TMI Blog2004 (9) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... read with section 2(24)(ix). Briefly stated, the facts leading to the dispute are as under. 2. Assessee is a public limited company engaged in the business of publishing Newspapers, periodicals and other Reference Books. It is a pioneer organisation in Kerala and also in whole of India in the field of newspapers. During the assessment year under consideration, while framing the assessment order, the Assessing Officer noticed that the assessee had organised poll forecast contest in concert with Mr. Buttler's Soda Maker, and the winners were awarded prizes including Maruti Car. Similarly another contest was organised in concert with M/s. Samsung, namely, the 'World Cup Football Forecast Contest', and the (winners were awarded prize money i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer held that the provisions of section 194B read with section 201 were applicable in the case of the assessee and assessee was liable to deduct tax before disbursing the prize money to the winners and since the assessee failed to do so, the Assessing Officer held that assessee is an assessee in default within the meaning of section 201 of the Income-tax Act, 1961. Aggrieved by the above order, assessee approached the first appellate authority. 4. It was contended before the first appellate authority that the schemes of the nature that the assessee introduced did not come within the meaning of 'lottery' as contemplated under section 194B read with the definition under section 2(24)(ix). Section 194B deals with income by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matches are fixed by draw of lots, particularly in International Tournaments with a large number of participants. He further held that the very fact the Finance Act, 2001 brought about an amendment of section 194B with effect from 1-6-2001 to enlarge its scope by inserting the phrase 'or card games and other game of any sort' shows that during the relevant year under appeal, such an extended meaning cannot be applied in the assessee's case. At the most such contests may, to some extent, be compared to horse-racing which also requires considerable knowledge and skill to be a winner, barring very few freak occasions when even an uninitiated made a fortune by sheer luck. But such winnings do not come within the purview of section 194B. For b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a written submission. He supported the order of the Commissioner (Appeals). The representative of the assessee submitted that, even according to the Assessing Officer, the 22 entries of correct forecasts are not winnings from lottery. He further submitted that after admitting that the 22 correct forecast entries were not by chance, there is no logic in concluding that three out of it is lottery. He submitted that the three ingredients of lottery are- (a) payment by participants for the right of participation, (b) a prize and (c) distribution of prize by chance. Referring to the decision of the Gauhati High Court in Director of State Lotteries v. Asstt. CIT [1999] 238 ITR 1 at page 10, assessee's representative submitted that if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case of the assessee, in 'the World Cup Foot Ball forecast' or 'Lok Sabha Election forecast', there is no price paid for participation, but only the skill or knowledge is the criterion. The case of Revenue is that out of the 22 persons who could make the correct prediction, the prize winners were selected by lot and as such, it was pure chance or luck, and therefore, it comes within the ambit of lottery. We are afraid, this is over-simplification of the fact. The dominant factor is the knowledge or the skill. But there can be an argument that no body could predict using his knowledge or skill regarding the winning or losing candidates throughout the country. Therefore, that itself is something like lottery or chance. This argument too is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prediction. 8. To accept the proposition of Revenue that such contests constitute running of lottery is not only against the provisions of Income-tax Act but it has also far-reaching and unforeseen consequences. Under section 294 A of the Indian Penal Code, keeping unauthorised lottery office is an offence punishable for a term which may extend to 6 months or fine or with both and so also the publishing of such non-recognised lottery. 9. Lottery is not defined in the Indian Penal Code. In the case of Sesha Iyyar v. Krishna Iyyar AIR 1935 Mad. 562, 566 (Full Bench) (sic), the Hon'ble Madras High Court held that 'a lottery is distribution of prizes by lot or chance without use of any skill'. The same view was also expressed in Taylor v. S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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