COMMISSIONER OF INCOME TAX CENTRAL CIRCLE AND THE INCOME TAX OFFICER (TDS) WARD NO. 16(1) Vs. M/S. HINDUSTAN LEVER LTD.

JUDGEMENT

(1.) These appeals arise from common order dated 7.3.2006 rendered by the Income Tax Appellate Tribunal (for short the 'Tribunal'), Bangalore Bench 'A', in ITA Nos. 1290 and 1291/Bang/2002 whereby both the appeals preferred by the respondent-assessee were allowed. The appeals before the Tribunal were directed against the order of Commissioner of Income Tax-V (for short the 'Appellate Authority' or 'AA'), Bangalore, dated 21.6.2002 for the Assessment years 2001-02 and 2002-03.

(2.) The respondent, thereafter preferred two appeals under Section 253 of the Act before the Tribunal bearing Nos. 1290 & 1291/Bang/2002. The Tribunal allowed both the appeals filed by the respondent holding that the schemes conducted by the respondent were not a lottery as the said expression was understood upto the Assessment Year 2001-02. The Tribunal found, as a matter of fact, that the customers did not pay any excess amount for getting coupons indicating winnings in the packs/containers of products they purchased, and therefore, nothing was paid by them for participating in the Scheme. Accordingly, the Tribunal concluded that although there was an element of chance, but as no consideration or payment was made by the customers for the purpose of participation in the lottery with the object of winning the prizes, the schemes conducted by the respondent would not fall within the ambit of Section 194B. The Tribunal, further held that having regard to the insertion of the explanation below Section 2(24)(ix) of the Act, the scheme conducted by the respondent would be a lottery for the Assessment Year 2002-03 but, nevertheless, they accepted the respondent's alternate contention that having regard to the Circular No. 390 dated 8.8.1984 (erroneously referred to as circular No. 956 in the order), there was no obligation on the respondent to deduct tax at source in respect of prizes paid in kind and in absence of any such obligation no proceedings under Section 201 could be taken against the respondent.

(3.) Feeling aggrieved by the order passed by the Tribunal, the revenue filed present appeals. The substantial question of law on which both the appeals were Admitted by this Court are similar. We, therefore, quote the question of law framed in ITA No. 142/2007, which reads thus: