1990 (11) TMI 99 - HC - Income Tax

Summary

Issues Involved:
The judgment involves a reference u/s 256(1) of the Income-tax Act, 1961 regarding the tax treatment of bonus commission received by an assessee selling lottery tickets. The main issue is whether the bonus commission should be assessed as 'Income from business' or 'Income from other sources' and whether the assessee is entitled to deduction u/s 80TT of the Act.

Tax Treatment of Bonus Commission:
The petitioner-assessee sold lottery tickets for a commission and received a bonus commission of Rs. 1,00,000 due to a winning ticket. The dispute centered on whether this bonus commission constituted income falling under the definition of lottery winnings u/s 80TT of the Act. The key question was whether the bonus commission should be considered a lottery winning within the meaning of the Act.

Interpretation of Section 80TT:
Section 80TT of the Act allows for a deduction from lottery winnings in certain cases. The assessee argued that the bonus commission should be treated as a lottery winning based on the chance factor involved in selling the winning ticket. Reference was made to a decision by the Punjab and Haryana High Court regarding the definition of "lottery" in relation to such winnings.

Analysis and Conclusion:
The court examined whether the bonus commission met the criteria of a lottery winning as defined in the Act. It was determined that the firm selling lottery tickets was not a contributor to the prize amount, as it acted as a sub-agent and recouped its investment from the principal. The court concluded that the bonus commission was not akin to lottery winnings under section 80TT, but rather an incentive bonus for selling a winning ticket. Therefore, the assessee was not entitled to the deduction u/s 80TT and the Tribunal's decision denying the benefit was upheld.