TaxTMI 
TaxTMI 
TaxTMI 
1996 (10) TMI 124
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.... matter was considered was that the assessee has shown a loss of Rs. 8,32,934 in the trading account and the loss arose due to expiry of tickets and also because large number of tickets were sold at a substantially reduced price for which no proper evidence was placed. 4. Before us, the ld. counsel for the assessee has filed a paper book containing Balance-sheet, copy of the order of the Tribunal in the assessee's own case for the assessment year 1987-88, copy of distributorship agreement with the Directorate of State Lotteries, etc. He has adverted our attention to pages 1 and 2 of the paper book and submitted that in fact, the assessee has shown a gross profit of Rs. 8,32,933 and as such the basis upon which the authorities below have proceeded, i.e., by presuming that the assessee has shown a loss in the trading account, is not factually correct and consequently, the decision thereupon is not in accordance with law. He has furnished before us copy of the order of the Tribunal in S. Pal & Co. [IT Appeal No. 3416 (Cal.) of 1990 dated 9-12-1995], wherein the Tribunal has restored same issue to the file of the Assessing Officer. On the other hand, ld. departmental representative s....
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...., and also in the absence of any further evidence before us, we confirm the addition made by the Assessing Officer in this regard. 10. Ground No. 4 gives rise to an interesting issue. The assessee is a sole-selling agent/distributor of lottery tickets in India. As per the agreement between the assessee-firm and the Institute of Public Assistance (Provedoria), the assessee-agent has to procure paper and got the tickets printed at a printing press decided by the Director, Provedoria and also should arrange for the transportation to the press and at various other places for sale at its own cost and responsibility. Prize amount of the unsold tickets and other tickets for which no claim is made within a specified and reasonable period stipulated in clause 17 shall be refunded to the assessee-agent. Some of the clauses in the agreement dated 15-2-1985 may be relevant for the purpose of appreciating the issue in dispute before us : " Clause 8 : The Agent agrees for the procurement of paper, printing of tickets and their transportation to the press and at the various other places for sale at his own cost and responsibility. The paper for the tickets shall be of Maplitho quality of 70 gr....
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....press and the tickets sold, unsold, cancelled or condemned. The Agent agrees in particular to ensure that no duplicate lottery tickets are printed or issued for sale. The sole responsibility in this regard shall be of the Agent only and the Provedoria shall not in any way be responsible therefor and shall be fully indemnified by the agent and civil/penal action. The accounts shall be open for inspection by the authorised officer of the Provedoria. The Provedoria also reserves the right to enquire into Lottery business of the Agent concerning this agreement." 11. In the course of carrying on its business as a sole-selling agent, some of the lottery tickets remained unsold and were available with the assessee. Prizes earned on some of the unsold lottery tickets, as per clause 17 of the agreement, are the unclaimed prizes and hence, the same is the property of the assessee-agent and, accordingly, the assessee has treated the refund as income in the course of carrying on its business and claimed the same in the return of income for the assessment year 1988-89. Assessing Officer was of the opinion that the income earned by the assessee against the unsold lottery tickets should be treat....
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....rd game of chance ". In Aiyar's Judicial Dictionary (Eleventh Edition), the meaning of the word ' lottery ' is given as under : " A lottery is a game of chance in which the event of either gain or loss of the absolute right to a prize or prizes by a person concerned is made wholly dependent upon the drawing or casting of lot. Transactions in which prizes are decided by lots or by chance amount to a lottery. The keeping of any office or place for the purpose of drawing any lottery not authorised by Government is punishable under section 294A, IPC. An agreement for contributions to be paid by lot or a transaction requiring skill for winning prizes is not a lottery. " 16. From the dictionary meaning we find that ' lottery ' is chance for a prize. Whether the amount received by the assessee falls within the meaning of ' lottery ' depends on the question as to whether the assessee has participated in the lottery -- to take a chance -- by purchasing a ticket. On a reading of the clauses in the agreement we are of the opinion that the assessee has not participated in the ' lottery ' neither it purchased the ticket nor it got the amount by winning a prize -- and the amount was refunded t....
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....teries credits the amount under the second part of clause 15 of the agreement, the Government gives prizes to the petitioner-company for unsold tickets. Mr. Jetley's contention that the word " prize " in clause 15 is income from winning from lottery of unsold tickets, cannot be accepted merely because such expression has been incorporated in that clause. The word ' prize ' which appears in clause 15 of the agreement obviously refers to clause 10 of the agreement. Under clause 10 of the agreement which we have extracted elsewhere in this judgment, the petitioner-company is required to deposit the prize money 30 days in advance before the draw. This is a guarantee to the Government as finally the Government is responsible to pay the prizes to the ultimate purchasers of winning tickets. When tickets remain unsold, the Government is required to return or credit the money in favour of the petitioner. The word " prize " used in clause 15 has to be understood in the context of clause 10 of the agreement. It is in reality not a prize, for a ticket which has remained unsold cannot win a prize." 17. On a careful reading of the aforesaid judgment, we are of the opinion that the facts and ci....