TaxTMI 
TaxTMI 
2026 (1) TMI 62
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....ble under the Income Tax Act, 1961. 5. The lower authorities erred in treating the buy-in amount as an expenditure. 6. The 1st Appellate Authority erred in not appreciating the fact in similar cases, buy-in of the Assessee was reduced from the winnings. 7. The lower authorities, ought to have appreciated that the gaming platform, i.e., gameskraft, has not deducted any tax at sources, since the Appellant did not have any winnings. 8. The lower authorities are not justified in bringing gross winnings to tax instead of net winning, which in Appellant's case is loss. 9. The Appellant craves leave to add, amend, alter or rescind any of the above grounds of appeal before or at the time of hearing. Sd/- APPELLANT 3. The assessee has also filed a petition for admission of additional ground which reads as under: "Without prejudice to the grounds, the learned CIT(A) is not justified in confirming the addition of Rs. 1,86,60,850/- made by learned Assessing Officer being gross receipts from gaming activity u/s 115BB, ignoring the fact that the amendment made vide insertion of section 115BBJ w.e.f. 01/04/2023 is clarificatory in....
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....d that these 2 provisions specifically govern the taxation of the income from online game. This newly introduced regime replaced the earlier arbitrary framework that provide charging of tax on the gross winning amount without recognizing the loss or entire cost. Section 115BBJ introduced the concept of new net winning which more accurately reflects the true economic income accruing to a player. The learned Counsel for the assessee has further submitted that the explanatory memorandum to the Finance Bill 2023 acknowledges that the earlier provisions were inadequate to address the unique transactional nature of online games where the winning and losses occur frequently within a single platform. The amendment aims to align tax incidence with actual net gains rather than isolated gross receipts. Thus, the learned Counsel for the assessee has submitted that the additional ground raised by the assessee may be admitted for adjudication and the amendment vide Finance Act, 2023, inserting new section 115BBJ is a clarificatory in nature and therefore, will have a retrospective effect. He has further submitted that the provisions introduced by Finance Act, 2023 are beneficial in nature and cu....
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....per the provisions of section 58(4) of the Act, no deduction or allowance is permissible against the said income thereby these provisions con templates the gross income from winning of lottery or games to be taxed at a fixed rate provided u/s 115BB of the Act. He has further contended that section 115BBJ has been introduced vide Finance Act, 2023 applicable for the A.Y 2024-25, therefore, the same is not applicable for the year under consideration as the said provision is neither clarificatory nor curative in nature and further the Legislature has specifically mentioned in the amendment itself that the amendment is applicable w.e.f. A.Y 2024-25. He has relied upon the judgment of the Hon'ble Supreme Court in the case of Krishna Gopal Tiwari vs Union of India reported in 282 Taxman 274(S.C) and submitted that when the amendment provides a specific date of its applicability, then the same cannot be treated as retrospective in nature. He has then relied upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. Vatika Township (P) Ltd reported 367 ITR 466 (S.C) that the Hon'ble Supreme Court has held that one of the established rule is that unless a contrary int....
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....ive effect of its applicability. In support of his contention, the assessee has relied upon various judgments. However, we find that the settled rule of interpretation as discussed and reiterated by the Hon'ble Supreme Court regarding the retrospectivity of a particular legislation is once again considered by the Constitution Bench in the case of CIT vs. Vatika Township (P) Ltd (Supra) in para 30 to 38 as under: "30. A legislation, be it a statutory Act or a statutory Rule or a statutory Notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, such as one finds in a work of fiction/ non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of 'Interpretation of Statutes'. Vis-à-vis ordinary prose, a legislation differs in its provenance, lay-out and feat....
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....pective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India v. Indian Tobacco Association [2005] 7 SCC 396, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra [2006] 6 SCC 286. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here. 34. In such cases, retrospectively is attached to benefit the persons in contradistin....
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....ct is 'to explain' an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language 'shall be deemed always to have meant' is declaratory and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-amended provision was clear and unambiguous. An amending Act may be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law which the Constitution came into force, the amending Act also will be part of the existing law." The above summing up is factually based on the judgments of this Court as well as English decisions. A Constitution Bench of this Court in Keshavlal Jethalal Shah v. Mohanlal Bhagwanda....
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....tation, it ought to be construed as prospective only." 37. In the case of CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589, this Court held that as the liability to pay tax is computed according to the law in force at the beginning of the assessment year, i.e., the first day of April, any change in law affecting tax liability after that date though made during the currency of the assessment year, unless specifically made retrospective, does not apply to the assessment for that year. Answer to the Reference 38. When we examine the insertion of proviso in Section 113 of the Act, keeping in view the aforesaid principles, our irresistible conclusion is that the intention of the legislature was to make it prospective in nature. This proviso cannot be treated as declaratory/ statutory or curative in nature. There are various reasons for coming to this conclusion which we enumerate hereinbelow: Reasons in Support 39. (a) The first and foremost poser is as to whether it was possible to make the block assessment with the addition of levy of surcharge, in the absence of proviso to Section 113? In Suresh N. Gupta's case (supra) itself....
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....rocedure. The Hon'ble Supreme Court has observed that where a benefit is conferred by a legislation, the rule against retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other persons or on the public generally, and where to confer such benefit appears to have been the legislators objects, then the presumption would be that such legislation, giving it purposive construction, would warrant it to be given a retrospective effect. In the case in hand, the provisions of section 115BBJ is providing only the taxation of certain income with flat rate and therefore, it is not a procedural provision to be treated as having removed the unwanted hardship to certain set of assessees. The Pune Bench of the Tribunal in the case of Dinar Umeshkumar More vs. ITO (Supra) has also analyzed the fundamental rule of interpretation in para 13 and 14 as under: "13. It is a fundamental rule of interpretation that ordinarily, a legislation is presumed to be prospective unless there appears a contrary intention. Similarly, a statute which impairs vested rights acquired under existing law or which cre....
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....ncur with the earlier view holding such an amendment to be retrospective, their Lordships referred the matter for consideration by a Larger Bench. It was pursuant to such a reference, that the Constitution Bench in Vatika Township Pvt. Ltd. 367 ITR 466 (SC) came to consider this issue. It has been laid down in this decision that ordinarily legislation is presumed not to be intended to have a retrospective operation as the law passed today cannot apply to the events of the past. Their Lordships of the Constitution bench further observed that a legislation which imposes new obligation should be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect. It was in this backdrop of the principles of statutory interpretation that the Constitution Bench held proviso to section 113 as prospective. After holding so, their Lordships observed that if the legislature is going to confer a benefit, then such an amendment will have a retrospective effect. Discussing this issue in para 33 of the judgment, the Hon'ble Apex Court held that : "We would also like to point out, for the sake of completeness, that where a benefit is conferre....