10 April 2015
R Professionals, Please clarify whether income earned by agents of life insurance corporation, by way of competition prizes held in LIC, is taxable or not? if yes the under which section it is taxable?
10 April 2015
The definition of game is pretty clear and unambiguous. Any contest whether in entertainment programme on TV or e lectronic mode or otherwise has been covered in it. The thumb rule is: 1. A contest 2. Competing participants 3. Prizes to be won If the three conditions are satisfied, it is a game. Under Section 194B of the Income Tax Act, 30 per cent tax is deducted on any prize money in excess of Rs . 10,000 received by way of winnings from games, lotteries etc.
10 April 2015
For supporting you, let me put you through this proposition also.
Thus in our opinion , awards given based on merit and performance may not fall under the provisions of section 2(24 ) ( ix) read with section 194B . The above can be justified based on the following case law s : CASE LAWS: In the case Sampanna Kuries (P.) Ltd. v. ITO [2004] 141 Taxman 615 (Ker.) the essential elements of ‘lottery’ were discussed and the following was held: ( i ) A prize or some advantage in the nature of a prize; ( ii ) Distribution thereof by chance; and ( iii ) Consideration paid or promised for purchasing the chance. Thus, unless all the three elements are satisfied, the prize scheme cannot be considered as a lottery. A price must be charged for participating in the draw. The chance of a person getting the prize could not be treated as part of the bargain unless independent consideration was there with respect to the prize awarded. Similar views were also taken in the case Canaan Kuries & Loans (P.) Ltd. v. Income - tax Officer [2005] 142 TAXMAN249 (KER).
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