TMI Blog2018 (4) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of lottery prize was sent by the Government of Sikkim to Jaipur on the request made by the appellant. While Section 5 of the IT Act would not be applicable, the existing Sikkim State Income Tax Rules, 1948 would be applicable. Thus, on the income, it would appear that Income-tax would be payable, under Sikkim State Income Tax Rules, 1948 and not under the IT Act. Since Sikkim is a part of India for the accounting year, there would appear to be, on the same income, two types of income-taxes cannot be applied. Once the assessee has paid the income tax at source in the State of Sikkim as per the law applicable at the relevant time in Sikkim, the same income was not taxable under the IT Act, 1961. Having decided so, the other issue whether the income that is to be allowed deduction under section 80 TT of the IT Act is on ‘Net Income’ or ‘Gross Income’, becomes academic. - Civil Appeal No. 4166 of 2006 - - - Dated:- 19-4-2018 - R. K. Agrawal And Abhay Manohar Sapre, JJ. JUDGMENT R.K. Agrawal, J. 1) The present appeal has been preferred against the final judgment and order dated 10.09.2004 passed by the High Court of Judicature for Rajasthan, Bench at Jaip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal ground before the Tribunal claiming that the authorities below have grossly erred in law in treating the lottery income of Sikkim Government as income under the IT Act. Though the Tribunal allowed the appeal partly vide order dated 26.02.1993 but it dismissed the objections raised by the appellant herein as to legality of assessment order and held that the lottery amount is taxable under the provisions of IT Act. e) However, at the instance of the appellant herein the assessee, the Tribunal framed certain questions under IT Act and referred the same to the High Court for opinion, considering them the questions of law fit for reference which are as under: 1. Whether on the facts and in the circumstance of the case, the Hon ble Tribunal was justified in holding that income from Sikkim State Lottery is taxable under the Income Tax Act, 1961? 2. Whether in the facts and circumstances of the case the Tribunal was justified in holding that deduction u/s 80TT is applicable on the net winning amount received by the assessee and not on the gross amount of the winning prize? f) A Division Bench of the High Court, vide judgment and order dated 10.09.2004, answered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the hands of the assessee as resident of India within the State of Rajasthan where IT Act was in force notwithstanding that the same had accrued or arisen to him at a place where the Act of 1961, was not in force even in respect of income accruing to him outside taxable territory. Learned senior counsel further submitted that on the question as to whether the Tribunal was justified in holding that deduction under Section 80 TT of the IT Act was applicable on the net winning amount received by the assessee and not on the gross amount of the winning prize , the High Court answered the same in the affirmative in favour of Revenue and against the appellant herein the assessee observing that deduction under Section 80 TT of the IT Act is not referable to gross total income but is referable to net income. Discussion:- 7) Before we go into the issues raised in this appeal, it would be necessary to have an idea of the position of Sikkim under the Indian Constitution. Prior to 26.04.1975, Sikkim was not considered to be a part of India. Any income accruing or arising there from would be treated as income accruing or arising in any foreign country. However, by the 36th amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t especially in light of the fact that the income has already been subjected to tax under the Sikkim State Income Tax Rules, 1948. 8) The case of the assessee is that irrespective of the place of residence, income accruing or arising in Sikkim, would not be taxable in India, as per clause (k) of Article 371F of the Constitution and is taxable only under the Sikkim State Income Tax Rules, 1948. The contention seems to be based on erroneous assumption and the simple answer to the said contention is that though the IT Act is not applicable to various other countries but still the income accruing and arising in foreign countries can be brought to tax provided the assessee is resident and ordinarily resident and further the income accrued or received in any territory which is considered to be a part of India is within the net of IT Act. 9) The appellant, being a resident of Rajasthan, received the income arising from winning of lotteries from Sikkim during the Assessment Year in question was liable to be included in the hands of the Assessee as resident of India within the State of Rajasthan where IT Act was in force notwithstanding that the same had accrued or arisen to him at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the same tax .. If any double taxation is involved, the Legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over. 13) The above referred cases make it clear that there is no prohibition as such on double taxation provided that the legislature contains a special provision in this regard. Now, the only question remains to be decided is whether in fact there is a specific provision for including the income earned from the Sikkim lottery ticket prior to 01.04.1990 and after 1975, in the income-tax return or not. We have gone through the relevant provisions but there seems to be no such provision in the IT Act wherein a specific provision has been made by the legislature for including such an income by an assessee from lottery ticket. In the absence of any such provision, the assessee in the present case cannot be subjected to double taxation. Furthermore, a taxing Statute should not be interpreted in such a manner that its effect will be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the Statute is so compelling that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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