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TMI Blog1994 (5) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 15 lacs. He included his 1/8th share of Rs. 1,87,500 in the said return of income. The prize was announced in Dec., 1985. Soon thereafter, the assessee wrote to the Assessing Officer informing him that the prize has been won jointly by 8 persons and his share is only 1/8th. It was further pointed out that the authorities under the Gujarat State Lottery rules would disburse the entire prize money in one name and will deduct tax at source at the rate of 30% unless a certificate for lower deduction of tax at source is obtained from the Assessing Officer and is submitted to the lottery authorities. The assessee, therefore, submitted an application to the Assessing Officer for issuing a certificate for deduction of tax at lower rates. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The Assessing Officer thereafter came to the conclusion that the entire amount of prize money of Rs. 15 lacs is taxable in the hands of the assessee. After allowing deductions under s. 80C and 80TT, he determined the total income at Rs. 7,39,450. 5. The CIT(A) after considering the entire relevant material and facts came to the conclusion that the lottery ticket was purchased collectively by all the co-winners and the assessee was liable to pay tax only on 1/8th share in the said prize money. He directed the ITO to levy tax on assessee's share in the said income and exclude the shares of other 7 co-winners. 6. Before us, the learned Departmental Representative strongly relied upon the elaborate reasons mentioned in the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) and reiterated almost the same arguments as were advanced before the CIT(A). He submitted that lottery prize was collected through the bank on behalf of all the co-winners. The prize money was distributed amongst all the 8 persons and such payments to the co-winners were made by cheques. The assessee applied for deduction of tax at source at lower rates to the ITO, who after examining all the relevant facts and circumstances issued the said certificate by accepting the fact that the prize money belongs to 8 co-winners, each having 1/8th share. The amount of TDS which has been refunded at a later point of time has also been distributed in equal proportion by cheques. The Assessing Officer initiated gift-tax proceedings vide notice dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid prize of Rs. 15 lacs has been won on the lottery tickets jointly purchased by 8 persons, 4 of them, including the assessee, males and their wives. The male members are employees. It was submitted that deduction of tax at source should be made at the rate of 2.075%. On revised working submitted vide another letter dt. 3rd Jan., 1986, the liability of all the 8 persons was calculated at Rs. 2,25,000, i.e., about 15% of the total prize money. The Assessing Officer accordingly issued a certificate on 10th Jan., 1986, under s. 197(1) of the IT Act, 1961, authorising the Secretary to the Govt. of Gujarat, Finance Department, to deduct income-tax and surcharge (both combined) at the rate of 16% from the amount of lottery winning paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees getting meagre salary and the other four co-winners are wives of the respective male co-winners. After the prize money was distributed by cheque drawn on the joint bank account a substantial amount has been invested by the said 8 co-winners or, in other words, by the four different families in investments like NSC and/or for acquiring a house, etc. For instance Shri Abdul Majid Valimohmad Dal (the assessee) purchased NSCs of Rs. 40,000 in his name and Rs. 40,000 in the name of his wife. Balance amount was utilized for construction of house building at Gaushala, Panchavati Society. The other co-winner Shri Vallabhdas Ranchhoddas Gondalia also purchased NSCs of Rs. 40,000 in the names of himself and his wife. Apart from this investm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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