TaxTMI 
TaxTMI 
2022 (3) TMI 1400
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....rs stands diverted at source by virtue of overriding title on the facts and circumstances of the case. [i]. The learned Commissioner of Income-tax [Appeals] failed to appreciate that the totalizator collection from the punters stands diverted at source for disbursement to dividend to punters on the facts and circumstances of the case. [ii]. The learned Commissioner of Income-tax [Appeals] failed to appreciate that method of accounting adopted by the appellant were accepted by the revenue from past many years and the rule of consistency has to be followed, further the learned Assessing Officer has deviated from the stand taken consistently and accepted for earlier years on the facts and circumstances of the case. [iii]. The authorities below erred in observing that the gross receipts received in the totalizator would be the amount of revenue receipts aggregated with all other receipts on the facts and circumstances of the case. [iv]. The learned Commissioner of Income-tax [Appeals] failed to appreciate that as per the betting rules what the appellant is entitled to is only the commission and and the clauses in the betting rules clearly indicates t....
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....one could have been considered for the purposes of disallowance under section 40A[3] of the Act on the facts and circumstances of the case. 5. The learned Commissioner of Income-tax [Appeals] is not justified in law in setting aside the issue of disallowance of a sum of Rs. 9,51,580/-representing expenditure disallowed in the earlier assessment year and was claimed by the appellant in the return of income as an allowance deduction on actual payment as per the provisions of section 43B of the Act on the facts and circumstances of the case. 6. The learned Commissioner of Income-tax [Appeals] is not justified in law in setting aside the issue of disallowance of bad debts written off in the books of the appellant of Rs.6,19,000/- to the learned assessing officer without jurisdiction on the facts and circumstances of the case. 7. The learned Commissioner of Income-tax [Appeals] is not justified in law in setting aside the issue of a sum of Rs.70,618/- being prior-period expenses claimed by the appellant in the return of income, to the assessing officer without jurisdiction on the facts and circumstances of the case. 8. The learned Commissioner of Inco....
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....tted that, the gross receipts does not constitute income of the race club because income of other race clubs are transferred by way of overriding title. 3. Disagreeing with the submissions of assessee, the Ld.AO re-casted the income and expenditure account and computer the taxable income in the hands of assessee at Rs. 1,87,65,803/-. Agreed by the additions/this allowances made, as it would appeal for the Ld.CIT(A). 4. The Ld.CIT(A) partly allowed the claim of assessee by considering the amount paid to the punters on winning as application of income as against diversion by overriding titles and submitted by assessee's however upholding the disallowance of the amount paid other than by way of a county checks that exceeded the limits prescribed under section 40A(3) of the Act. The Ld.CIT(A) also allowed the claim pertaining to expenditure disallowed in earlier years for which provision was made and was also not considered by assessing officer in the assessment order. The Ld.CIT(A) also had directed the lower deal to consider the claim of brought forward unabsorbed depreciation and unabsorbed losses for the year under consideration and to recompute the interest payable under ....
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....nd immediately on completion of each race, the assessee is required to make payment on the winning tickets. It is assessee's claim that it has been following a consistent accounting policy which is in line with the accounting policy of other race clubs all over the country by which credits to the Profit and Loss account only the net collections and not the gross collections i.e. to say collections exclusive of winning payments and betting tax payable to the State Government. Thus, only the net collection/commission from totalizators alone is considered by assesseee as its tagable income. Totalizator is defined in section 2(6) of the Mysore Betting Tax Act, 1932 as: "Totalisator" means a totalisator in an enclosure which the licensees have set apart in accordance with the provisions of the Mysore Race Courses Licencing Act, 1952 and includes any instrument, machine or contrivance known as the totalisator, or any other instrument, machine or contrivance of a like nature or a sweep or any other scheme for enabling any number of persons to make bets with one another on the like principals." 5.1 It is the assessee's contention that w....
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....d Betting Tax payments merely arise out of the obligations that are undertaken by the assessee in the course of its business, and the payments made in the discharge of those obligations merely amount to application of income, viz. gross receipts. We decodingly reject the contention of the assessee, based on the concept of overriding title, with 5.2 regard to exclusion of the winning payments and Betting Tax from the gross income." On the contrary, the Ld. Authorised Representative has argued that the Order of the ITAT in the case of Hyderabad Race Club (supra) has not considered the judgment of the Hon'ble Apex Court in the case of CIT vs. Sitaldas Tirathdas 41 ITR 367 (S.C.) in its true intent. He also has argued that the ITAT Order has also not considered some other relevant decisions in the right perspective. A perusal of the judgment of the Hon'ble Apex Court in the case of CIT vs Sitaldas Tirathdas 41 ITR 367 (S.C.) would show that the Hon'ble Apex Court has held that there is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation c....
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....ue of overriding title in the case of another Race Club and h held against the netting of receipts by the assessee and has al ruled against the assessee with respect to the provisions section 40A (3) and we are in agreement with the principle la down in the said order. However, we do note that various Ra Clubs formulate their own Rules regarding Betting, Totalizator Dividend, Refund of Tickets, Forfeiture of the Ticket amour carry-over of the Pool amount, Distribution of the Pool amou etc. The Ld. AR has filed a copy of the Betting Rules issued the assessee and has sought to distinguish the case of ti Hyderabad Race Club by contending that by virtue of the: Rules, the assessee's claim of overriding title stands affirme thea However, a perusal of Order of the ITAT in the case of Hyderabad Race Club (supra) shows that no reference has been made to the Betting Rules of the assessee club in that case. A perusal of the case records of the assessee also shows that these Rules were not considered at any stage of the proceedings before the tax authorities. The Ld. CIT has strongly objected to the reference to the Betting Rules at thi....