1980 (7) TMI 72 - HC - Income Tax

Summary

Issues: Assessment year determination based on jackpot winnings receipts; Applicability of exemption under section 10(3) on jackpot winnings.

Analysis:
The judgment pertains to the assessment year 1973-74 and involves questions referred by the Income-tax Appellate Tribunal regarding the taxability of jackpot winnings received by the assessee. The Tribunal questioned whether the previous year for the jackpot winnings should be considered as the year ending on June 30, 1972. The assessee had received jackpot winnings on various dates totaling Rs. 1,25,529, and claimed exemption under section 10(3) as casual and non-recurring receipts. However, the Income Tax Officer (ITO) treated these receipts as income from undisclosed sources and included them in the total income calculation. The Assistant Commissioner (AAC) allowed relief under section 10(3) but limited it to Rs. 1,000 due to an amendment. Both the assessee and the department appealed to the Tribunal, with the department contending that the entire amount should be taxed. The Tribunal dismissed the department's appeal and granted relief to the assessee for the assessment year 1972-73 based on a Finance Act provision. The Tribunal considered the receipts in the assessment for 1973-74, limiting the exemption to Rs. 1,000 due to an amendment in section 10(3).

The Court observed an error in the questions referred and clarified that the previous year for jackpot winnings should be the financial year ending on March 31, 1972, not June 30, 1972. Citing the provisions of the Income Tax Act and a Supreme Court decision, the Court emphasized that different sources of income could have different previous years for taxation purposes. The Tribunal's oversight of the income source and previous year determination was highlighted. The Court noted that the receipts were not from undisclosed sources, as they were in the form of cheques issued by the race club, thus not falling under section 68 for taxation. Consequently, the Court answered the first question negatively, stating that the previous year for jackpot winnings should be the financial year ending on March 31, 1972.

Based on the previous year determination, the Court concluded that the receipts between September 1, 1971, and February 15, 1972, should be assessed for the year ending on March 31, 1972 (1972-73). The Court further clarified that these receipts could not be taxed in the assessment for the year 1973-74, and the restriction in section 10(3) limiting the exemption to Rs. 1,000 was not applicable. Therefore, the Court answered the second question negatively, stating that the receipts were not liable to be taxed in the assessment for the assessment year 1973-74.