High Court Of Madras
Commissioner Of Wealth Tax vs. C.R.K. Swamy
Section WT 2(M)
Asst. Year 1985-86, 1986-87
P.D. Dinakaran & P.P.S. Janarthana Raja, JJ.
Tax Case (Appeal) Nos. 147 of 2004
4th June, 2007
Counsel Appeared : Mrs. Pushya Sitaraman, for the Appellant : M.P. Senthil Kumar, for the Respondents
JUDGMENT
P.P.S. Janarthana Raja, J. :
These appeals are filed by the Revenue against the order of the Tribunal, Madras Bench “D”, in WTA Nos. 1500 and 1501/Mad/1992 and GTA No. 49/Mad/1992 for the asst. yrs. 1985-86, 198687 and 1984-85. On 3rd March, 2004, this Court admitted the appeals and formulated the following substantial questions of law :
“(i) Whether on the facts and in the circumstances of the case the Tribunal is right in law in confirming the order of the CIT(A) directing the AO to recompute the assessee’s net wealth after excluding the wealth of his wife, daughters-in-law and grand-children attributable to the lottery winnings ?
(ii) Whether on the facts and in the circumstances of the case the Tribunal is right in law in confirming the order of the CIT(A) cancelling the gift-tax assessment order ?”
2. The facts leading to the above substantial questions of law are as under : The assessee, C.R.K. Swamy purchased two lottery tickets of Meghalaya State Lottery and ten lottery tickets of Aero Sports Raffle conducted by Aero Club of India by spending Rs. 52 and settled them on C.R.K. Swamy Trust on 14th Aug., 1983 for the benefit of 15 beneficiaries and handed over the said lottery tickets to the trustees, Shri D. Mohandoss, Shri K. Bhaskaran and Shri C.R.K. Arokiaraj. The deed of trust was executed on stamp papers of Rs. 30 purchased on 14th Aug., 1983 from a stamp vendor in Cuddalore. The lottery was conducted on 15th Aug., 1983. The ticket bearing No. 408697 of the Aero Club of India won the first prize of Rs. 1 crore. The name of the trust is called C.R.K. Swamy Trust. The trust is also an assessee and it has also filed its return. The assessee contended that the price money has to be assessed in the hands of the respective beneficiaries as the beneficiaries and their shares are determinate and known. The AO did not agree with the plea of the assessee. The deed of trust appeared ante-dated and it was the result of an afterthought when the results of the lottery had been declared, because 14th Aug., 1983 happened to be Sunday and 15th Aug., 1983 happened to be Independence Day and that Sri C.R.K. Swamy was an aged man residing at Villupuram. The stamp paper was purchased on 14th Aug., 1983 at Cuddalore and that the same was brought to Villupuram and got typed at Villupuram on the same day. The AO was of the opinion that the lottery tickets were purchased at least 20 days before the date of draw of the lottery, but the trust was formed not immediately after the purchase of the tickets, but only a day before the date of draw of the lottery. Further, the AO was of the view that corpus of the trust, being lottery tickets numbering 12, cannot be called a property as understood in the general sense. Further, the AO held that it does not make the lottery ticket in which the buyer has speculative interest, a property with which a person could form the trust. If the lottery tickets had not won any prize, the trust, which was formed on 14th Aug., 1983 would have ceased to exist on 15th Aug., 1983 and that the tenure and period of validity of the trust could not be a matter of speculation.
