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Fifth Income-tax Officer Vs. R. Wilson. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberIT APPEAL NO. 525 (MAD.) OF 1980 [ASSESSMENT YEAR 1977-78]
Reported in[1982]2ITD418(Mad); (1983)16TTJ(Mad)405
AppellantFifth Income-tax Officer
RespondentR. Wilson.
Cases ReferredSesha Ayyar v. Krishna Ayyar
Excerpt:
head note: income tax deduction under s. 80tt--allowability--prize of bank's prize scheme won by its depositor. ratio : prize of bank's prize scheme won by its depositor involves element of chance and, therefore, assessee was entitled to deduction under section 80tt. held : the element of chance is one of the important factors for considering whether a particular scheme falls within the term `lottery' and that the risk of loss is not necessary. further, a scheme may amount to a lottery though none of the competitors is a loser. if the subscribers have purchased a chance of winning a prize, the scheme would be a lottery. the assessee was, therefore, entitled to deduction under section 80tt. application : not to current assessment years. income tax act 1961 s.80tt - .....the tanjore permanent bank ltd. that bank which was celebrating its platinum jubilee, conducted a prize scheme in respect of the deposits received on the occasion. at the second draw held on 19-6-1976, the assessee won the first prize of rs. 10,000. while adding this amount to the total income for the assessment year 1977-78, corresponding to the previous year ended 31-3-1977, the assessee claimed deduction under section 80tt treating the amount as a winning from a lottery. the ito was of the view that it could not be treated as a lottery because it was received by accident, and not by design. he, therefore, treated the amount as a casual and non-recurring receipt, exempt to the extent of rs. 1,000 under section 10(3) of the act and brought the balance of rs. 9,000 to tax. the aac found.....
Judgment:
ORDER

Per Shri T. N. C. Rangarajan, Judicial Member - This appeal by the revenue is directed against the order of the AAC granting deduction under Section 80TT of the Income-tax Act, 1961 (the Act).

2. The assessee is an individual who deposited a sum of Rs. 25 on 9-12-1975, with the Tanjore Permanent Bank Ltd. That bank which was celebrating its Platinum Jubilee, conducted a prize scheme in respect of the deposits received on the occasion. At the second draw held on 19-6-1976, the assessee won the first prize of Rs. 10,000. While adding this amount to the total income for the assessment year 1977-78, corresponding to the previous year ended 31-3-1977, the assessee claimed deduction under Section 80TT treating the amount as a winning from a lottery. The ITO was of the view that it could not be treated as a lottery because it was received by accident, and not by design. He, therefore, treated the amount as a casual and non-recurring receipt, exempt to the extent of Rs. 1,000 under Section 10(3) of the Act and brought the balance of Rs. 9,000 to tax. The AAC found no difference between the prize declared by the bank and the prize declared by the Government Raffle Scheme. He was of the view that the receipt was a winning from a lottery and the assessee was entitled to deduction under Section 80ITT, as claimed by him.

3. In this appeal the contention of the revenue is that in a lottery there is an element of risk, in that the sum staked may be lost, whereas in the present case the assessee had not staked anything since his deposits had to be returned safe with interest, whether he drew the lot or not. But this contention ignores the fact that the assessee obtained the prize by a lot. Section 80TT allows the deduction in respect of winnings from lottery and the Act does not define the word lottery. We have, however, the benefit of the decision of the Punjab and Haryana High Court in the case of CIT v. Sanjiv Kumar , where it was pointed out that the element of chance is one of the important factors for considering whether a particular scheme falls within the term lottery and that the risk of loss is not necessary. The Punjab and Haryana High Court was following the decision of the Full Bench of the Madras High Court in Sesha Ayyar v. Krishna Ayyar AIR 1936 Mad. 225 in which Court in Sesha Ayyar v. Krishna Ayyar AIR 1936 Mad. 225 in which also it was held that 'a scheme may amount to a lottery though none of the competitors is a loser. If the subscribers have purchased a chance of winning a prize, the scheme would be a lottery, whether the prizes are paid circuitously from the interest earned on the subscribers, contributions or are paid directly from those contributions'. In the circumstances, it is not possible to agree with the contention of the revenue that the prize received by the assessee could not be regarded as winning from a lottery as contended by the assessee. It follows that the AAC was right in allowing the deduction under Section 80TT, in respect of the amount obtained by the assessee as lottery winnings. Though the assessee had taken a ground before the AAC that the receipt was capital in nature, it appears that it was not pressed and is not raised before us either. Therefore, we confine ourselves to the question of deduction under Section 80TT, on the undisputed basis that the amount is taxable as income. We, therefore, confirm his order.

4. In the result, the appeal is dismissed.


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