1993 (4) TMI 9 - SC - Income Tax

Prizes were awarded to assessee - Whether Tribunal was right in holding that the total sum of Rs. 22,000 received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally should not be brought to tax - we hold that the receipt in question herein does constitute income as defined in clause (24) of section 2 of the Act. The appeal is accordingly allowed and the question referred by the Tribunal is answered in the negative

Summary

Issues Involved:
1. Whether the sum of Rs. 22,000 received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally constitutes taxable income.
2. Interpretation of the term "income" under section 2(24) of the Income-tax Act, 1961.
3. Applicability of section 10(3) regarding casual and non-recurring receipts.

Issue-Wise Detailed Analysis:

1. Taxability of the Sum Received:
The primary issue was whether the total sum of Rs. 22,000 received by the assessee from participating in the All India Highway Motor Rally should be taxed. The Income-tax Officer included this amount in the respondent-assessee's income, relying on the definition of "income" in clause (24) of section 2. The Appellate Assistant Commissioner and the Tribunal, however, held that the rally was not a race and that the amount received did not constitute income under section 2(24)(ix).

2. Interpretation of "Income" under Section 2(24):
The court examined the inclusive definition of "income" in section 2(24) of the Income-tax Act, 1961. The definition has been expanded over time to include various forms of receipts. The court noted that the term "income" should be given its widest connotation, as emphasized in previous judgments such as Raja Bahadur Kamakshya Narain Singh of Ramgarh v. CIT and Navinchandra Mafatlal v. CIT. The court reiterated that the definition is not exhaustive and that even casual receipts could be considered income if they partake of the nature of income.

3. Applicability of Section 10(3):
Section 10(3) of the Act, which deals with casual and non-recurring receipts, was also considered. The court pointed out that even casual income is included in the total income if it exceeds Rs. 1,000. The Tribunal had found the receipt to be casual but opined that it was not an income receipt under section 10(3). The court disagreed with this interpretation, stating that the receipt in question does constitute income.

Conclusion:
The Supreme Court concluded that the sum of Rs. 22,000 received by the assessee from the rally does constitute "income" under section 2(24) of the Act. The court held that the High Court erred in concluding that the receipt did not constitute income merely because it did not fall within sub-clause (ix) of section 2(24). The appeal was allowed, and the question referred by the Tribunal was answered in the negative, i.e., in favor of the Revenue and against the assessee. There was no order as to costs.