The Assessing Officer has taxed the gross winnings figure the online gaming platform reported for me, refusing to look at my buy-ins because s.58(4) allows no deduction. My buy-ins actually exceeded my winnings. Is that assessment sustainable?
No. The Bangalore Bench held that s.58(4) operates only after there is income by way of winnings; it does not authorise the Department to treat gross wallet credits or recycled gaming funds as income in the first place. Since the very information obtained from the platform showed buy-ins of Rs 2,61,51,624 against gross winnings of Rs 2,33,52,271 — a net loss — there was no taxable income under s.115BB and the whole addition was deleted.
Decided by the ITAT (Shri Waseem Ahmed, Accountant Member and Shri Soundararajan K, Judicial Member ('A' Bench, Bangalore; order per Waseem Ahmed AM)) on 2026-07-23, reported as ITA No. 3016/Bang/2025 (ITAT Bangalore). It bears on section 58(4), section 58, section 115BB, section 115BBJ, section 56(2)(ib), section 2(24)(ix), section 194BA, section 194B, section 133(6), section 132 of the Income Tax Act 1961, in Assessment & Scrutiny, Deductions & Disallowances and Evidence & Burden of Proof matters.
This is the boundary of s.58(4), and it is the argument that saves an online-gaming assessment built on an Insight Portal or s.133(6) gross figure. The Tribunal's route matters as much as the result: it treated s.115BBJ, s.194BA and Rule 133, inserted by the Finance Act 2023, as clarificatory of the pre-existing principle that only real net winnings are taxable, and drew support from the horse-racing line under s.194BB where the Kolkata and Delhi Benches held that 'winnings' means what the punter receives in excess of what he invested in that race. Note the limits: the Tribunal was working with figures the Revenue had not disputed, drawn from the Department's own s.133(6) material, and it treated the absence of TDS as making the taxpayer's account probable. On the taxpayer's own record before the Commissioner (Appeals) the point failed for want of evidence, and the first appellate authority's reasoning — that gross winnings are the taxable base and the plea of losses cannot be accepted without strong and specific evidence — is what a bare denial will meet.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, an individual, filed a return for AY 2022-23 declaring Rs 4,32,800 comprising house property income, business income and income from other sources. The case was selected for scrutiny on CRIU information from the Insight Portal that he had earned winnings of Rs 2,33,52,271 from M/s Gameskraft Technologies Pvt. Ltd. in FY 2021-22 through the portals 'Rummyculture' and 'Gamezy'. A search under s.132 had been conducted on Gameskraft on 15 March 2022 and the dissemination note explained that amounts credited to a player's wallet after deduction of the company's commission constituted the player's gross winnings. The Assessing Officer issued a notice under s.133(6) to Gameskraft, which confirmed gross winnings of Rs 2,33,52,271; relying on s.2(24)(ix), s.56(2)(ib), s.115BB and s.58(4) he added the whole amount and determined total income at Rs 2,33,85,071. Before the Commissioner (Appeals) the assessee pointed out that the same Gameskraft reply showed a total buy-in of Rs 2,61,51,624, producing a net loss of Rs 27,99,353. The Commissioner (Appeals) dismissed the grounds, holding that the gross winnings certified by the portal were the only ascertainable figure, that the plea of losses could not be accepted without strong and specific evidence, and that the reference to s.115BBE in the computation sheet was a clerical error where the order reasoned under s.115BB.
The appeal was allowed and the addition of Rs 2,33,52,271 deleted. Only real net winnings from online gaming can be subjected to tax, not gross wallet credits or gross winnings reflected at intermediate stages of gameplay. Section 58(4) merely prohibits deduction of expenditure or allowance while computing income from winnings; before it can be invoked the authorities must first determine whether there is any real income by way of winnings, and it does not authorise treating gross transactional entries or recycled gaming funds as income. On the material, the buy-ins exceeded the gross winnings, so there was no taxable income under s.115BB.
The Tribunal framed the short controversy as whether gross gaming winnings shown in the platform records can be taxed under s.115BB or only the real net winnings after adjusting buy-ins. It found that the addition proceeded on the assumption that every wallet credit during gameplay was taxable income, without examining buy-ins, repeated circulation of funds or the ultimate net result, and that the authorities had selectively adopted the gross figure while ignoring participation costs embedded in the same transaction stream that the Revenue had not disputed. It held this contrary to the concept of income: the Act taxes real income and not gross transactional movements, and unless there is a real gain or accretion no income arises. It noted that s.115BB and s.194B as they stood used the expression 'income by way of winnings', so even under the pre-amended scheme only the real winnings component was intended to be taxed, and it set out the memorandum explaining the Finance Act 2023 provisions introducing s.194BA and s.115BBJ on 'net winnings'. Rule 133 and CBDT Circular No. 05/2023 provide a complete computational mechanism proceeding on the principle that only net winnings are taxable. The Tribunal held the new framework clarificatory and declaratory, throwing light on the correct interpretation of s.115BB for AY 2022-23, and drew the same principle from Royal Calcutta Turf Club (Kolkata Bench) and Delhi Race Club (Delhi Bench) under s.194BB, where 'winnings' was read as the amount received in excess of the punter's investment in that race. It added that the absence of any TDS by the intermediary made the assessee's account probable.
