TMI Blog1996 (7) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... accredited agent for selling Tamil Nadu raffle tickets for Sivakasi, governed by the agreement, dated October 12, 1976, under the Tamil Nadu State Raffle Rules, 1976. The assessment year involved in this case is 1978-79. The relevant portion in the agreement for the purpose of this tax case is as under : The agent shall be entitled to receive a commission of 111/2 per cent. on the face value of the tickets in the ticket books purchased by him, which commission shall be deducted from the total value of the ticket books purchased by him. The agent shall also be entitled to receive a bonus equivalent to 10 per cent. of the prize amount, if any, won by the tickets sold by him, on production of the voucher issued to him by the sub-treasury at the time of purchase of tickets for every draw. During the accounting year, relevant to the assessment year 1978-79, apart from the commission receipt of 111/2 per cent. on the face value of the tickets in the ticket books purchased by him, the assessee also became entitled to the bonus equivalent to 10 per cent. of the prize amount of winning ticket No. 6852288. The said ticket won a bumper prize of Rs. 15 lakhs and the assessee was given a bonu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion is taxable income under section 2(24)(ix) of the Act. Following the above order, the Tribunal dismissed the Revenue's appeal. Before us, learned senior standing counsel appearing for the Department, submitted that the Tribunal was not correct in holding that the bonus in question is taxable income under section 2(24)(ix) of the Act. According to learned senior standing counsel, the agent who purchased the ticket from the Government is not participating in the lottery. It is only the ultimate purchaser of the ticket, who is participating in the lottery. Therefore, the commission payment to the agent would not partake of the character of winning from lottery. According to learned senior standing counsel, the agent gets his bonus apart from the commission, since the ticket sold to a third party has become a winning ticket. Therefore, there is no nexus between the agent who sold the ticket and the ticket which is winning the prize. Therefore, according to learned senior standing counsel in view of the decision in Visveswaraiah Lucky Centre v. CIT [1991] 189 ITR 698 (Kar), the Tribunal was not correct in holding that the bonus is assessable under section 2(24)(ix) of the Act. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as increased by a sum equal to 50 per cent. of the amount by which the winnings exceed Rs. 5,000. In the assessment year even though the Income-tax Officer held that the bonus received by the assessee is not a winning from the lottery, he ultimately considered the bonus income as income under section 2(24)(ix) of the Act but denied the benefit under section 80TT of the Act. However, the first appellate authority as well as the Tribunal came to the conclusion that the receipt of bonus is also inextricably connected with the winning of the lottery and, therefore, the assessee is entitled to the benefit under section 80TT of the Act. According to learned senior standing counsel appearing for the Department, for receiving the bonus payment, the agent is not participating in the lottery, but only the ultimate purchaser of the ticket, who is the holder in due course, alone is participating in the lottery, and, therefore, the income derived out of the winnings from the lottery alone would be entitled to the benefit under section 80TT of the Act, since the bonus payment was made to the agent, which is unconnected with the winning of the lottery ticket, the agent is not entitled to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lottery. Inasmuch as this aspect was absent in the present case, the Karnataka High Court held that the agent, who received the bonus from it would be an income not connected with the winning of the lottery, and, therefore, relief under section 80TT cannot be given. A plain reading of a clause in the agreement, dated October 12, 1976, would go to show that the agent shall also be entitled to receive a bonus equivalent to 10 per cent. of the prize amount, if any, won by the tickets sold by him, on production of the voucher issued to him by the Sub-treasury Officer at the time of purchase of the ticket for every draw. Therefore, when a ticket wins the prize, two persons are entitled to the benefit resulting from the winning of the ticket. When the agent purchased the ticket from the Sub-treasury, he is purchasing the tickets with a commission of 111/2 per cent. Thereafter, he sells the tickets to the intending purchasers. The matter does not end there, because if the ticket sold to a third party wins a prize, the agent is getting a bonus equivalent to the 10 per cent. of the prize money. For this purpose, the agent, who is the seller of the ticket, is retaining the counterfoil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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