1983 (3) TMI 79 - AT - Income Tax

Summary

Issues:
1. Whether the bonus received by the assessee from the prize-winning ticket should be treated as income from lottery or business income.
2. Whether the assessee is entitled to deduction under section 80TT.

Analysis:

Issue 1:
The assessee sold lottery tickets and received a bonus of Rs. 1 lakh from a prize-winning ticket. The AAC held that the bonus receipt was income from lottery and allowed deduction under section 80TT. The revenue contended that since the bonus was received in the course of the assessee's business, it should be treated as business income. The Tribunal observed that the bonus was a result of selling lottery tickets, making it business income. The Tribunal distinguished a previous case where the assessee purchased unsold tickets, stating that in the current scenario, the assessee sold the winning ticket, making the bonus part of business income.

Issue 2:
The Tribunal analyzed the provisions of section 80TT, which allows a deduction for winnings from lotteries assessed under the head 'Income from other sources.' The Tribunal noted that post-amendment, casual receipts previously exempt were now taxable under 'Income from other sources.' It clarified that individuals assessed under business income for lottery-related earnings could not claim deduction under section 80TT. The Tribunal distinguished a case where a contributor to a chit scheme won a prize, highlighting that income arising from business activities cannot be considered lottery income. Consequently, the Tribunal ruled that the assessee, assessed under business income for the bonus, was not entitled to deduction under section 80TT. The Tribunal set aside the AAC's order and upheld the ITO's assessment.

In conclusion, the Tribunal allowed the revenue's appeal, determining that the bonus received by the assessee from the prize-winning ticket constituted business income and that the assessee was not entitled to deduction under section 80TT.