Lottery winnings deduction under section 80TT applies to gross prize, not net receipt after agent's commission.

Deduction under section 80TT for lottery winnings had to be computed on the gross prize declared, not on the net amount received after agent's commission. The commission was treated as an outgoing incurred to obtain the prize and not as a diversion by overriding title, so it did not reduce the winnings for section 80TT purposes. Section 2(24)(ix) did not justify confining the winnings to net receipt. The commission could be considered only after computing the deduction, and recomputation was directed on the gross winnings basis.

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Issues: Whether deduction under section 80TT of the Income-tax Act, 1961, in respect of lottery winnings had to be computed on the gross prize declared or only on the net amount received after deduction of agent's commission.

Analysis: The winnings were the full prize amount declared by the State Government and not the net sum remitted after deduction of commission. The commission paid to the agent was an outgoing incurred for obtaining the prize and did not amount to a diversion by overriding title. Section 80TT contemplates computation of deduction with reference to the amount of winnings, and section 2(24)(ix) did not support restricting the winnings to the net receipt. The commission was therefore not to be excluded while computing the deduction under section 80TT, though it could be considered as an expenditure after such computation.

Conclusion: Deduction under section 80TT had to be computed on the gross lottery winnings of Rs. 3 lakhs, not on the net amount of Rs. 2,67,000 received after commission. The assessee's computation was accepted and the matter was remitted for recomputation accordingly.

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