The Tribunal held that the ‘stake money’ will not be taxable as TDS under S. 194B or S. 194BB of the Act. When a specific provision, S. 194BB, has been provided for dealing with the horse races, general provision, S. 194B, cannot be used to affix liability on the assessee. [CBDT Circular No. 8 of 2005 dt 29-08-2005(2005) 277 ITR 20 (St)] It held that horse racing is a “skill-based game” and not a “luck-based game” and hence, S. 194 BB will not be applicable to the ‘stake money’. Stake money is different from ‘winnings’ under S. 194BB and is not taxable under it [CBDT circular No. 240 dt. 17.05.1978 (2017) 117 ITR 17(St)]. The recipients have already paid the tax and filed return showing the same. Assessee cannot be treated as an assessee in default accordingly the interest levied is set aside. (Followed the decision in U.P. State Electricity Board and Anr. v. Harishankar Jain and Ors. (AIR 1979 SC 65); LIC v. D.J. Bahadur and Ors. AIR 1980 SC 2181); Dr. K.R. Lakshmanan v. State of Tamil Nadu (1996) 2 SCC 226, Bangalore Turf Club Ltd v. UOI (2014) 52 taxman.com 290 (Karn.) (HC) Madras Club v. DCIT ITA No. 646-657/Mds/2015 and Hyderabad Race Club ITA No. 319/323/ Hyd/ 2015, Hindustan Coca-Cola Beverages (P) Ltd. v. CIT (2007) 293 ITR 226 (SC); (ITA No. 6625/MUM/ 2017 dt. 28-06-2019)(AY. 2007-08)
Royal Western India Turf Club Ltd. v. ACIT( 2019) 201 TTJ 871 /178 ITD 18 / 73 ITR 670 / 184 DTR 393(Mum.)(Trib.)
S. 194B : Deduction at source-Winning from lottery-Cross word puzzle -stake money–Money paid to horse owners for winning races The position of TDS on ‘stake money’ has not changed even after amendment in S. 194B of the Act by Finance Act, 2001 and the position prior to amendment continues to prevail, i.e. stake money is not liable to deduct tax at source either under S.194BB or under S.194B of the Act-Recipients have shown the income received from the assessee and paid the taxes-Assessee cannot be treated as an assessee in default–Interest levied is set aside. [S. 194BB, 201(1), 201(IA)].