Royal Western India Turf Club Limited Vs ITO (ITAT Mumbai)
In a significant ruling for the horse racing industry, the Income Tax Appellate Tribunal (ITAT) Mumbai bench has affirmed that “stake money” received by horse owners from race clubs is not subject to Tax Deducted at Source (TDS) under either Section 194B or Section 194BB of the Income Tax Act, 1961. The decision came in the appeal filed by the Royal Western India Turf Club Limited (RWITC) against a demand of over ₹19.47 crore, including interest, for the Assessment Year 2016-17.
The Tribunal’s order, pronounced on May 22, 2025, effectively reiterates its own previous judgment on the same issue for an earlier assessment year of the RWITC, emphasizing the binding nature of specific CBDT circulars and the interpretation of relevant statutory provisions.
The Heart of the Dispute: Stake Money vs. Winnings
The Royal Western India Turf Club Limited is primarily involved in conducting horse races and offering hospitality services. The core contention between the club and the Income Tax Department revolved around the nature of “stake money” paid to horse owners whose horses win or place in races. The department contended that this stake money constituted “winnings” from a “game of any sort” and was therefore liable for TDS under Section 194B of the Income Tax Act. Since the RWITC had not deducted TDS on these payments, the Assessing Officer (AO) declared the club an “assessee-in-default” under Section 201(1) of the Act, raising a substantial demand. The Joint Commissioner of Income Tax (Appeals) subsequently upheld the AO’s stance.
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