The provision does not authorise the department to artificially treat gross transactional entries or recycled gaming funds as income.
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Handle my notice → Ask a CA on WhatsAppNo. The Bangalore Bench held that s.58(4) operates only after there is income by way of winnings; it does not authorise the Department to treat gross wallet credits or recycled gaming funds as income in the first place. Since the very information obtained from the platform showed buy-ins of Rs 2,61,51,624 against gross winnings of Rs 2,33,52,271 — a net loss — there was no taxable income under s.115BB and the whole addition was deleted. This was decided by the ITAT (Shri Waseem Ahmed, Accountant Member and Shri Soundararajan K, Judicial Member ('A' Bench, Bangalore; order per Waseem Ahmed AM)) and bears on section 58(4), section 58, section 115BB, section 115BBJ, section 56(2)(ib), section 2(24)(ix), section 194BA, section 194B, section 133(6), section 132 of the Income Tax Act 1961. It is reported as ITA No. 3016/Bang/2025 (ITAT Bangalore). This is the boundary of s.58(4), and it is the argument that saves an online-gaming assessment built on an Insight Portal or s.133(6) gross figure. The Tribunal's route matters as much as the result: it treated s.115BBJ, s.194BA and Rule 133, inserted by the Finance Act 2023, as clarificatory of the pre-existing principle that only real net winnings are taxable, and drew support from the horse-racing line under s.194BB where the Kolkata and Delhi Benches held that 'winnings' means what the punter receives in excess of what he invested in that race. Note the limits: the Tribunal was working with figures the Revenue had not disputed, drawn from the Department's own s.133(6) material, and it treated the absence of TDS as making the taxpayer's account probable. On the taxpayer's own record before the Commissioner (Appeals) the point failed for want of evidence, and the first appellate authority's reasoning — that gross winnings are the taxable base and the plea of losses cannot be accepted without strong and specific evidence — is what a bare denial will meet. If it applies to you, the first step is this: Get the platform's complete player-wise statement under s.133(6), not just the winnings column, and put the buy-in, deposit, withdrawal and closing-balance data on the record at the assessment stage.
The assessee, an individual, filed a return for AY 2022-23 declaring Rs 4,32,800 comprising house property income, business income and income from other sources. The case was selected for scrutiny on CRIU information from the Insight Portal that he had earned winnings of Rs 2,33,52,271 from M/s Gameskraft Technologies Pvt. Ltd. in FY 2021-22 through the portals 'Rummyculture' and 'Gamezy'. A search under s.132 had been conducted on Gameskraft on 15 March 2022 and the dissemination note explained that amounts credited to a player's wallet after deduction of the company's commission constituted the player's gross winnings. The Assessing Officer issued a notice under s.133(6) to Gameskraft, which confirmed gross winnings of Rs 2,33,52,271; relying on s.2(24)(ix), s.56(2)(ib), s.115BB and s.58(4) he added the whole amount and determined total income at Rs 2,33,85,071. Before the Commissioner (Appeals) the assessee pointed out that the same Gameskraft reply showed a total buy-in of Rs 2,61,51,624, producing a net loss of Rs 27,99,353. The Commissioner (Appeals) dismissed the grounds, holding that the gross winnings certified by the portal were the only ascertainable figure, that the plea of losses could not be accepted without strong and specific evidence, and that the reference to s.115BBE in the computation sheet was a clerical error where the order reasoned under s.115BB. The matter was decided on 2026-07-23 by the ITAT (Shri Waseem Ahmed, Accountant Member and Shri Soundararajan K, Judicial Member ('A' Bench, Bangalore; order per Waseem Ahmed AM)). On those facts the ITAT held as follows. The appeal was allowed and the addition of Rs 2,33,52,271 deleted. Only real net winnings from online gaming can be subjected to tax, not gross wallet credits or gross winnings reflected at intermediate stages of gameplay. Section 58(4) merely prohibits deduction of expenditure or allowance while computing income from winnings; before it can be invoked the authorities must first determine whether there is any real income by way of winnings, and it does not authorise treating gross transactional entries or recycled gaming funds as income. On the material, the buy-ins exceeded the gross winnings, so there was no taxable income under s.115BB.
