TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 323
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.... were adjusted against other heads, including betting income and the balance betting income was alone shown as being taxable at the flat rate of 40% under Section 115-BB and other CBDT circulars. The assessing officer held that as per the provisions of Section 115-BB, what is envisaged is the total winning, and deduction of losses under the other heads cannot be set off against it and, therefore, recalculated the income under Section 115-BB on the entire income from betting. 3. Aggrieved against the same, the assessee preferred appeal before the CIT (Appeals). The issue was held in favour of the respondent/assessee by the CIT (Appeals), and, thereafter, by the Tribunal, wherein, the Tribunal held as follows :- 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 (Appeals) is perfectly justified where the assessee was allowed to adjust the losses suffered under the head business against the income earned under other heads including betting income.&n....
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....r 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. 7. Sub-section (4) to Section 58 of the Act was inserted by the Finance Act, 1986 with effect from 1.4.1987 and the purport of the said amendment is to disallow any expenditure from 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 which are deemed as income for the purposes of levy of income tax under Section 2(24)(ix) of the Act. 8. By the Finance Act, 1986, with effect from 1.4.1....
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....ncome 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 against the income from the source including horse races, in a subsequent year. The benefit of carry forward and set off of such losses is allowed for four assessment years next following the assessment year for which the loss was first computed. In view of the insertion of a new section 115BB in the Act levying a flat rate of tax on winnings from lotteries, crossword puzzles, races including horse races, etc., sub-sections (1) and (2) of section 74A of the Act have been deleted. Sub-section (3) has been amended to provide that in the case of a taxpayer, being the owner of horses maintained by him for running in horse races the amount of loss incurred in the activity of owning or maintaining such race horses in any assessment year shall not be set off against income, if any, from any othe....
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....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 under Section 115BB of the Act. In view of the specific provision contained in Section 115BB of the Act under Chapter XII of the Act, which provides for determination of tax in certain special cases, the special rate of tax is applicable for the entire income of winnings from horse racing and should be subject to tax at the special rate provided therein. It is not the case of the assessee that the income being brought to tax is earned from owning and maintaining the horses. Therefore, in our considered opinion, the provisions of Section 58(4) of the Act will not come into play. 13. The methodology of computing tax on Long Term Capital Gain vis-a-vis Section 112 of the Act for which the assessee relied on the CBDT Circular No.721 dated 13.9....