TaxTMI 
TaxTMI 
1994 (1) TMI 118
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....equent upon the declaration of prize, is exigible to tax ? 3. Briefly the facts :--The assessee is a citizen of India and domiciled in India. For the relevant assessment year, she was a resident in India. She is following mercantile system of accounting. Her accounting period ended on 31-3-1988. In her return, she reflected share of profit received from M/s. Zorashtrian Dairy. Along with the return of income, the assessee filed inward remittance certificate number 00450 dated 23-12-1987 from Bank of India, Bombay. As per the certificate a sum of pound 1,00,000 was credited by the said bank in the assessee's A/c No. 21909 In Central Bank of India on 21-12-1987. The amount was remitted by the Department of National Savings, U.K. through Bank of India, London Branch. This amount was stated to be beyond the ken of Income-tax Act. It was stated that the assessee received the Premium Savings Bond in London on 3-12-1987, as a gift from Shri Kersi R. Bhadha, her first cousin, a British citizen, who purchased it in January 1986 in assessee's name. It fetched the prize in the draw held in Septemper 1987. The general conspectus of the main plank of the assessee's argument was that the p....
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....be declared in future. Sd/- Sd/ Before Me : Dated : 3rd December, 1987 Dated : 3/12/87 C.R.B.COOKE COMMISSIONER FOR OATHS OWEN WHITE 32 36 SATH ROAD HOU...., MIDDLESEX TWS 3LF" 6. Shri Subramanian submitted that the unilateral action of Shri K. R. Bhadha of buying bond in the name of the assessee by itself does not amount to a gift. The gift is completed only when it is accepted. In order to make a valid gift, it is essential that the gifted property must vest in the transferee. There cannot to a gift, in law, without vesting of the property gifted in the transferee and such vesting cannot take place without the consent or the concurrence of the transferee donee. According to ld. counsel, conjoint reading of sec.2(xii), coining a definition of expression 'gift' and sec. 2(xxiv), coining a definition of expression " transfer of property " makes it clear that before a transactioncan be styled as a gift, it must be implied as a transaction of transferby one donee to another, that is, there must be plurality of parties involved in the transaction. In other words, these provisions postulate that there must be a transaction between at least two parties. Thus....
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....eement is effected, for such transfer, it ought to be treated as illegal and it shall have no value in the eye of law. What all could said to have been gifted in the instant case is a sum of pound 50 which Mr. Bhadha parted while purchasing the bond. Coming to the applicability of section 115BB, it was contended that the amount of prize was picked out of the lot on random basis. This is exactly what the meaning of the word 'lottery' connotes. Section 115BB includes within its ambit winning from lotteries also. Our attention was invited on the dictionary meaning of word 'lottery'. Finally it was submitted that the amount in question was correctly taxed in the hands of the assessee. 10. We have heard the rival submissions in the light of material placed before us and precedents relied upon. The assessee is a resident in India and is doing business in partnership in Bombay. Mr. K. R. Bhadha is cousin of the assessee. He is permanently residing in England. Mr. Bhadha, In January 1986 purchased the Premium Savings Bond in the name of the assessee. In September 1987, the prize of pound 1,00,000 was declared. Money was claimed by the assessee and was repatriated to India. The assessee ....
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....or cannot claim any title over the same. The prize was just a " HIDDEN POTENTIALITY ". The gift of the Premium Savings Bond can be equated with the gift of a seed. If you cut down the seed you cannot get the tree there inside. But " HIDDEN POTENTIALITY " of its being a tree is in the seed. For that it is to be kept inside the soil. It needs proper water, light and manure. If climatic conditions are favourable, after the flux of time, it may grow into a tree. Seed is not a tree. Of course. " HIDDEN POTENTIALITIES " or possibility of its being a tree is there in the seed. Likewise winning of the prize in the instant case was depend upon many imponderables - it permeated in a future eventuality - names were to be picked out of a lot on random basis - one may get - one may not get - purely a matter of luck and chance. This goes to show that prize element on the Premium Savings Bond was not an existing property at the time of its purchase. When it was pregnant with the prize, it was the property of the assessee as is evident from the document itself. The name of Shri K. R. Bhadha is not mentioned on the certificate. He had absolutely no title over the asset in question. Just by holding ....