Play Games 24X7 Private Limited Vs ACIT (ITAT Mumbai)
The Mumbai ITAT decided cross appeals filed by Play Games 24X7 Private Limited and the Revenue against the NFAC, Delhi order dated 28.08.2025 for AY 2017-18. The assessee operated online and mobile gaming platforms, including Rummy Circle and Teen Patti. It filed its return declaring total income of Rs.103,90,26,560 under the normal provisions and book profit of Rs.101,78,22,530 under section 115JB. During scrutiny, the AO examined payments made towards winnings to players and made a disallowance under section 40(a)(ia) for alleged non-deduction of TDS under section 194B.
The assessee explained that players maintained virtual wallet accounts, into which they deposited money to participate in games. The participation money was not the assessee’s revenue and was maintained separately, while the assessee earned platform service fees ranging from 5% to 20%. The winning amounts credited to players were not routed through the Profit and Loss Account and were treated as a liability. The assessee stated that TDS was deducted where net winnings exceeded Rs.10,000 per game.
The AO required details of winnings and TDS compliance. The assessee stated that winnings exceeding Rs.10,000 per game amounted to Rs.25,18,84,437 and furnished data concerning payments below and above Rs.10,000. The AO found the information insufficient to establish player-wise and transaction-wise compliance and concluded that TDS under section 194B was required on the winnings. He treated Rs.2,742,57,62,413 as winnings on which TDS had not been deducted and consequently made a disallowance of Rs.817,37,28,723 under section 40(a)(ia).
