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TMI Blog2001 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... law in holding that the amount of Rs. 76,912 received by the assessee from the Sikkim lottery is includible in the assessee's total income ?" Before we answer the aforementioned question of law, it is necessary to have a brief look at the facts of the case. The assessee had received Rs. 76,912 as a result of winning of a prize from the Sikkim lottery and it remains undisputed before us that a sum of Rs. 8,088 was deducted at source under the Sikkim Income-tax Rules. The assessee, while giving its income-tax return, did not, include the income earned in Sikkim. The Assessing Officer vide his order dated March 23, 1990, annexure A, assessed the assessee for that income also which was earned by him by way of the Sikkim lottery ticket. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain undisputed facts., It has remained undisputed before us that Sikkim was not a part of India in 1975 and initially, the State, of Sikkim was under a hereditary monarch, subject to British Paramountcy. Later, a treaty was entered into between Sikkim and the Government of India and the latter took responsibility with regard to defence, external affairs and communications of Sikkim. Thus Sikkim became a protectorate of the Union of India. Thereafter, the Constitution (Thirty-sixth Amendment) Act, 1975, was passed whereby Sikkim was admitted into the Union of India as a State. The said amendment inserted article 371F in the Constitution of India incorporating special provisions with respect to the State of Sikkim. By virtue of the powers u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal Bench at Delhi in Anuj (Toffee) Garg v. ITO [1990] 84 CTR 83, has taken a decision in favour of the assessee. The relevant observations of the Delhi Bench are as follows : "The result, therefore, is that, while undoubtedly section 5 would be applicable, the existing notifications of Sikkim also would be applicable: Thus, on the same income, it would appear that income-tax would be payable under the notification of the Government of Sikkim as well as under the Income-tax Act, 1961. But such a position would not be acceptable in law. Since Sikkim is. a part of India for the accounting year, there would appear to be, on the same income, two types of income-taxes. The Supreme Court has observed in Laxmipat Singhania v. CIT [1969] 72 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ordinarily resident of India at a place outside the territories comprising the State of Sikkim and to whom the Sikkim Regulations of 1948 and the notifications issued thereunder were not applicable. The assessee herein is to be assessed as per the provisions of the Sikkim Regulations, 1948, and the notifications issued thereunder. Therefore, deductions made from winnings from Sikkim lotteries on account of agent's/seller's commission and/or payment of tax called income-tax, would not debar the assessment of that income as per the provisions of the Income-tax Act, 1961. In the instant case, as has been pointed out above, Explanation 2 to section 5, which provides safeguard against double taxation does not apply for the obvious reason tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the firm can be taxed in accordance with the Finance Act of 1956 as also the income in the hands of the partners, the distinction between a charging and a machinery section is of no consequence. Both the sections have to be read together and construed harmoniously. It is significant that similar provisions have also been enacted in the Act of 1961. Sections 182 and 183 correspond substantially to section 23(5) except that the old section did not have a provision similar to sub-section (4) of section 182. After 1956, therefore, so far as registered firms are concerned the tax payable by the firm itself has to be assessed and the share of each partner in the income of the firm has to be included in his total income and assessed to tax ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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