TaxTMI 
TaxTMI 
2003 (12) TMI 34
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....e penalty imposed. In order to encourage thrift as also to mobilise funds for developmental works, saving schemes are operated by the Government. Under the gift linked scheme, a prize coupon is given to the investor when the investment made is in excess of Rs. 1,000. The investor does not pay any price for those coupons. Prizes are awarded to the holder of the lucky coupon, which is chosen by lot. The prizes given are consumer goods, such as, fan, colour television, moped etc. During the accounting year ended March 31, 1998, the assessment year being 1998-99, the respondent released prizes worth Rs. 72,94,480. According to the Revenue, before distributing those prizes, the assessee ought to have deducted tax at source in a sum of Rs. 29,17....
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.... of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings." By the Finance Act, 1972, which introduced section 194B, a new sub-clause (ix) was introduced in the definition of "income" in section 2(24) of the Act, which reads thus: "2(24).... (ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever." Winnings from lotteries on and after April 1, 1972 were included within the scope of the definition of "income" and the person responsible for paying to any person any income in excess of rupees five thou....
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....he manager of the game." Halsbury's Laws of England, Fourth Edition Reissue, Volume 4(1), at paragraph 7, which deals with "lotteries", reads thus: "There is no statutory definition of a lottery. However, it has been said that: 'A lottery is the distribution of prizes by chance where the persons taking part in the operation, or a substantial number of them, make a payment or consideration in return for obtaining their chance of a prize. There are really three points one must look for in deciding whether a lottery has been established: first of all, the distribution of prizes; secondly, the fact that this was to be done by means of a chance; and thirdly, that there must be some actual contribution made by the participants in return for the....
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....r, "lottery" is defined "as a hazard in which sums are ventured for a chance of obtaining a greater value...A lottery is a species of gaming, which may be defined as a scheme for the distribution of prizes by chance among persons who have paid, or agreed to pay, a valuable consideration for the chance to obtain a prize." Thus, before the scheme can be regarded as a lottery, there must be the element of distribution of prizes which should be by chance or lot and such distribution should be among those who had paid a price for participating in the scheme. Mere gratuitous distribution without any price having been paid by the participants for acquiring the chance and receiving a prize that is ultimately distributed, would not amount to a lott....
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....g the same. Subsequent decisions of the English courts by the Queen's Bench in the case of Reader's Digest Association Ltd. v. Williams [1976] 3 All ER 737 and the one by the House of Lords in the case of Imperial Tobacco Ltd. v. Attorney General [1980] 1 All ER 866 set out the current state of the law with regard to lotteries in England. In the case of the Reader's Digest [1976] 3 All ER 737, it was held that to establish that a prize constitutes a "lottery" within section 41 of the Betting, Gaming and Lotteries Act, 1963, it must be shown, in addition to the distribution of prize by chance, the participants must have made some contribution in return for obtaining the chance of a prize, and that where a significant number of participants ....