TMI Blog1999 (9) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by one Sri M. Subramanian claiming a share in the lottery amount as joint owner. The Munsiff Court, Ambasamudram, ordered stay of the disbursement of the prize amount to the assessee due to which a delay of three years was caused in the disbursement of the lottery prize to the assessee. Subsequently after the suit was filed by the said Sri M. Subramanian there was out of Court settlement between the assessee, Sri M. Subramanian and one Sri A.S.A. Karunakaran, lottery agent. According to the settlement the assessee agreed to pay Rs. 2,000 to Sri Subramanian and Rs. 5,000 to Sri A.S.A. Karunakaran. For the assessment year 1984-85 the assessee had originally filed a return of income on 18-12-1987 declaring total income by way of lottery win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer. The Assessing Officer also found that for the assessment year 1984-85 the assessee had not filed the return of income during the period available under section 139(4) of the Act and the return of income was filed after a lapse of nearly four and half years on 18-12-1987. The Assessing Officer considered that the assessee had filed [lie return of income for the assessment year 1984-85 which was barred by time, in view of the provisions of section 115BB of the Act which were inserted w.e.f. 1988-89. 3. The assessee carried the matter in appeal before the CIT(A). The CIT(A) observed that the Assessing Officer himself had determined the tax to be deducted at source in respect of the lottery amount as early as in Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight to receive the lottery amount as an accrual of income and the same amount cannot be assessed at the discretion of the Department in a subsequent year. It is further stated that the action of the Assessing Officer to assess the lottery income for the assessment year 1988-89 and levy of tax by invoking the provisions of section 115BB of the Act is totally unwarranted as the provisions of that section are applicable for lottery winnings effected on and from 1-4-1986. 6. We have heard the ld. Departmental Representative and carefully perused the material on record including the assessee's written submissions and enclosures thereto. Under section 56 of the Act any winning from lottery is chargeable to Income-tax under the head "Income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by him accepted the right to receive the lottery amount as an accrual of income. The Assessing Officer has categorically given a finding that the assessee has not been maintaining any books of account and income from lottery winning will have to be assessed in the asst. year 1988-89 on receipt basis. When the assessee is not maintaining any books of account it cannot be said that he was following mercantile system of accounting. 7. In the case of N.R. Sirker v. CIT [1978] 111 ITR 281 (Gauhati) it was found that the assessee has not kept proper accounts. The Hon'ble Gauhati High Court held that it could not, therefore, be presumed that the assessee has followed mercantile system of accounting. Their Lordships further held that the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, the assessee was entitled to 5% interest from the date of payment till the sale of goods. In 1958 disputes arose between the assessee and M/s. B.R. Sons and in 1959, the disputes were referred to arbitration. In July 1964 award was given directing the assessee to pay Rs. 2.50 lakhs in full and final settlement. The assessee had debited amounts to M/s. B.R. Sons in its books in the accounting year relevant to the asst. year 1959-60, and included it in its returns. Similarly, for asst. year 1960-61, the amounts debited to M/s. B.R. Sons in its accounts was shown as assessee's income. The account books of M/s. B.R. Sons showed that the amount as debits in the assessee's books were not admitted but disputed. In 1964, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the assessee was maintaining its books on the mercantile system it became entitled to the amount when the decree was passed in its favour in July 1969, and included the amount in the asst. year 1970-71. It was held by the Hon'ble Punjab Haryana High Court that the decretal amount could not be deemed to have accrued to the assessee in the assessment year in which the decree was passed. However, when the decretal amount reached the pocket of the assessee the question of accrual became otiose because the liability to pay tax would at once arise as soon as the amount was received by the assessee. It was held that the amount was actually received by the assessee during the asst. year 1971-72 and before that period its claim was in a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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