Arakere Channappa Vishwanath Vs ITO (ITAT Bangalore)
Summary: The assessee filed an appeal for Assessment Year 2022-23 against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, confirming an addition of Rs. 2,33,52,271/- made by the Assessing Officer on account of alleged online gaming winnings.
The case was selected for scrutiny after information was received through CRIU through the Insight Portal that the assessee had earned winnings of Rs. 2,33,52,271/- from M/s Gameskraft Technologies Pvt. Ltd. during Financial Year 2021-22 through online gaming portals including “Rummyculture” and “Gamezy”. The Assessing Officer treated the entire amount as taxable winnings under sections 2(24)(ix), 56(2), 115BB and 58(4) of the Income-tax Act, 1961.
Before the CIT(A), the assessee submitted that the amount represented cumulative gross credits in the gaming wallet and not real income. According to the assessee, the information furnished by Gameskraft itself showed total buy-in amounts of Rs. 2,61,51,624/- against gross winnings of Rs. 2,33,52,271/-, resulting in a net loss of Rs. 27,99,353/-. The CIT(A), however, confirmed the addition, holding that the gross winnings certified by the gaming portal represented the legally relevant figure and that section 58(4) prohibited deductions against such winnings.
Before the Tribunal, the assessee relied, among other things, on sections 194BA and 115BBJ and Rule 133 introduced by the Finance Act, 2023, contending that the legislative framework recognised taxation of net winnings rather than gross wallet movements. The assessee also relied upon CBDT Circular No. 05/2023 dated 22.05.2023 and Tribunal decisions concerning horse-race winnings.
