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TMI Blog2015 (1) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax (Appeals), while making a diametrically opposite observation that Section 58(4) of the Act is not applicable. - 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 is set aside.- Decided in favour of Revenue. - T.C. (A) NO. 649 OF 2006 - - - Dated:- 10-12-2014 - R. SUDHAKAR AND R. KARUPPIAH, JJ. For The Appellant : T. Ravikumar, Senior Standing Counsel For The Respondent : S. Sridhar JUDGMENT . R. Sudhakar, J. - The Revenue has filed this appeal assailing the order dated 28.09.2005 passed by the Income Tax Appellate Tribunal, Madras 'A' Bench, in ITA No.1275/Mds/2001 and the same was admitted on the following question of law: Whether on the facts and circumstances of the case, the Tribunal was right in 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 under Section 115BB of the Income Tax Act? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income of an assessee includes 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, the income-tax payable shall be the aggregate of (i) the amount of income-tax calculated on income by way of winnings from such lottery or crossword puzzle or race including horse race or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, at the rate of thirty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). Explanation :- For the purposes of this section 'horse race' shall have the same meaning as in Section 74A.' 13. 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. On a consideration of the rival submissions we are of the view that the order of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 nothing contained in this sub-section shall apply in computing the income of an assessee, being the owner of horses maintained by him for running in horse races, from the activity of owning and maintaining such horses. Section 115BB. Where the total income of an assessee includes 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, the income-tax payable shall be the aggregate of (i) the amount of income-tax calculated on income by way of winnings from such lottery or crossword puzzle or race including horse race or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, at the rate of thirty per cent; and (ii) the amount of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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 74A(2): Modification of the provisions relating to losses from certain specified sources falling under the head 'Income from other sources'.- 32.1. As mentioned above, winnings from lotteries, crossword puzzles, races including horse races, card games, other games or from gambling or betting is chargeable to tax under the head 'Income from other sources'. Section 74A(1) provides that the losses from the aforesaid sources will be allowed to be set off only against income from the same source and the losses not so set off relating to these sources incurred during a year are not allowed to be carried forward for set off against any income of a subsequent year. Under the provisions of section 74A(3) of the Act, however, losses arising from the activity of owning or maintaining race horses for running in horse races are entitled to be carried forward and set off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 applicable to the case of hand, what can be deduced from the same is the fact that the higher rate of tax as applicable to winnings from betting, etc. has been brought down to 30%, on a par with the rate applicable for other incomes as a measure of rationalization. Therefore, the intent of the legislature to levy tax at the rate of 40% for the relevant assessment year on the winnings from betting, etc. is apparent as otherwise, the very existence of the said provision in the Act would be meaningless. 12. On a careful perusal of the above provisions of law and the legislative intent, this Court is not inclined to accept the view as propounded by the Tribunal and the Commissioner (Appeals), as Section 115BB of the Act is a standalone special provision, which makes it clear that income of an assessee, not being income from activity of owning and maintaining race horses, would fall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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