ASSISTANT COMMISSIONER OF INCOME TAX Vs. DIRECTOR OF STATE LOTTERIES ASSAM

JUDGEMENT

(1.) THIS judgment and order of ours will dispose of Writ Appeals Nos. 232 of 1999 and 242 of 1999 as the same arise out of the common judgment and order of the learned Single Judge, dt. 12th March, 1999, allowing two writ petitions Civil Rule No. 2786 of 1994 and No. 405 of 1994.

(2.) A common question of law and fact arises in both these appeals. The question of law that calls for our determination is whether the refund by the Director of State Lotteries to the organising agent of the prize money from the unsold tickets of lotteries and unclaimed prizes attract the provisions of S. 194B of the IT Act, 1961 ?

(3.) PURSUANT to the powers conferred on the States under Art. 298 of the Constitution of India the State of Assam has been carrying on the business of State organised lotteries through its organising agents, after executing an agreement between the parties, i.e., the Director of State Lotteries and the agent. Lotteries are run under various names. The Director of Lotteries, in this case, appointed M.S. Associates as an organising agent. The Director of Lotteries was responsible for making the payment of the prize money to the prize winners in terms of the agreement made with the organising agent. As per the agreement dt. 2nd Dec., 1991, as amended vide agreement, dt. 7th Aug., 1992, the organising agent was to pay certain royalty to the Director of Lotteries, but the sale of tickets was to be done by the agent. The agent was required to keep a deposit of Rs. 10 lakhs with the Director of Lotteries as one time deposit of taxable prize money. The taxable prize money was to be distributed or disbursed by the Director of Lotteries to the prize winner of the lottery and that sum was to be deducted from the deposit made by the agent. The prizes in each draw which were not claimed by the prize winners within 30 days from the date of publication of the result in the Official Gazette, were not to be disbursed. However, the Government could allow disbursement of such prizes within 90 days from the date of draw subject to the provisions in the Assam State Lotteries Rules, 1969, as amended from time to time. Further, the organising agent was to be solely responsible for sale of the entire lot of tickets for each draw and the Director of State Lotteries was not liable for any loss caused to the organising agent on account of lottery tickets remaining unsold. Clause (5), cl. (10) and cl. (15) of the agreement dt. 2nd Dec., 1991, as substituted by the agreement dt. 7th Aug., 1992, read as follows :