The Tribunal framed the short controversy as whether gross gaming winnings shown in the platform records can be taxed under s.115BB or only the real net winnings after adjusting buy-ins. It found that the addition proceeded on the assumption that every wallet credit during gameplay was taxable income, without examining buy-ins, repeated circulation of funds or the ultimate net result, and that the authorities had selectively adopted the gross figure while ignoring participation costs embedded in the same transaction stream that the Revenue had not disputed. It held this contrary to the concept of income: the Act taxes real income and not gross transactional movements, and unless there is a real gain or accretion no income arises. It noted that s.115BB and s.194B as they stood used the expression 'income by way of winnings', so even under the pre-amended scheme only the real winnings component was intended to be taxed, and it set out the memorandum explaining the Finance Act 2023 provisions introducing s.194BA and s.115BBJ on 'net winnings'. Rule 133 and CBDT Circular No. 05/2023 provide a complete computational mechanism proceeding on the principle that only net winnings are taxable. The Tribunal held the new framework clarificatory and declaratory, throwing light on the correct interpretation of s.115BB for AY 2022-23, and drew the same principle from Royal Calcutta Turf Club (Kolkata Bench) and Delhi Race Club (Delhi Bench) under s.194BB, where 'winnings' was read as the amount received in excess of the punter's investment in that race. It added that the absence of any TDS by the intermediary made the assessee's account probable. In the words reproduced by the source cited on this page: "The provision does not authorise the department to artificially treat gross transactional entries or recycled gaming funds as income." The decision followed or applied Royal Calcutta Turf Club (ITAT Kolkata) — followed on the meaning of 'winnings'; Delhi Race Club (ITAT Delhi) — followed; CBDT Circular No. 05/2023 dated 22 May 2023 and Rule 133 — relied on as clarificatory.
It was decided by the ITAT on 2026-07-23 and is reported as ITA No. 3016/Bang/2025 (ITAT Bangalore). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 58(4), section 58, section 115BB, section 115BBJ, section 56(2)(ib), section 2(24)(ix), section 194BA, section 194B, section 133(6), section 132, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the addition of Rs 2,33,52,271 deleted. Only real net winnings from online gaming can be subjected to tax, not gross wallet credits or gross winnings reflected at intermediate stages of gameplay. Section 58(4) merely prohibits deduction of expenditure or allowance while computing income from winnings; before it can be invoked the authorities must first determine whether there is any real income by way of winnings, and it does not authorise treating gross transactional entries or recycled gaming funds as income. On the material, the buy-ins exceeded the gross winnings, so there was no taxable income under s.115BB. It arises in Assessment & Scrutiny, Deductions & Disallowances and Evidence & Burden of Proof matters, on section 58(4), section 58, section 115BB, section 115BBJ, section 56(2)(ib), section 2(24)(ix), section 194BA, section 194B, section 133(6), section 132 of the Income Tax Act 1961, and was decided by Shri Waseem Ahmed, Accountant Member and Shri Soundararajan K, Judicial Member ('A' Bench, Bangalore; order per Waseem Ahmed AM). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Frame the argument in two steps: first, is there any real income by way of winnings at all; only then does s.58(4) bite. Do not argue that buy-ins are a deductible expenditure, which is exactly what s.58(4) forbids. For years before AY 2024-25, use the Rule 133 and Circular No. 05/2023 mechanism as a computation model and argue it is clarificatory, as this Bench did; for AY 2024-25 onwards s.115BBJ and s.194BA apply directly and the statute itself speaks of net winnings. Point to the absence of TDS by the intermediary as corroboration where the alleged net winnings would have obliged deduction. Check the computation sheet against the body of the assessment order — here the Commissioner (Appeals) treated a reference to s.115BBE in the computation as a clerical error where the order reasoned under s.115BB, and that point was not disturbed.
Validity check could not be completed. Validity check could not be completed. This is a Tribunal order of 23 July 2026 and no search was run for any appeal from it or for any contrary Bench decision, so nothing is certified about later treatment. The proposition that a later provision can be read as clarificatory of an earlier one is itself contestable and the Revenue may be expected to contest it; the safe part of the reasoning is the anterior point that s.58(4) presupposes income and does not create it. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The paragraph numbering in the order is not continuous: it runs 1 to 6 with sub-numbers 4.1 to 4.5 and 6.1 to 6.10, then reproduces the Commissioner (Appeals)'s order in a block whose own internal numbering is 6.3 to 6.4.2, and then resumes at 11 — there are no paragraphs 7 to 10. The quoted passage is at the Tribunal's own para 14.13. The order records the assessment year as 2022-23, so s.115BBJ and s.194BA did not apply of their own force; the Tribunal applied them as clarificatory. The date of hearing is given as 25 May 2026 and pronouncement as 23 July 2026. The Tribunal cites Royal Calcutta Turf Club as 'reported in 114 taxman 82' and Delhi Race Club as '17 SOT 39'; those citation strings are reproduced as printed and were not independently checked. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the addition of Rs 2,33,52,271 deleted. Only real net winnings from online gaming can be subjected to tax, not gross wallet credits or gross winnings reflected at intermediate stages of gameplay. Section 58(4) merely prohibits deduction of expenditure or allowance while computing income from winnings; before it can be invoked the authorities must first determine whether there is any real income by way of winnings, and it does not authorise treating gross transactional entries or recycled gaming funds as income. On the material, the buy-ins exceeded the gross winnings, so there was no taxable income under s.115BB.
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