Income Tax Appellate Tribunal - Ahmedabad
Income Tax Officer vs Abdul Majid Valimohmad Dal. on 30 May, 1994
Equivalent citations: (1995)51TTJ(AHD)147
ORDER
B.M. KOTHARI, A.M. :
The only ground in this appeal by the Revenue is that the CIT(A) has erred in holding that lottery prize of Rs. 15 lacs was won by the assessee alongwith other 7 co-winners.
2. The assessee filed a return of income on 16th May, 1986 showing income of Rs. 82,310. As per the said return the assessee derived income from salary and also lottery winning prize. As per the statement annexed with the said return it was mentioned that the assessee derived 1/8th of the total lottery winning prize of Rs. 15 lacs. He included his 1/8th share of Rs. 1,87,500 in the said return of income. The prize was announced in Dec., 1985. Soon thereafter, the assessee wrote to the Assessing Officer informing him that the prize has been won jointly by 8 persons and his share is only 1/8th. It was further pointed out that the authorities under the Gujarat State Lottery rules would disburse the entire prize money in one name and will deduct tax at source at the rate of 30% unless a certificate for lower deduction of tax at source is obtained from the Assessing Officer and is submitted to the lottery authorities. The assessee, therefore, submitted an application to the Assessing Officer for issuing a certificate for deduction of tax at lower rates. The assessee worked out his tax liability on 1/8th share of the prize money at Rs. 31,125 which attracted tax rate of only 2.075% of total prize money. He accordingly, requested the ITO for a certificate authorising tax deduction at 2.075%. The Assessing Officer took the view that tax liability of all the 8 co-winners will have to be safeguarded. He accordingly required the assessee to submit a revised application in which tax liability of all the 8 co-winners should be calculated. The revised working was submitted and thereafter the Assessing Officer issued a certificate for deduction of tax at the rate of 16%, which would cover the individual tax liabilities of all the 8 co-winners.
3. All the co-winners opened a joint bank account with Bank of India which was to be operated by any one of them or the last survivor as per certificate of the bank dt. 24th June, 1988. The lottery prize was collected through the said joint bank account of all the 8 co-winners. However, the prize money was given by the lottery authorities by a cheque in the name of the appellant. The TDS certificate issued by the lottery authorities was also in the name of the assessee.
4. The Assessing Officer observed that as per letter dt. 20th April, 1987, of the Accounts Officer, Gujarat State, Gandhinagar, it has been confirmed that Shri Abdul Majid Valimohmad Dal (the appellant) has won the prize of Rs. 15 lacs. He also reproduced certain extracts from the statements of the assessee in the assessment order. The Assessing Officer thereafter came to the conclusion that the entire amount of prize money of Rs. 15 lacs is taxable in the hands of the assessee. After allowing deductions under S. 80C and 80TT, he determined the total income at Rs. 7,39,450.
5. The CIT(A) after considering the entire relevant material and facts came to the conclusion that the lottery ticket was purchased collectively by all the co-winners and the assessee was liable to pay tax only on 1/8th share in the said prize money. He directed the ITO to levy tax on assessees share in the said income and exclude the shares of other 7 co-winners.
6. Before us, the learned Departmental Representative strongly relied upon the elaborate reasons mentioned in the assessment order. He invited our attention towards the various questions and answers appearing in the statement of the appellant dt. 5th Aug., 1987. In reply to question No. 16, the appellant stated that the lottery tickets were purchased from the savings from his salary income. In reply to question No. 21 it was stated that lottery ticket was purchased by 8 persons and each had 1/8th share. All of them contributed 1/7th share towards Rs. 200 with which the various lottery tickets including the one which fetched the prize were bought. Reliance placed by the assessee on the joint bank account, accordingly to the Departmental Representative, does not help the assessee in any manner as the said bank account was opened after announcement of the prize. All the material and evidence submitted by the assessee pertained to the period subsequent to the date when the prize was announced. The assessee could not produce any agreement or any other documentary evidence of an anterior date prior to declaration of prize showing that the lottery ticket was purchased out of joint funds provided by all of them. The ticket remained under the custody of the appellant. The lottery authorities issued the cheque in the name of the appellant and the TDS certificate also showed that the amount in question was paid to the appellant alone. He, therefore, urged that the order of the CIT(A) should be cancelled and that of the ITO should be restored.
