High Court rules prize income not lottery, allows appeal, quashes addition to income. Amendments not retrospective.

The Madras High Court held that the prize received by the appellant did not constitute lottery income. The Court allowed the appeal, setting aside the orders of the lower authorities and quashing the addition of the prize money to the appellant's income. The Division Bench ruled in favor of the assessee, concluding that the amendments to the Act regarding lottery winnings were not retrospective and therefore did not apply to the case.

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Issues involved: Appeal u/s 260A of the IT Act, 1961 challenging orders passed by AO, CIT(A), and Tribunal regarding exemption claimed under section 10(3) for incentive prize received by the appellant/assessee.

Facts: The appellant, a professor, purchased National Savings Certificates (NSCs) and won a prize in a lucky draw held by the Directorate of Small Savings. The prize was a commercial flat, but at the appellant's request, he was awarded an Indira Vikas Patra instead. The appellant claimed exemption under section 10(3) for the value of the Patra in his income tax return.

Substantial Questions of Law: 1. Whether the incentive award received constitutes lottery income. 2. Whether the purchase of NSCs constitutes payment of consideration to participate in the lottery.

Judgment: The Division Bench of the Madras High Court held that the prize received does not fall within the definition of lottery. Amendments to the Act regarding winnings from lotteries were not retrospective and do not apply to the case. The Court allowed the appeal, setting aside the orders of the lower authorities and quashing the addition of the prize money to the appellant's income. The questions of law were answered in favor of the assessee and against the Revenue.

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