for financial years 2007 to 08 to 2009-10 after the expiry of two years from the end of. The financial year in which the statement filed as referred to sec.200 of the Act for the reason that the deductor has not filed the return in respect of stake money. The AO held that the stake money from horse races is in the nature of prize money received on ho .....

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appeal before the Commissioner of Income Tax (Appeals). 4. On appeal the Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer. Against this, the assessee is in appeal before us. 5. We have heard both the parties and perused the material on record. We find that the lower authorities has applied the provisions of section 194B to the payments made to horse owners as stake money on the ground that by insertion of words or card game and other game of any sort w.e.f. 1.6.2 .....

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tion of the judgment of the High Court is reproduced hereunder for ready reference: 58. When the words 'and other game of any sort' used in section 194B is examined with reference to the preceding words and interpreted, the one and only conclusion which can be drawn would be that activity of owning and maintaining horses cannot by any stretch of interpretation be held that it would fall within the definition of 'and other game of any sort'. 59. Thus, harmonious reading of the sta .....

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distinction between 'winnings' and 'activity of owning and maintaining horses' which has continued till date. Though, Section 194BB provided for TDS to be made on 'winnings from race horses' with effect from 01.04.1978, the Circular 240 dated 17.05.1978 came to be issued clarifying that it did not apply to stake money. Hence, insertion of the words 'card game or other game of any sort' to section 194B with effect from 2001 would have no bearing on payment of stak .....

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not found its place in the definition clause of "Income" under the Income-tax Act, 1961, Legislature introduced Explanations (i) and (ii) to sub-clause (ix) of sub-section (24) of section 2 so as to include such prize money also under definition of "income", since in those events people would compete with each other to win prizes. In fact, this position becomes clear from the budget speech of the Finance Minister which came to be rendered on the Floor of Parliament in the bac .....

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rom the winnings of these and all similar game shows." Ejusdem generis, principle of construction would mean same kind or nature, whereby wide words associated in the text with more limited words are taken to be restricted by implication to matters of the same limited character. For this principle to apply there should be sufficient indication of a category that can properly be described as a class or genus, even though not specified as such in the enactment. The nature of genus is gathered .....

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