2004 (9) TMI 342 - AT - Income Tax

Lottery prize split: ITAT rules 1/3 assessable. Co-owners' evidence key.

INCOME TAX OFFICER. Versus PREM RAHEJA.

The ITAT Jodhpur upheld the CIT(A) decision, ruling that only 1/3rd of the prize money from a lottery winning was assessable in the hands of the assessee. ... - Issues:1. Assessment of prize money received from lottery winning in the hands of the assessee.Analysis:The appeal before the Appellate Tribunal ITAT Jodhpur involved the assessment of prize money received from a lottery winning in the hands of the assessee for the assessment year 1993-94. The primary issue raised was the proportion of the prize money assessable to the assessee, specifically whether only 1/3rd of the prize money should be considered in the hands of the assessee. The dispute arose as the assessee had declared a 1/3rd share in the prize money, claiming that the lottery ticket was jointly purchased by three persons. The Assessing Officer (AO) initially rejected this claim due to lack of evidence regarding joint purchase. Upon appeal to the CIT(A), the assessment was set aside for further inquiries to be conducted by the AO.In subsequent assessments, the AO found contradictions in the statements of the co-owners but ultimately concluded that the entire prize money belonged to the assessee. The CIT(A) disagreed with this assessment, considering the evidence provided by the co-owners and the broker involved in the sale of the prize car. The CIT(A) found that the co-owners had jointly purchased the lottery ticket, received 1/3rd of the prize amount, and utilized the money as per their claims, supported by bills and vouchers. The CIT(A) held that only 1/3rd of the prize money should be assessable in the hands of the assessee, based on the evidence presented.The Revenue, aggrieved by the CIT(A) order, appealed to the ITAT Jodhpur. The Departmental Representative heavily relied on the AO's order, highlighting inconsistencies in the statements of the co-owners and emphasizing that the prize money was received by the assessee himself. On the other hand, the assessee's counsel supported the CIT(A) order and cited relevant judgments, including those of the Supreme Court and Tribunal decisions, to bolster their case.After considering the submissions and evidence on record, the ITAT Jodhpur upheld the CIT(A) decision. The tribunal noted that the AO's reliance on contradictions in the co-owners' statements was not sufficient to disregard the evidence provided by the co-owners and the broker. The tribunal found no contrary material to rebut the co-owners' contentions regarding the distribution and utilization of the prize money. Additionally, a precedent from the Tribunal, Ahmedabad Bench, was cited where a similar proportion of prize money was held taxable. Consequently, the ITAT confirmed the CIT(A) order, dismissing the Revenue's appeal.In conclusion, the ITAT Jodhpur's judgment resolved the issue of assessing the prize money from lottery winning in the hands of the assessee, affirming that only 1/3rd of the prize money was assessable based on the evidence and submissions presented during the proceedings.