7. The learned counsel for the assessee supported the order of the CIT(A) and reiterated almost the same arguments as were advanced before the CIT(A). He submitted that lottery prize was collected through the bank on behalf of all the con-winners. The prize money was distributed amongst all the 8 persons and such payments to the co-winners were made by cheques. The assessee applied for deduction of tax at source at lower rates to the ITO, who after examining all the relevant facts and circumstances issued the said certificate by accepting the fact that the prize money belongs to 8 co-winners, each having 1/8th share. The amount of TDS which has been refunded at a later point of time has also been distributed in equal proportion by cheques. The Assessing Officer initiated gift-tax proceedings vide notice dt. 9th June, 1989. The assessee submitted elaborate reply dt. 5th July, 1989. No gift-tax order has been passed which also indicates acceptance of the aforesaid facts by the GTO. The learned counsel further submitted that the actual conduct proves that the prize money belonged to all the 8 partners. Each co-winner was paid his/her share of prize money from the joint bank account. The said share of income has been utilised/invested by each co-winner for his/her benefit. There is no evidence on records to prove that the money given to each co-winner has come back to the appellant at any point of time. At this stage the counsel for the assessee was required to submit copies of statements/affidavits of all the co-winners submitted before the Departmental authorities and also given details of investments made by the respective co-winners out of their share of income from the said prize money. The required details were submitted vide letter dt. 20th May, 1994, on 24th May, 1994. The learned counsel submitted that the view taken by the CIT(A) is perfectly valid and requires no inference.
8. We have carefully considered the rival submissions made by the learned representatives and have also gone through the orders of the Departmental authorities and various other documents to which our attention was drawn during the course of hearing. The lottery prize was declared on 12th Nov., 1985. The assessee submitted an application dt. 3rd Jan., 1986, to the ITO, Ward F, Jamnagar, saying that the aforesaid prize of Rs. 15 lacs has been won on the lottery tickets jointly purchased by 8 persons, 4 of them, including the assessee, males and their wives. The male members are employees. It was submitted that deduction of tax at source should be made at the rate of 2.075%. On revised working submitted vide another letter dt. 3rd Jan., 1986, the liability of all the 8 persons was calculated at Rs. 2,25,000, i.e., about 15% of the total prize money. The Assessing Officer accordingly issued a certificate on 10th Jan., 1986, under S. 197(1) of the IT Act, 1961, authorising the Secretary to the Govt. of Gujarat, Finance Department, to deduct income-tax and surcharge (both combined) at the rate of 16% from the amount of lottery winning payable to the assessee. The said lottery ticket was presented to the lottery authorities through Bank of India to be credited in the joint bank account in the name of all the 8 persons. The bankers have also certified that the said joint bank account could be operated by any one of them. All the co-winners have submitted their respective return of income disclosing, inter alia, the 1/8th share of the said lottery prize of Rs. 15 lacs. The affidavits of all the co-owners were filed before the Departmental authorities. Statements of three co-winners where recorded on oath by the Assessing Officer. Statement of Vallabhdas Ranchhoddas Gondalia was recorded on 20th Aug., 1987. He is a Government employee and is employed as Circle Officer in the Revenue Deptt. He confirmed the fact that the said lottery ticket was purchased jointly by all the 8 persons and also received the 1/8th share of the prize money. The other co-winner Shri Prabhudas Chhagandas Agravat is employed in the Sub-Treasury Office. He also confirmed the correctness of these facts. Likewise Shri Vallabhgar Jethigar Gosai was also examined on 20th Aug., 1987. He is a peon in Mamlatdars office, Jodia. He also confirmed the fact relating to the joint purchase of the said lottery ticket and also confirmed receipt of 1/8th share by him and 1/8th share by his wife from the said prize money. Another important fact which heavily weigh in our mind is that all the four male members who are the co-winners are ordinary Government employees getting meagre salary and the other four co-winners are wives of the respective male co-winners. After the prize money was distributed by cheque drawn on the joint bank account a substantial amount has been invested by the said 8 co-winners or, in other words, by the four different families in investments like NSC and/or for acquiring a house, etc. For instance Shri Abdul Majid Valimohmad Dal (the assessee) purchased NSCs of Rs. 40,000 in his name and Rs. 40,000 in the name of his wife. Balance amount was utilized for construction of house building at Gaushala, Panchavati Society. The other co-winner Shri Vallabhdas Ranchhoddas Gondalia also purchased NSCs of Rs. 40,000 in the names of himself and his wife. Apart from this investment in small savings and bank were also made as is revealed from reply to question No. 27 of his statements recorded on oath. Shri Prabhudas Chhagandas Agravat purchased 20 tolas of gold ornaments for his wife. NSC of Rs. 40,000 in his own name and NSC of Rs. 40,000 in the name of his wife were also purchased. Apart from this gift of Rs. 20,000 was made to his sister and some work was done in the building. Similarly, Shri Vallabhgar Jethigar Gosai purchased NSC of Rs. 40,000 in his name and NSC of Rs. 40,000 in the name of his wife. One FDR of Rs. 30,000 was taken in the name of his parents. The utilisation of the share in the lottery prize either for investment or for expenditure is adequately proved by the facts disclosed by the four male co-winners in their respective statements. There is no evidence or material on record that the share in the lottery prize received by the other 7 co-winners at any point of time directly or indirectly ever flown back in favour of the assessee either by way of gift or loan or in any other manner whatsoever. We are, therefore, of the considered opinion that the learned CIT(A) was fully justified in accepting the assessees contention. We do not find any justification in interfering with his findings.
9. In the result, Revenues appeal is dismissed.