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Facts
The assessee, while filing return for AY 2022-23, declared a total income significantly lower than the Rs.1,68,50,073/- prize money received from an online gaming platform. Despite notices and opportunities, the assessee failed to provide adequate explanation regarding this substantial receipt.
Held
The Tribunal upheld the taxation of the prize money under Section 115BB, stating that for AY 2022-23, winnings from games of any sort are taxable on a gross basis at 30% without deductions for losses. The assessee's arguments regarding games of skill and retrospective application of new laws were rejected.
Key Issues
Whether online gaming winnings are taxable under Section 115BB for AY 2022-23 on a gross basis, irrespective of claims of skill and net losses.
Sections Cited
115BB, 143(1), 143(2), 142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, C BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
This appeal is filed by the assessee against the order dated 1.
19.02.2025 passed by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [‘CIT(A)’ in short] for Assessment Year 2022-23, confirming the addition made by the Assessing Officer u/s.115BB of the Income-tax Act, 1961 (“the Act”).
Facts of the Case that the assessee is an individual who filed his return of income for AY 2022-23 on 01.08.2022 declaring total income of Rs.12,72,750/- using ITR-1 (Sahaj). The return was processed u/s. 143(1) of the Act. Subsequently, the case was selected for scrutiny through CASS based on information received through CRIU, indicating receipt of prize money of Rs.1,68,50,073/- from M/s Gameskraft Technologies Private Limited.
On verification of records, it was observed that during the relevant financial year the assessee disclosed only salary income from Madras Fertilizers Ltd. Though the assessee had reflected a receipt of Rs.21,429/- from Play Games 24x7 with corresponding TDS of (AY 2022-23) Rajeshkanna Vs ITO NCW 4(6) :3:
Rs.6,429/-, the same was not included under “Part B – Gross Total Income” of the return.
Statutory notices u/s.s 143(2) and 142(1) were issued on various dates; however, the assessee failed to comply. Even communications issued through NaFAC and Proforma AU-1 were not responded to.
Consequently, notice u/s.144 was issued. In response, the assessee merely stated that an outstanding demand had been paid, without explaining the receipt of prize money.
A show-cause notice dated 29.01.2024 proposing addition of Rs.1,68,50,073/- was issued. The assessee submitted account statements of his RummyCulture account, claiming that he had incurred net losses from online gaming. Information gathered from search and seizure proceedings conducted u/s.132 in the case of M/s Gameskraft Technologies Pvt. Ltd. on 15.03.2022 confirmed that the assessee had received prize money aggregating to Rs.1,68,50,073/- during FY 2021-22. sort are taxable on a gross basis at a flat rate of 30% without allowing any deduction or set-off. Accordingly, the amount of Rs.1,68,50,073/- was added as income from other sources and taxed u/s. 115BB of the Act.
On appeal, the Ld.CIT(A) upheld the action of the Assessing Officer.
Aggrieved, the assessee is in appeal before the Tribunal.
The ld.AR for the assessee contended that Online rummy is a game of skill and not a game of chance and there were overall losses and no real income accrued. She further submitted that winnings from online rummy cannot be treated as casual income u/s. 115BB. Ld.AR contends that subsequent legislative changes introduced by Finance Act, 2023 taxing only “net winnings” should be treated as clarificatory and applied retrospectively.Reliance was placed on judicial precedents including Dr. K.R. Lakshmanan v. State of Tamil Nadu and CIT v. Alom
The Ld. Departmental Representative (DR) supported the orders of the lower authorities and submitted that section 115BB, as applicable for AY 2022-23, specifically covers winnings from card games and (AY 2022-23) Rajeshkanna Vs ITO NCW 4(6) :5: other games of any sort and mandates taxation on gross winnings, irrespective of the nature of the game or losses incurred.
The sole issue for consideration is whether prize money of Rs.1,68,50,073/- received by the assessee from online gaming is liable to tax u/s. 115BB of the Act for AY 2022-23, irrespective of the claim of net losses.
We have carefully considered the rival submissions and perused the material available on record. It is undisputed that the assessee received prize money amounting to Rs.1,68,50,073/- from the online gaming platform operated by M/s Gameskraft Technologies Pvt. Ltd., as corroborated by CRIU data and search proceedings.
Section 115BB, as applicable to AY 2022-23, provides that winnings from lotteries, crossword puzzles, races, card games and other games of any sort, or from gambling or betting of any form, shall be taxed at a flat rate of 30%, and no deduction or allowance in respect of any expenditure or set-off of losses shall be allowed.
The contention of the assessee that online rummy is a game of skill does not take the income outside the ambit of section 115BB.
The Hon’ble Supreme Court in CIT v. G.R. Karthikeyan (1993) has held that the expression “other games of any sort” used in section 115BB is of wide amplitude. The charging provision does not distinguish between games of skill and games of chance.
The judicial precedents relied upon by the assessee, including
Dr. K.R. Lakshmanan, were rendered in the context of gambling laws and business income characterization and do not dilute the specific statutory mandate of section 115BB. The taxable event u/s. 115BB is the receipt of winnings, and not the net result of gaming activity.As regards the reliance on Circular No. 5 of 2023,
Notification No. 28 of 2023, and introduction of section 115BBJ by Finance Act, 2023, we find that these provisions are expressly made applicable from AY 2024-25 onwards. The proviso to section 115BB clearly states that it shall not apply to income from online games only for assessment years beginning on or after 01.04.2024. The legislative intent is therefore prospective, and the provisions cannot
Extrusions Ltd. is misplaced, as the amendments brought by Finance
Act, 2023 are not merely curative or clarificatory but constitute a substantive change in the scheme of taxation of online gaming income.
In view of the clear statutory position applicable for AY 2022-23,
we find no infirmity in the order of the Assessing Officer and the Ld.CIT(A) in taxing the prize money of Rs.1,68,50,073/- u/s. 115BB of the Act.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in open court on 19th January, 2026 at Chennai.