COMMISSIONER OF INCOME-TAX Vs. SUSHEELA DEVI AGARWAL

JUDGEMENT

(1.) THIS is an appeal under Section 260A of the Income -tax Act against the order dated 18 -12 -1998 passed by the Income -tax Appellate Tribunal 'B' Bench, Allahabad in ITA No. 1906 (All.)/1990 for the assessment year 1988 -89. The facts which are not in dispute are as follows.

(2.) THE assessee respondent received a lottery/prize money from Directorate of Lotteries, Government of Sikkim out of which a sum of Rs. 8,088 was deducted as tax at source. The assessee claimed before the Income -tax Officer, Ward 'B', Allahabad that she had received a lottery prize to the tune of Rs. 90,000. She claimed exemption on the aforestated amount of Rs. 90,000 under Section 91(1) of the Income -tax Act. The said claim was not accepted by the Assessing Officer and he added back the income from lottery as income in the hands of the assessee. The said order was confirmed by the order dated 21 -5 -1990 by the Commissioner of Income -tax (Appeals), Allahabad in Appeal No. 23/Ward 4/All./89 -90. In further appeal, the Tribunal has held that the provisions of the Income -tax Act were not applicable to the income earned at Sikkim. A notification in this regard was issued by the Ministry of Finance, Department of Revenue, New Delhi on 7 -11 -1988 providing for application of provision of Chapter XVII of the Income -tax Act with immediate effect. The Tribunal held that as per the Press Note, the provisions of the Income -tax Act, under the aforesaid notification, were made effective from the assessment year 1990 -91 and as a result, the assessee is not liable to tax for the relevant assessment year (1988 -89) on lottery income.

(3.) ON the following questions of law, the appeal was admitted by the order dated 24 -4 -2007: (1) Whether on the facts and circumstances of the case, was the ITAT's order dated 18 -12 -1998 legally correct and tenable in view of the fact that none of the notifications clearly spell out that the Act will apply to Sikkim from assessment year 1990 -91? (2) Whether on the facts and circumstances of the case, was the ITAT legally justified in holding that the Income -tax Act, 1961 will apply upon Sikkim from assessment year 1990 -91 and not before, in view of the notifications and the Press Note relied upon by the assessee as well as Section 91(1) of the Act and Article 371 of the Constitution of India? (3) Whether on the facts and circumstances of the case, and on the materials on record, and on a true and correct interpretation of Section 91(1) and Chapter XVII of the Income -tax Act, 1961 and of Article 371 of the Constitution and of the Press Note and relevant notification issued by the Ministry of Finance, was the ITAT legally justified in reversing the order of the CIT (Appeals) and in holding that the assessee is not liable to pay Income -tax on the lottery prize money of the Sikkim Government?