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TMI Blog2022 (4) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... cision taken by the A.O. with regard to the first issue discussed above, viz., whether there is diversion of income or not. The question of application of provisions of sec.40A(3) will not apply, if the assessing officer accepts the contention of the assessee that there is diversion of income and expenditure. Accordingly, we restore this issue in both the years to the file of the A.O. CIT(A) has enhanced the total income of the assessee - Whether reasonable opportunity to the assessee as per provisions of section 251(2) provided? - HELD THAT:- As we notice that the AO has committed an error in computing the total income, i.e., as against the total income of Rs.4.16 crores, he has computed the total income at Rs.4.06 crores. We notice that the Ld CIT(A) has not enhanced any income as alleged by the assessee. In any case, the assessee has not pointed out the specific issue, which has resulted in enhancement of income as alleged in the above said ground. Accordingly, we dismiss the grounds relating to this issue. Disallowance u/s 40(a)(ia) - subsidy Payment - HELD THAT:- We are of the view that the disallowance made by A.O. u/s 40(a)(ia) of the Act in respect of subsidy expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21-4-2022 - Shri N.V. Vasudevan, Vice President And Shri B.R. Baskaran, Accountant Member For the Appellant : Shri S.V. Ravishankar, A.R. For the Respondent : Shri Sankar Ganesh K., D.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: Both the appeals preferred by the assessee are directed against the orders passed by Ld. CIT(A), Mysuru and they relate to the assessment years 2009-10 2013-14. Since common issues are urged in these appeals, they were heard together and are being disposed of by this common order, for the sake of convenience. 2. The common facts are that the assessee is engaged in the activity of conducting horse racing and on and off course betting. The public at large could place bets on horses either at the race course or through the counters placed outside the race course. The person who places bet on horses are called Punters and if the horse on which he has placed bet wins the race securing particular rank (1st or 2nd or 3rd etc.), he will get prize money according to the pre-determined rates, which is the combination of multiplying factor for each of the horse and the rank. The public can place their bets either at the totalizato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed tax at source. Accordingly, he disallowed following amounts u/s 40(a)(ia) of the Act. a) Subsidy amount - Rs.2,69,94,732/- b) Contribution to Turf authorities - Rs.20,00,000/- c) Dope testing charges - Rs.54,97,036/- The A.O. also made certain other additions but the same were deleted by Ld. CIT(A). 5. The first common issue contested by the assessee is whether the collectionsmade from punters by totalizators/book keepersfor participating in horse races and disbursement of prize money/dividend to them arediverted at source or not? 5.1 The Ld. A.R. submitted that this issue has been decided against the assessee by Hyderabad bench of Tribunal in the case of Hyderabad Race Club (supra), wherein the Hon ble Hyderabad bench has taken the view that the amount collected by way of betting by punters needs to be treated as income of the assessee. The Ld. A.R. further submitted that the very same issue was considered by Mysuru Circuit bench of the Tribunal in the assessee s own case in assessment year 2010-11 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er verification of record. Accordingly, we restore this issue to the file of the AO. With the adjudication of this ground, the appeal of the assessee for AY 2009-10 stands disposed of. 8. The assessee has raised some more issues in AY 2013-14. The assessee has raised a legal ground stating that the Ld. CIT(A) has enhanced the total income of the assessee to Rs.4.16 crores as against the total income of Rs.4.06 crores determined by the A.O., without giving reasonable opportunity to the assessee as per provisions of section 251(2) of the Act. However, we notice that the AO has committed an error in computing the total income, i.e., as against the total income of Rs.4.16 crores, he has computed the total income at Rs.4.06 crores. We notice that the Ld CIT(A) has not enhanced any income as alleged by the assessee. In any case, the assessee has not pointed out the specific issue, which has resulted in enhancement of income as alleged in the above said ground. Accordingly, we dismiss the grounds relating to this issue. 9. The next issue contested in assessment year 2013-14 is the disallowance made by the A.O. u/s 40(a)(ia) of the Act, which consisted of various types of payments. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he two-year old subsidy is also a kind of reimbursement to groom horses and the same, in our view, would also not attract provisions of TDS. (d) payment to jockeys and trainers fund and employees welfare society is a kind of contribution connected with the business activities of the assessee and the said payments are also not covered by any of the TDS provisions. (e) the last item Syces subsidy is the money paid to the owners of horses from out of stake money and it would also be not covered by any of the TDS provisions. Accordingly, we are of the view that the disallowance made by A.O. u/s 40(a)(ia) of the Act in respect of subsidy expenditure is not in accordance with law and the Ld. CIT(A) was not justified in confirming the said addition. Accordingly, we set aside the order passed by the Ld. CIT(A) on this issue and direct the A.O. to delete the disallowance. 9.3 The next item disallowed u/s 40(a)(ia) of the Act is the contribution of Rs.20 lakhs made to the turf authority. The assessee has offered following explanation:- 9.4 A perusal of the above said explanation would show the above said amount represents contribution made by the assessee to conduct an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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