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TMI Blog1982 (2) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... bassador car. The assessee has chosen to receive an Ambassador car. According to the assessee the said receipt was not income at all and as such it was not taxable. 2. The ITO was not satisfied with the said explanation. According to him the said receipt is an income as defined in section 2(24)(ix) of the Income-tax Act, 1961 ("the Act"). After giving an exemption of Rs. 1,000, the ITO taxed the balance of Rs. 29,000 in the hands of the assessee. 3. The assessee took up the matter in appeal and, inter alia, contended that this receipt in question is not taxable under any provisions of the Act. The ITO has misconstrued the provisions of section 2(24)(ix). Thus, it was contended that a sum of Rs. 29,000 is not taxable. 4. The learned AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(ix). Reliance was placed on the decision in the cases of Kanwar Singh v. Delhi Administration AIR 1965 SC 871, Pyarali K. Tejani v. Mahadeo Ramchandra Dange AIR 1974 SC 228, State of Bombay v. Chamarbaugwala (R.M.D.) AIR 1957 SC 699 and CIT v. G.R. Karthikeyan [1980] 124 ITR 85. Reliance was also placed on Circular No. 158 dated 27-12-1974 issued by the CBDT. According to the learned counsel for the assessee the receipts which are of a casual and non-recurring nature will be liable to income-tax only if they can properly be characterised as "income" either in its general connotation or within the extended meaning given to the term by the Income-tax Act. According to the learned counsel for the assessee, this circular was issued in 1972, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horse races, card games, etc., were completely free from having to pay any tax, while the persons who earned by the sweat of their brow had to pay the tax levied under the Act. This was an anomaly especially in an egalitarian society. This is also inconsistent with the cardinal doctrine of taxation based on ability to pay. Bearing these aspects in mind, the Parliament has brought in the relevant provisions so as to tax receipts by chance winnings or windfalls. In doing so, the Parliament virtually introduced a statutory fiction so as to enlarge the concept of taxable income by including the winnings in races, etc., which are not ordinarily regarded as income. In the context of this legislative intent and in the light of the meaning given in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, person of average intelligence will not be successful in achieving such prize. Under the circumstances interpretation of the word "winnings" in the relevant section can only be applied in those cases where the money was won by chance as a kind of windfall as in a lottery, a horse race, gambling or betting. A similar issue came up for decision before the Hon'ble Madras High Court in the case of CIT v. G. R. Karthikeyan. In that case the assessee participated in an All-India Highway Motor Rally, an event restricted to private motor cars and jointly sponsored by the Automobile Association of Eastern India and the Indian Oil Corporation and supported by other regional automobile associations as well as the Fereration of Indian Motor Sports C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a case of this kind. The Tribunal was, therefore, right in its conclusion." The Hon'ble High Court further held as under: "What was intended to be taxed by section 2(24)(ix) was only a windfall that reached persons without any effort on their part, without any skill being exhibited by them." 11. The facts of the present case are more or less identical with the facts of the said case. In the present case the assessee competed along with other persons in which great intelligence and skill was required. A person of ordinary intelligence could not be declared as winner of such competition. Under the circumstances the present case would not come within the definition of the words "winnings" used in section 2(24)(ix). 12. In the Circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is foreseen and anticipated and provided for by an agreement; if it is a result thereof, then it may not be defined as casual even if it is not likely to recur for a considerable time. As a matter of fact, there can be no rule laid down with regard to what is of a casual and non-recurring nature. Each case must be decided on its particular facts. Reference may be made to the ratio of decision in the case of CIT v. M. Ahmed Badsha Saheb [1943] 11 ITR 590 (Mad.). 13. Looking to the aforesaid facts, in my opinion, the present case is also covered by the Circular No. 158 referred to above. Once the present case is covered under the said circular, the income-tax authorities are bound to give benefit of the said circular to the assessee. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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