Mrs Roshan D. Nariman v. The Commissioner Of Income-Tax

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION.INCOME TAX REFERENCE No. 147 OF 1996 Mrs Roshan D. Nariman ..Appellant. Vs. The Commissioner of Income-tax,..Respondent.Mr N. Thakkar a/w Mr R. Poojary i/b Mulla & MullaC.B.C. for the Applicant.Mr N. A. Kazi, Advocate for the Respondent. CORAM: DR. S.RADHAKRISHNANAND V.C.DAGA, JJ.DATED: 29th September,2008. Questions of Law : ------------------ 1."Whether on the facts and undercircumstances of the case and in law, theAppellate Tribunal was right in holding thatthe Applicant did not receive premium savingsBond of Pounds 50 along with its prizeentitlement of pounds 1,00,000 by way of giftfrom her cousin Mr Kersi R. Bhadha on3.12.1987?2.Whether on the facts and under thecircumstances of the case and in law, theAppellate Tribunal was right in taxing theprize of Rs. 23,67,835/- as winning fromlottery under Section 115BB of the Income-taxAct, 1961 even though the said receipt was inthe nature of capital receipt? THE FACTUAL MATRIX: ------------------ 3.The factual matrix drawn from the statement of case are as under:4.The Assessee is a Citizen of Indiaand domiciled in India. For the relevant assessmentyear 1988-89 she was resident in India. She isfollowing mercantile system of accounting. Heraccounting period ended on 31.3.1988. In her return,she disclosed share of profit received from M/sZorastrian Dairy. Along with the return of Income,the assessee filed inward remittance certificate dated 23.12.1987 from Bank of India, Bombay. As per the certificate a sum of pounds 1,00,000/- was credited by the said bank in the assessee’s account No.21909 in the Central Bank of India on 21.12.1987. The amountwas remitted by the Department of National Savings,U.K. through Bank of India (London Branch). Thisamount was stated to be beyond the ken of Income-taxAct. It was stated that the assessee received thepremium savings bond in London on 3.12.1987, a gift from Kersi R. Bhadha, her first cousin, a Britishcitizen, who purchased it in January, 1986 inassessee’s name. It fetched the prize in the drawheld in September, 1987. The general conspectus ofthe main plank of the assessee’s argument was that theprize was borne by Shri Kersi R. Bhadha and not bythe Assessee and, therefore, the amount was notexigible to tax in India. 5.The said submission was not accepted by the Assessing Officer holding that right from theinception the bonds purchased were in the name ofthe Assessee. The Assessee contended that she didnot purchase these bonds but those bonds werepurchased by Shri K.R. Bhadha in her name withouther knowledge. She further submits that the said words, her appeal failed before the CIT (A) and also before the Income-tax Act. 6 The aforesaid factual matrix have given rise to the question framed in the opening part of the judgment. SUBMISSIONS:- ------------ thus, submits that the income was not exigible to tax in the hands of the assessee. 8. Adverting to the applicability of the cannot be applied in the facts and circumstances of the case. also tried to justify the finding touching the applicability of Section 115BB. donee, as such assessee cannot be made liable to pay tax on the amount of prize money. ------------- ------------- ------------- CONSIDERATION:-------------- words, her appeal failed before the CIT (A) and also before the Income-tax Act. 6 The aforesaid factual matrix have given rise to the question framed in the opening part of the judgment. SUBMISSIONS:- ------------ thus, submits that the income was not exigible to tax in the hands of the assessee. 8. Adverting to the applicability of the cannot be applied in the facts and circumstances of the case. also tried to justify the finding touching the applicability of Section 115BB. donee, as such assessee cannot be made liable to pay tax on the amount of prize money. ------------- ------------- ------------- CONSIDERATION:-------------- 11.Having heard rival parties, consideringthe settled legal position that unless the gift isaccepted by the donee gift is not complete. It isnot in dispute that, K.R.Bhadha had purchasedpremium bonds in the name of the present assesseeout of his own funds without the knowledge of theassessee. It is also not in dispute that the doneehas accepted gift duly on 3.12.1987. Under thesecircumstances, transaction of gift could be said tobe complete only on 3.12.1987. If that be so, the prize money which was earned by K.R.Bhadha could not be assessed in the hands of assessee. 12.So far as the applicability of Section115B is concerned, the transaction in questioncannot be said to be one prize tentamount of freewinning from lottery as contemplated under Section115BB. The findings recorded in this behalf with respect to applicability of the Section 115BB cannot be said to be legal and valid. order with no order as to costs. (V.C.DAGA, J.) (Dr.S.RADHAKRISHNAN, J.)