S. 194B : Deduction at source-Winning from lottery-Cross word puzzle-Winnings from
advertisement–Provision is not applicable. [S.201 & 201(A)]
The assessee company was engaged in the business of manufacture and sale of various consumer
goods / products. During the previous year it had conducted certain sale of promotion schemes. The
Company advertised in packs/ containers of their products. Some of those coupons indicated that on
purchase, the prizes that were offered were Santro car, Maruti Car, Gold Coins, Gold Tables, Silver
Coins, emblems etc. The total amount of prizes distributed valued at Rs.6,51,238 for A.Y : 2001-02
and Rs 54,73,643 for A.Y : 2002-04 . AO conducted survey at assessee’s premises and thereafter
passed an order treating assessee as an assessee in default u/s 201(1) and 201(A) for AY : 2001-02
and treated respondent as an assessee-in-default of its obligations in terms of 194B of the Act as
although the customers did not pay anything extra to receive the prize , nevertheless they had
participated in the schemes by purchasing the products advertised to take a chance at winning the
prize. AO further held that what has been paid as prize in kind in various schemes conducted by the
respondent was a lottery on which tax was neither deducted nor ensured payment thereof before the
winnings were released. CIT (A) affirmed the order of the AO. Tribunal reversed the decision and
held that although there was no 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 assessee would not fall within the ambit of S/194B of the Act. On further
appeal in HC, HC affirmed the order of Tribunal and held that on conjoint reading of S/201 & 194
would show that if the person responsible fails to pay is deemed to be an assessee-in-default, in
respect of tax. Where the payment of the winnings is wholly in kind and not in cash at all, the
question of deduction does not arise and in that eventuality, the winner of prize before the prize/
winnings was to be released in assessee’s favour. Therefore proceedings against the person u/s 201 ,
such as the assessee in the assessee’s case, who failed to ensure payment of tax , as contemplated by
proviso to S/194B , before releasing the winnings were not maintainable or the proceedings against
such person were without jurisdiction. (AYs. 2001-02, 2002-03)
CIT v. Hindustan Lever Ltd. (2014) 264 CTR 93 / 220 Taxman 177 / 361 ITR 1 (Kar)(HC)
advertisement–Provision is not applicable. [S.201 & 201(A)]
The assessee company was engaged in the business of manufacture and sale of various consumer
goods / products. During the previous year it had conducted certain sale of promotion schemes. The
Company advertised in packs/ containers of their products. Some of those coupons indicated that on
purchase, the prizes that were offered were Santro car, Maruti Car, Gold Coins, Gold Tables, Silver
Coins, emblems etc. The total amount of prizes distributed valued at Rs.6,51,238 for A.Y : 2001-02
and Rs 54,73,643 for A.Y : 2002-04 . AO conducted survey at assessee’s premises and thereafter
passed an order treating assessee as an assessee in default u/s 201(1) and 201(A) for AY : 2001-02
and treated respondent as an assessee-in-default of its obligations in terms of 194B of the Act as
although the customers did not pay anything extra to receive the prize , nevertheless they had
participated in the schemes by purchasing the products advertised to take a chance at winning the
prize. AO further held that what has been paid as prize in kind in various schemes conducted by the
respondent was a lottery on which tax was neither deducted nor ensured payment thereof before the
winnings were released. CIT (A) affirmed the order of the AO. Tribunal reversed the decision and
held that although there was no 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 assessee would not fall within the ambit of S/194B of the Act. On further
appeal in HC, HC affirmed the order of Tribunal and held that on conjoint reading of S/201 & 194
would show that if the person responsible fails to pay is deemed to be an assessee-in-default, in
respect of tax. Where the payment of the winnings is wholly in kind and not in cash at all, the
question of deduction does not arise and in that eventuality, the winner of prize before the prize/
winnings was to be released in assessee’s favour. Therefore proceedings against the person u/s 201 ,
such as the assessee in the assessee’s case, who failed to ensure payment of tax , as contemplated by
proviso to S/194B , before releasing the winnings were not maintainable or the proceedings against
such person were without jurisdiction. (AYs. 2001-02, 2002-03)
CIT v. Hindustan Lever Ltd. (2014) 264 CTR 93 / 220 Taxman 177 / 361 ITR 1 (Kar)(HC)
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