In Brief
A resident of Rajasthan won Rs. 20 lakhs in a Sikkim State Lottery draw in 1986 and paid income tax under Sikkim's law. The Income Tax Department subsequently sought to tax the same income under the Indian Income Tax Act. The Supreme Court held that income accrued in Sikkim before the IT Act's extension to Sikkim on 1 April 1990 remains taxable only under the Sikkim State Income Tax Rules, 1948. Article 371F of the Constitution preserves pre-merger Sikkim laws. Since the income was already taxed under Sikkim law, it cannot be taxed again under the IT Act absent express legislative provision for double taxation. The appeal was allowed.
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