TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 913
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....s and taxes to be withheld thereon without appreciating the fact that appropriate inquiries and verifications in this relation were made by the learned AO during the course of assessment proceedings. II. directing the learned AO to examine the issues (despite himself admitting that submissions have been made during the assessment proceedings) merely on account of the discussion on the subject not forming part of the assessment order, without appreciating the fact that mere non-mentioning of specific reasons for accepting explanation of Appellant by the learned AO in assessment order cannot lead to assumption that the learned AO did not apply his mind or that he has not made inquiry on the subject. III. directing him to re-verify and examine the issue on hand without considering the fact that the power of revision for the said year could have been exercised only where no inquiry as required under the law was undertaken and that his goodself has no power to restart the inquiries when the learned AO had made the inquiries and considered all aspects of the matter. IV. directing the AO to re-examine the matter on payments made to players on winnings from lotteries/crossword puzzle....
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.... XI. issuing directions to re-examine the issue without considering the fact that the learned Pr. CIT' s opinion about the AO's findings should be based on his objective satisfaction (not subjective satisfaction) from the assessment order and he himself should form a prima-facie opinion/should himself have a categorical finding that the order passed by the learned AO is erroneous insofar it is prejudicial to the interest of the revenue." 3. In the present appeal, the assessee is aggrieved against the invocation of revisionary proceedings under section 263 of the Act by the learned PCIT. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is engaged in the business of providing online games service. For the year under consideration, the assessee e-filed its return of income on 29/09/2015 declaring a total income of Rs. 22,19,08,470. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. Vide order dated 29/12/2017 passed under section 143(3) of the Act, the Assessing Officer ("AO") assessed the tot....
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....e the AO during the assessment proceedings. 8. The learned PCIT, vide impugned order, held that inadequate enquiries were made by the AO on payments made by the assessee to players on winning from lotteries/crossword puzzles and taxes to be withheld thereon. It was further held that there is no mention in the assessment order about the enquiry made by the AO on payments made to the players. It was further held that the AO has not examined the details furnished by the assessee and since no enquiry has been made by the AO, the assessment order is incomplete and needs enquiry on the issue of deduction of TDS. Accordingly, the learned PCIT set aside the assessment order dated 29/12/2017 passed under section 143(3) of the Act and directed the AO to examine the issue of non-deduction of TDS on the full amount of payments made for winning from lotteries/crossword puzzles. The AO was further directed to examine the issue of payment towards winning of lotteries or crossword puzzles on account of online promotional games during the year. Further, the AO was directed to verify whether the assessee has complied with the provisions of Chapter XVII B of the Act. With the above directions, the A....
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....e TDS while making the payment to the winner of the game, when the prize money paid was more than Rs. 10,000. However, the learned PCIT alleged that TDS was not deducted on the full amount of payment made and this aspect was not examined by the AO during the assessment proceedings. The learned PCIT further alleged that the AO has not conducted an adequate enquiry. It was also alleged that the AO has not examined the details as furnished by the assessee and therefore needs enquiry on the issue of deduction of TDS. 12. As per the assessee, during the assessment proceedings, the AO directed the assessee to furnish the details of withholding taxes on the winning amount paid to the players with supporting evidence. We find that the entry dated 06/11/2017 in the order sheet of the assessment proceedings, furnished by the learned DR during the hearing before us, fully corroborates this fact. In response thereto, the assessee filed its written submission dated 18/11/2017 before the AO providing the details of different forms of games available on its website and the mechanism of payout to the winners. From the perusal of the aforesaid submission, forming part of the paper book from pages ....
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....written submission dated 18/11/2017. For ready reference, the relevant portion of the assessee's submission, as noted in para 4.2 of the assessment order, is reproduced as under:- "4.2 In response to same, the assessee vide letter dated 15.12.2017 has submitted the following details which are reproduced as under: i. The Company has incurred certain advertisement cost amounting to INR 24,91,45,374 during AY 2015-16. The break-up of the total advertisement cost is provided in Annexure-4. ii. Your goodself will note that out of the same, the Company has paid advertisement cost amounting to INR 10,46,35,355 to Facebook, Ireland for banner advertising on Facebook. iii. For the purpose of uploading the banner advertisement on Facebook, the Company submits the advertisement related information on the interface provided by Facebook in the required format. iv. Facebook, after due verification of the advertisements, uploads the advertisement on its server: v. The Company does not withhold taxes on payment made to Facebook, given that such payments do not fall under the definition of 'Royalty' both under the Act and the tax Treaty between India Ireland." 14. We find that ....
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.... that tax has been paid in respect of the winnings." 17. Therefore, as per the provisions of section 194B of the Act, tax is required to be withheld on the winning amount from any lottery or crossword puzzle or card game and other game of any sort, at the time of payment, when the winning amount exceeds Rs. 10,000. Accordingly, we are of the considered view that under section 194B of the Act, as it stood during the relevant year, there was no requirement to withhold tax on the entire payment made by the assessee and therefore we find no merits in the allegation of the learned PCIT that the assessee failed to deduct tax on the entire payment made towards winning from lottery/crossword puzzle. 18. During the hearing, the learned AR referred to the submission dated 18/11/2017, wherein the mechanism of payout to the winners and deduction of TDS under section 194B of the Act has been explained. As per the assessee, the players play on the online platform among themselves by paying an entry fee for participation in the game. Further, out of the entry fees received, the assessee collects 5% to 20% of the total entry fee as its service charge only when the game is completed, i.e. when th....