1986 (2) TMI 30 - HC - Income Tax

Summary

Issues Involved:
1. Taxability of the jackpot winnings for the assessment year 1973-74.
2. Determination of the relevant previous year for the income from horse races.
3. Application of section 59 of the Finance Act, 1972, and section 3 of the Income-tax Act, 1961.

Detailed Analysis:

1. Taxability of the Jackpot Winnings for the Assessment Year 1973-74
The primary issue was whether the sum of Rs. 38,079 received by the assessee from winning a jackpot on February 27, 1972, was taxable in the assessment year 1973-74. The Income-tax Officer included Rs. 37,079 (after allowing an exemption of Rs. 1,000) in the assessee's income for the assessment year 1973-74. The Appellate Assistant Commissioner, however, deleted this addition, accepting the assessee's claim that the winnings accrued in the financial year 1971-72.

2. Determination of the Relevant Previous Year for the Income from Horse Races
The Tribunal held that the receipt of Rs. 38,079 was on February 27, 1972, and thus taxable in the assessment year 1972-73. The Tribunal supported its view by noting that the assessee had stated in his return that the amount was received in the previous year relevant to the assessment year 1972-73 and was thus exempt. The Tribunal found that the assessee had exercised his option for the financial year 1971-72 as the previous year for this source of income, despite maintaining accounts for his money-lending business for the year ending Deepavali, 1972.

3. Application of Section 59 of the Finance Act, 1972, and Section 3 of the Income-tax Act, 1961
The Revenue argued that the assessee had shown the amount in his wealth-tax assessment for the year ending Deepavali, November 5, 1972, indicating a conscious exercise of the option for that previous year. However, the court found this argument unconvincing, noting that the definition of "income" in section 2(24) of the Income-tax Act was amended by the Finance Act, 1972, to include winnings from horse races. Section 59 of the Finance Act, 1972, provided that casual and non-recurring receipts in the previous year relevant to the assessment year commencing on April 1, 1972, should not be included in the total income.

The court concluded that the Tribunal's inference that the assessee had exercised his option for the financial year 1971-72 was justified. The court noted that the assessee's statements in his return and the lack of separate accounts for this income supported this inference. The court also distinguished this case from other cited cases, emphasizing the specific facts and the assessee's conduct in exercising his option.

Conclusion:
The court answered the question in the affirmative and against the Revenue, holding that the sum of Rs. 38,079 was not taxable for the assessment year 1973-74. The assessee was entitled to costs of Rs. 500 from the Revenue.