The AO also held that the income actually arose in the hands of the assessee in the present tax cases and that that there will not be any assessment in the hands of the trust. As a protective measure, the assessment was completed in the name of C.R.K. Swamy Trust taking the income as “nil”. The said assessment was processed under s. 143(3) in the status of an AOP on 30th March, 1988. In view of the same, the AO held that the Trust was not a genuine one and hence it is not a valid trust. In view of the same, the AO held that the prize money has to be assessed only in the hands of the assessee and not in the hands of the trust. The WTO included the wealth of the appellant’s wife, daughter-in-law and minor grand children and others on the same basis. In the gift-tax assessment also, the GTO initiated and levied gift-tax on the ground that the assessee had distributed the prize money to his close relatives. Aggrieved by the same, the assessee filed appeals to the CIT(A). The CIT(A) allowed the appeals and set aside the orders of the AO. Aggrieved, the Revenue filed appeals to the Income-tax Appellate Tribunal (“Tribunal” in short). The Tribunal dismissed the Revenue’s appeals by following the earlier Tribunal order in C.R.K. Swamy Trust as well as the assessee’s own case. Hence, the present tax cases by the Revenue. Learned standing counsel appearing for the Revenue submitted that the trust is not a genuine one and hence the levying of wealth-tax and gift-tax is justified and is in accordance with law. Learned counsel for the assessee submitted that the earlier Tribunal order reached finality and also the beneficiaries received their respective shares and they have been assessed under the Act. Hence, the order passed by the Tribunal is in conformity with law.
Heard the counsel. In the present cases, the Tribunal merely followed the C.R.K. Swamy Trust’s case (supra) as well as the assessee’s own case in ITA No. 1969/Mds/1989 and ITA Nos. 4131 to 4133/Mds/1989, respectively and held as follows : “2. We have heard the rival submissions and perused the material on record. The issues raised have already been concluded in favour of the assessees vide the order of this Tribunal, dt. 31st March, 1992 in ITA No. 1969/Mds/1989 and ITA Nos. 4131 to 4133/Mds/1989 in the case of the same assessee. Even the reference applications filed on the aforesaid order of the Tribunal have been rejected vide the order of this Tribunal dt. 20th Nov., 1992. The learned counsel for the assessee at the time of hearing also stated that the reference application filed by the Department under s. 256(2) of the Act have been decided in favour of the assessee by the High Court of Madras. However, he has not been able to produce a copy of the order of the High Court readily. We, however, find that the orders of the CIT(A) which have been contested against before us are based on the decision of this Tribunal. We therefore, respectfully following the order of this Tribunal dt. 31st March, 1992, hold that the CIT(A) was justified in taking a favourable view on the appeals filed by the assessee. Under the circumstances, we do not find any reason to interfere with the orders of the CIT(A) on these issues.
3. In the result, the appeals filed by the Revenue are dismissed.” Against the abovementioned order of the Tribunal, the Revenue filed appeals to the High Court. The appeals were filed belatedly. The said matter came up before this Court in T.C.M.P. Nos. 995 and 996 of 1997 on 4th Aug., 1998, wherein the following substantial questions of law have been raised : ‘1. Whether in the facts and in the circumstances of the case the Tribunal is right in law in holding that the trust is a genuine trust ? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in cancelling the assessment made in the hands of C.R.K. Swamy individual ?’ After hearing the arguments this Court dismissed the said T.C.M.Ps. and held as follows : ‘The delay cannot be condoned the affidavit is as held as it can possibly be. The respondent has rightly complained that even the copy served upon herein merely, Court aimed blanks and that not specify the period of delay. No reason worth mentioning is given in support of the prayer for condonation of delay for period of delay is not few days but runs into year. The application for condonation of delay are dismissed.” In view of the dismissal of the Revenue’s petitions by this Court, the trust’s case reached finality. In respect of the assessee’s own case relating to the earlier asst. yrs. 1984-85, 1985-86 and 198687, the Revenue is unable to furnish the details as to whether they have filed any appeal against the said orders or not. No fresh evidence or any other material produced before us to substantiate the claim of the Revenue. The Tribunal correctly followed its own orders and decided the matter in favour of the assessee. Hence, we do not find any error or legal infirmity in the order of the Tribunal so as to warrant interference.
6. Under these circumstances, the questions referred to above are answered in favour of the assessee and against the Revenue, and accordingly the tax cases are dismissed. No costs.
[Citation : 296 ITR 645]
