HC restrains I-T dept from moving against Turf Club

The High Court of Karnataka on Wednesday restrained the Income Tax authorities from initiating any action against Bangalore Turf Club pursuant to the show cause notice demanding Rs 777 crore as tax for the years 2010-11 and 2011-12.

The Income Tax Department, in its notice dated March 8 had stated that the Club had not deducted tax at source on the betting sum. The Club, which challenged the notice, claimed that it had not been provided an opportunity to put forth its case. Nagananda, the counsel for the petitioner termed the demand raised by the I-T department illogical and alleged that the Club had been asked to do things which are impossible.

Payment records

“It expects us to keep record of all payments - like how many people come, count their winning aggregate thorough the year and deduct tax at source when it crosses Rs 5,000. It is nearly impossible as seven crore tickets are sold annually and is practically impossible to keep an account,” he said. He claimed that the Club had been following the method which the Department had accepted for over three decades. “To change the manner and method of imposition of TDS is thus arbitrary and untenable in law,” he said.
“The IT department fails to appreciate the manner and method of deducting tax at source from the winnings by a punter has been in vogue since 1978 and the petitioner has been following the time tested method which has been approved and accepted by the Income Tax department,” the counsel said.

Justice Ram Mohan Reddy restrained the department from either demanding or collecting tax. A similar order was passed in the petition filed by Mysore Turf Club Limited.