1991 (9) TMI 142 - AT - Income Tax

Summary

Issues:
1. Whether the group of individuals who purchased lottery tickets and shared the winnings should be assessed as a "Body of Individuals" or as separate "Individuals."

Analysis:
The case involved 23 individuals who purchased lottery tickets together and agreed to share the winnings equally. The Revenue treated them as a "Body of Individuals," but the assessees argued they should be assessed as separate individuals. The Commissioner (Appeals) canceled the assessment as a "Body of Individuals" based on the factual understanding reached by the group after purchasing the tickets. The Revenue contended that the group should be considered a "Body of Individuals" based on common intention and activity to produce income. However, the assessees maintained that they should be assessed individually.

The Tribunal considered whether the group should be assessed as a "Body of Individuals" or as separate individuals. The Revenue relied on the decision in N.P. Saraswathi Ammal case from the Madras High Court, which emphasized common intention and activity for income production. However, the Tribunal distinguished this case, stating that the group in the present case merely purchased lottery tickets and did not engage in income-producing activities. The Tribunal highlighted that the group's actions were akin to co-heirs inheriting shares, not a "Body of Individuals." The Tribunal concluded that the group did not meet the essential requisites of a "Body of Individuals" and upheld the Commissioner's decision to assess them as separate individuals.

The Tribunal referred to decisions from the Andhra Pradesh High Court and the Gujarat High Court, emphasizing that a "Body of Individuals" must engage in income-producing activities with a common design. In this case, the group of individuals voluntarily came together to purchase lottery tickets but did not carry out any income-producing activities beyond that. The Tribunal noted that winning a lottery prize is based on chance, not on active income-generating endeavors. As the group did not engage in activities to earn income, the Tribunal dismissed the Revenue's appeal and upheld the assessment of the group as separate individuals.