Archive · 5 Sep 2026
ITAT Favors Bengaluru Taxpayer Over ₹2.33 Crore Gaming Demand
Arakere Channappa played real-money games online during the relevant tax year.
Tax officials said he received ₹2.33 crore in winnings and should have reported it.
They wanted to tax the entire amount as gaming winnings.
Channappa said he had put ₹2.61 crore into the games.
Because he received less than he put in, he said he actually lost nearly ₹28 lakh.
The tax officer focused on the money credited as winnings and not the total amount he spent.
The Commissioner of Appeals agreed with the tax officer.
Channappa then appealed to the Income Tax Appellate Tribunal.
On July 23, 2026, the tribunal ruled in his favour.
Arakere Channappa reported ₹4.32 lakh income for AY 2022-23 but omitted ₹2.33 crore in online gaming winnings.
The tax officer said the full amount credited to his gaming wallet was taxable gross winnings under Section 115BB.
Channappa argued that his ₹2.61 crore buy-ins exceeded ₹2.33 crore in winnings, creating a net loss of nearly ₹27.99 lakh.
The Commissioner of Appeals rejected his challenge and upheld the tax officer’s position.
The Income Tax Appellate Tribunal in Bengaluru ruled in Channappa’s favour on July 23, 2026.
- Who
- Arakere Channappa, a Bengaluru taxpayer, and the income tax authorities.
- What
- A tax dispute over whether ₹2.33 crore in online gaming winnings should be treated as taxable income.
- When
- For assessment year 2022-23; the Income Tax Appellate Tribunal ruled on July 23, 2026.
- Where
- Bengaluru, including the Income Tax Appellate Tribunal in Bengaluru.
- Why
- The tax authorities treated the gross wallet credits as taxable winnings, while Channappa said his buy-ins exceeded his winnings and resulted in a net loss.
Tax Authorities’ Position
Taxpayer’s Position
What should be taxed
Tax Authorities’ Position
The tax officer said the entire amount credited to the player’s gaming wallet represented gross winnings and should be reported as income from other sources.
Taxpayer’s Position
Channappa said the ₹2.33 crore was only movement of money within the gaming wallet and did not represent real income.
Treatment of gaming expenses
Tax Authorities’ Position
Relying on Section 115BB and related commentary, the tax officer argued that no allowance or deduction could be claimed against gross gaming winnings.
Taxpayer’s Position
Channappa said the officer ignored his ₹2.61 crore buy-in amount, which exceeded the winnings and produced a net loss of nearly ₹27.99 lakh.
Outcome of the proceedings
Tax Authorities’ Position
The assessing officer raised the demand, and the Commissioner of Appeals rejected Channappa’s appeal.
Taxpayer’s Position
Channappa appealed to the Income Tax Appellate Tribunal in Bengaluru, which ruled in his favour.
- Taxpayer
- Arakere Channappa, a resident of Doddakallasandra in Bengaluru
- Assessment year
- 2022-23
- Income reported in return
- ₹4.32 lakh
- Gaming amount at issue
- ₹2.33 crore
- Total buy-in amount claimed
- ₹2.61 crore
- Claimed net loss
- Nearly ₹27,99,353
- Tribunal outcome
- Income Tax Appellate Tribunal, Bengaluru, ruled in Channappa’s favour on July 23, 2026