PRAMILA VS COMMISSIONER OF INCOME-TAX, 2000 PTD-MADHYA-PRADESH-HIGH-COURT-INDIA 595 (1996)

Income-tax---

----Reference---Question of law---Deduction---Winnings from lottery-- Assessee winning first prize money on lottery---Tribunal allowing deduction under S.80TT on net amount of prize money and not on gross amount of lottery prize under S.80TT read with S.80B(5)---Is a question of law fit for reference---Indian Income Tax Act, 1961, Ss. 80AB, SOB(5) & 80TT-

The assessee won the first prize in a lottery conducted by the State Government amounting to Rs.12 lakhs. After deduction of 10 percent of the commission of the agent and the tax at source he was paid Rs.7,23,60Q. The Income-tax Officer allowed deduction under section 80TT of the Income Tax Act, 1961, at Rs.5,37,500 as against Rs.5.97,500 claimed by the assessee. The Commissioner of Income-tax (Appeals) allowed deduction on the gross amount of Rs.l2 lakhs and not on the net income of Rs.10,80.000. The Tribunal restored the order of the Income-tax Officer by basing its decision on the amended provisions of section 80AB of the Act and on the decision of the Supreme Court in Distributors (Baroda) (Pvt.) Ltd. v. Union of India (1985) 155 ITR 120. The application of the assessee for referring a question of law under section 256(1) of the Act was rejected by the Tribunal. On an application filed under section 256(2) for directing the Tribunal:- to refer a question of law:

Held, that a question of a law, whether the Tribunal was right in holding that the deduction under section 80TT was admissible on the net amount of prize money of Rs.10,80,000 and not on the gross lottery prize of Rs.12 lakhs under the provisions of section 80TT read with section 8013(5) of the Income Tax Act, 1961, which were in force in the assessment year 1978-79, arose for reference.

Distributors (Baroda) (P.) Ltd. v. Union of Indian (1985) 155 ITR 120 (SC) ref.

J.W. Mahajan for the Assessee.

D.D. Vyas for the Commissioner.

JUDGMENT

N.K. JAIN, J.---The assessee has filed this application under section 256(2) of the Income Tax Act, 1961 (for short "the Act"), seeking a direction to the Income-tax Appellant Tribunal, Indore, to state the case and refer the under-noted questions said to be of law, arising out of the order passed by the Tribunal on May 5, 1991, in I. T. A. No. 701/Ind. of 1985 and its refusal to refer the case vide order, dated November 29,1991, passed in R. A. No. 108/Ind. of 1991:

"(a) Whether, in the facts and circumstances of the case, the Appellate Tribunal is right in holding that the deduction under section 80TT is admissible on the net amount of prize money of Rs.10,80,000 and not on the gross lottery prize of Rs.12 lakhs as per provision of section 80TT read with section 8013(5) of the Income-tax Act, which were in. force in the assessment year 1978-79?

(b) Whether the Appellate Tribunal is right in relying upon the ratio of the Supreme Court's decision in Distributors (Baroda) (P.) Ltd. (1985) 155 ITR 120, relating to the provisions of sections 80AA and 80AB and applying the ratio thereof to the construction of section 80TT of the Income-tax Act?"

In short the facts of the case are that late M.T. Bakore, the husband of the applicant-assesses, won the first prize of a lottery of the State Government of Rs.l2 lakhs, After deduction of 10 percent. of the commission of the agent and the tax at source, he was paid Rs.7,23,600 on June 7, 1977. The Income-tax Officer allowed deduction under section 80TT of the Act at Rs.5,37,500 as against Rs.5,97,500 claimed by the assessee. In the first appeal, the Commissioner of Income-tax (Appeals) by his order, dated April 23, 1985, allowed deduction with respect to the gross income of Rs.12 lakhs and not the net income of Rs.10,80,000. The respondent/Department thereupon preferred appeal before the Tribunal. The appeal was allowed, the order of the Commissioner of Income-tax (Appeals) was reversed and that of the Income-tax Officer was restored, vide order, dated May, 5, 1991. The applicant-assessee made application under section 256(1) seeking reference to this Court. The Tribunal, however, rejected the application and this is how the assessee has come before this Court under section 256(2) of the Act.

We have heard Shri J. W. Mahajan, learned counsel for the applicant, and Shri D.D. Vyas, learned counsel for the Department/N.A.

At the stage of arguments, learned counsel for the applicant submitted that at least question No.1, as extracted below, may be called for if question No. 2 is held to be non-referable.

"Whether, in the facts and circumstances of the case, the Appellant Tribunal is right in holding that the deduction under section 80TT is admissible on the net amount of prize money of Rs.10,80,000 and not on the gross lottery prize of Rs.12 lakhs as per provision of section 80TT read with section SOB(5) of the Income-tax Act which were in force in the assessment year 1978-79?"

We have perused the order of the Tribunal, dated May 5, 1991. The order of the Tribunal is obviously based on the amended provisions of section 80AB and on the decision in Distributors (Baroda) (P.) Ltd. v. Union of India (1985) 155 ITR 120 (SC). Learned counsel for the applicant, however, submitted that the decision is inapplicable to the instant case and that the Tribunal erred in holding that the assessee was entitled to deduction of Rs.5,37,500 only. According to learned counsel, the conclusion of the Tribunal based on the interpretation of the newly inserted section 80AB does give rise to a referable question of law required to be considered by this Court.

After considering the submissions, we are satisfied that the question as extracted above, as regards the deduction, does arise out of the order of the Tribunal. Question No.2 is held to be non-referable.

Accordingly, we allow the application in part and direct the Tribunal to state the case and refer the lone question for our consideration and opinion. Counsel's fee is, however, fixed at Rs.750, for each side, if certified.

Copy of this order shall be transmitted to the Tribunal immediately for compliance at the earliest.

M.B.A./3230/FCOrder accordingly