Surendra Ram Bharti Vs ITO (ITAT Ranchi)
Ranchi: The Income Tax Appellate Tribunal (ITAT), Ranchi bench, has sent back a case to tax authorities to determine whether an amount of Rs 31,900 received by a taxpayer was indeed lottery winnings, taxable at a higher rate, or a gift as claimed by the individual. The tribunal observed that the lower tax authorities had failed to properly investigate the factual nature of the receipt before imposing tax.
The case involves Surendra Ram Bharti and the Income Tax Officer for the Assessment Year 2008-09. The tax department had asserted that the amount of Rs 31,900 was income from lottery winnings. Under Section 115BB(ii) of the Income Tax Act, 1961, winnings from lotteries are subject to a higher rate of taxation. The Assessing Officer (AO) allowed a deduction of Rs 5,000, treating the remaining Rs 26,767 as lottery income taxable at this higher rate. This treatment was subsequently upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].
However, the taxpayer contested this assessment, arguing that the amount was not derived from a lottery but was received as a gift from TATA Teleservices Ltd. The taxpayer claimed to have won a bike valued at Rs 31,900 through a scratch card provided by the company, characterizing this as a gift rather than lottery income. Therefore, the taxpayer argued, the amount should not be subjected to the higher tax rate applicable to lottery winnings under Section 115BB(ii).
