Section 2(24)(ix)

Section 2(24)(ix) — the law in short

What the courts have decided on section 2(24)(ix), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v G.R. Karthikeyan Supreme CourtHelps department
  I won prize money in a car rally that was a test of skill, not a lottery or a race. Is it taxable when it does not fit any sub-clause of section 2(24)?
  Yes. The Supreme Court held that section 2(24) is an inclusive definition, so a receipt can be income even though it falls under none of the sub-clauses. It is wrong to test a receipt against sub-clause (ix) and conclude, if it does not fit, that it is not income. The rally was a contest, the assessee entered it to win, and the prize was a return for his skill and endurance. If money not earned in the true sense is income, money earned by skill and toil is income too. It may be casual, but section 10(3) itself shows casual income is income.
• CIT v Dr. M.A.M. Ramaswamy High CourtHelps department
  My betting income is being taxed at the special rate on the gross figure. I have a business loss the same year. Can I set the business loss off first and pay the special rate only on the net?
  No. The Madras High Court held that s.115BB is a standalone special provision and the entire winnings from betting are taxed at the special rate, without set-off of losses. The court also held that s.58(4) did not come into play at all, because the income being assessed was not income from the activity of owning and maintaining race horses — the activity that its proviso, and s.115BB itself, carve out.
• Arakere Channappa Vishwanath v ITO ITATHelps taxpayerNo later treatment found
  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.
• Statutory position — the first proviso to s.234C(1): no interest for a shortfall caused by capital gains, casual income, first-year business income or dividend income CBDT Circulars & InstructionsCuts both ways
  My client sold a property in February and paid the whole tax on it with the March instalment. The intimation still charges s.234C interest on the June, September and December instalments. Is there a defence in the section itself?
  Yes, and it is in the section itself rather than in any circular. The first proviso to s.234C(1) disapplies the sub-section to any shortfall in the payment of tax due on the returned income where the shortfall is on account of under-estimate or failure to estimate (a) the amount of capital gains, (b) income of the nature referred to in s.2(24)(ix) — casual income such as winnings from lotteries, crossword puzzles and races, (c) income under the head 'Profits and gains of business or profession' in cases where the income accrues or arises under that head for the first time, or (d) the amount of dividend income. The relief is conditional: the assessee must have paid the whole of the tax payable in respect of that income, computed as if it were part of the total income, as part of the remaining instalments of advance tax which are due, or where no such instalments are due, by 31 March of the financial year.
• Statutory position — s.58: what can never be deducted against income from other sources CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has disallowed items in my other-sources computation without going near s.57(iii). What does s.58 actually shut out?
  Section 58 is headed 'Amounts not deductible' and opens with a non obstante clause overriding s.57. It bars personal expenses; expenditure of the nature referred to in s.40A(12); interest chargeable under the Act payable outside India on which tax has not been paid or deducted under Chapter XVII-B; and any payment chargeable under the head Salaries payable outside India unless tax has been paid or deducted. Sub-section (1A) carries s.40(a)(ia) and s.40(a)(iia) across, sub-section (2) carries the whole of s.40A across, sub-section (3) carries s.44D across for a foreign company, and sub-section (4) denies any deduction at all against winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.