Commissioner of Wealth Tax vs Smt. Pramilabai

G.G. Sohani, Actg. C.J.

By this reference u/s 27(1) of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), the Income Tax Appellate Tribunal, Indore Bench, Indore, has referred the following question of law to this court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the lottery ticket in question had no fair market value as on March 31, 1977 ?"

The material facts giving rise to this reference, briefly, are as follows :

The assessee won the first prize at the 90th main draw of the M. P. State Lottery held on March 15, 1977, and won a prize of Rs. 12,00,000. After deduction of commission charges and, the amount of tax, the prize money amounting to Rs. 7,23,600 was received by the assessee on June 7, 1977. In proceedings for the assessment of the assessee under the Act for the assessment year 1977-78, it was contended on behalf of the assessee that on March 31, 1977, the ticket held by the assessee had no market value as the claim of the assessee had not been accepted till then by the Director of Lotteries. This contention was not upheld by the Wealth-tax Officer. The Wealth-tax Officer accordingly passed the order of assessment. Aggrieved by that order, the assessee preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner partly allowed the appeal directing the Wealth-tax Officer to adopt the figure of net wealth at Rs. 7,23,600 as against Rs. 10,80,000 adopted by him. Aggrieved by the order passed by the Appellate Assistant Commissioner, an appeal was preferred by the assessee before the Tribunal. The Tribunal held that the lottery ticket had no market value as on March 31, 1977, and in this view of the matter, the Tribunal allowed the appeal filed by the assessee. Aggrieved by the order passed by the Tribunal, the Revenue sought a reference and it is at the instance of the Revenue that the aforesaid question of law has been referred to this court for its opinion.

Shri R. C. Mukati, learned counsel for the Revenue, contended that soon after the declaration of the result on March 15, 1977, the lottery ticket held by the assessee had a market value and the Tribunal, therefore, was not justified in holding that the lottery ticket held by the assessee had no market value prior to March 31, 1977, In reply, it was contended on behalf of the assessee that under the Rules framed by the State Government, till the publication of the result in the Official Gazette, there was no official announcement of the result of the draw and the assessee received the amount of prize money after March 31, 1977, after due verification by the Director of Lotteries.

Having heard learned counsel for the parties, we have come to the conclusion that this reference must be answered in the affirmative and against the Revenue.

Under Rule 33 of the M. P. State Lottery Rules, 1969, the list of prize -winning numbers is required to be published in the M. P. Gazette and such publication is deemed to be the official announcement of the draw. The Tribunal has found that the list was not published in the Official Gazette till March 31, 1977. Rule 36 further provides that the prize winners shall claim the prize money within 30 days from the date of the draw and that the prize money not claimed within this period shall lapse and be automatically forfeited to the Government. The manner in which the prize money shall be claimed is provided by Rule 35. The Tribunal has found that till March 31, 1977, neither was there any official announcement of the draw nor was the claim of the assessee to the prize money accepted by the Director of Lotteries. In these circumstances, the Tribunal, in our opinion, was justified in holding that the lottery ticket in question had no fair market value as on March 31, 1977.

For all these reasons, our answer to the question referred by the Tribunal is in the affirmative and against the Revenue. Parties shall bear their own costs of this reference.