Law: Income Tax Act, 1961

Section: 194B,205

Income-tax----Recovery of tax---Deduction of tax at source---Winnings from lottery--¬Person paying prize deducting tax at source on prize---Prize winner is not liable to pay tax on prize---Indian Income Tax Act, 1961, Ss. 194-B & 205. In view of section 205 of the Income Tax Act, 1961, the tax authorities cannot call upon the prize winner of lottery to make payment of the tax himself to the extent to which the tax had been deducted at source by the person paying the prize money under section 194-B of Income Tax Act. JUDGMENT During the assessment year 1986-87, the petitioner won two lottery prizes one for the value of Rs.10,50,000 and the other for Rs.18,000. Under the provisions of section 194-B of the Income Tax Act, 1961, The person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle in an amount exceeding one thousand rupees was obliged to deduct income-tax thereon at the rates in force while making the payment thereof. In the instant case one Chandra Agencies made the payment to the petitioner of the prize money. However, while making the said payment, the said Chandra Agencies, deducted a sum of Rs.2,62,500 and a sum of Rs.4,500 on account of the said two lottery winning prizes by way of deduction at source on account of income-tax authorities. However, the said Chandra Agencies did not make any payment of the said tax deducted at source from the said prize money to the income-tax authority. As such, while making an assessment for the year 1986-87 as against the petitioner, the income-tax authority passed an order, which reads as follows: "The credit for tax deduction at source is not given because when Chandra Agencies who made the payment to the assessee was requested to intimate the actual date of payment of tax deducted at source to the Government account, the said Chandra Agencies replied that the records have been forwarded to the Chairman, Vaibhavshali Bumper, and, accordingly, they were not able to furnish the date of payment of taxes to the Government Treasury. This explanation is not accepted and accordingly credit for this amount was not given. The credit for this will be given only when…

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