Law:

Section:

Section 199 of the Income-tax Act, 1961, read with article 371F of the Constitution of India - Deduction of tax at source - Credit for tax deducted - Assessment year 1988-89 - In month of August 1987 petitioner/assessee won a lottery of Government of Sikkim having a prize money of Rs. 6,30,000 - Government of Sikkim deducted income-tax in sum of Rs. 62,088 as per Sikkim tax laws from prize money and paid balance amount - Petitioner filed return of income for the assessment year 1988-89 wherein she claimed deduction of Rs. 62,088 from prize money of lottery on ground that said sum was deducted as income-tax at source while making pay-ment of lottery sum - Assessing Officer, however, did not give credit for said sum as tax deducted from prize money of lottery by Sikkim State Government was not paid to Indian treasury and tax was not deducted as per section 199 of 1961 Act - 1961 Act was made applicable and came into force in State of Sikkim from assessment year 1990-91 (previous year 1989-90) and on coming into force of 1961 Act, the Sikkim Income-tax Manual stood repealed - Whether since at relevant time when petitioner won prize money, Sikkim Tax Manual, 1949 was applicable in State of Sikkim, provisions of 1961 Act could not be applied to income earned in Sikkim - Held, yes - Whether, therefore, petitioner's claim was to be upheld - Held, yes FACTS In the month of August 1987 the petitioner/assessee won a lottery of the Government of Sikkim having a prize money of Rs. 6,30,000. The Government of Sikkim deducted income-tax in the sum of Rs. 62,088 as per Sikkim tax laws from the prize money and paid the balance amount of Rs. 5,67,912. The petitioner filed return of income, for the assessment year 1988-89, wherein she claimed deduction of Rs. 62,088 from the prize money of the lottery on the ground that the said sum was deducted as income-tax at source while making the payment of Rs. 5,67,912. The Assessing Officer, however, did not give credit for the said sum of Rs. 62,088, as the tax deducted from the prize money of the lottery by the Sikkim State Government was not paid to the Indian treasury and tax was not deducted as per section 199 of the 1961 Act. The…

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