The Cochin Bench of Income Tax Appellate Tribunal ( ITAT ) in the case of R.V.V. K. Peringanam v. Income-tax Officer held that where no consideration was paid by the assessee to participate in the gift coupons and the matter pertained to AY 2000-2001, the case was not covered u/s 194B of the IT Act.
The assessee made purchases of cloth from a shop and was given a certain number of price coupons on reaching a certain limit of purchase. The price coupon given to the assessee was under a scheme of the Kasargod vyapari Vyavasaya Ekopana Trust. The assessee won one kg of gold and was issued 600 gms of the same after deducting 40% of the price money u/s 194B of the IT Act. The assessee filed Nil Return and claimed a refund of the 40% price money. The AO, however, rejected the assessee’s claim on the ground that the assessee’s price constituted winning from lottery and tax had been rightly deducted. The CIT on being approached by the assessee also ruled against the assessee. Hence the present appeal.
The assessee submitted that no consideration was paid to participate in the process. The gift coupon is a “free gift coupon”.
The Bench constituting of Shri Chandra Poojari and George K ruling in favour of the assessee held that the essential ingredients of ‘lottery’ prior to 2002 are absent. It held that by any stretch of the imagination, it cannot be presumed that the assessee visited a particular merchant and purchased the dress material from him with the intention to participate in the lot.
It has been discussed that the reason why the Explanation to Section 2(24)(ix) w.e.f. 1.04.2002 was added was to bring within the purview of Section 194B, winnings from prizes awarded to any person by a draw of lots under any scheme, whether or not the participant had paid a price for acquiring the chance of winning the prize. However, since the present appeal relates to AY 2000-2001, the amended definition shall not apply.
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