9911796707
TMI Blog1996 (1) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that a further sum of Rs. 14,000 should be allowed as an expenditure against the jackpot race winnings of the assessee ? " The assessee is an individual. He has no avocation. His only activity is going to races both at Madras and Bangalore. According to the assessee, he was maintaining a regular day book and ledger showing the expenditure incurred in going to races. The total expenses claimed by the assessee was Rs. 32,905. For the assessment year 1973-74, the assessee returned an income of Rs. 15,764 from jackpot money. The assessee claimed before the Income-tax Officer that the activity of the assessee is a business activity and, therefore, the income from jackpot is a business income and as such the expenditure incurred by him will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of tickets for betting on horses. So also, from the statement, it was found that a sum of Rs. 16,690.75 was stated to be incurred in connection with the Madras races. In the account books, it was also found that a sum of Rs. 6,225 related to LIC, M.E.S., audit fees, car maintenance, subscriptions to clubs, telephones, incidental charges, newspaper and trunk calls, etc. According to the assessee, without going to the races both at Madras and at Bangalore and incurring the abovesaid sums by way of expenditure, he would not have got the share in the jackpot money. However, the Department took a stand that at the most, the expenditure incurred by the assessee in connection with the purchase of tickets for the jackpot alone could be allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... senior standing counsel for the Income-tax Department submitted that the order passed by the Tribunal, allowing an expenditure of Rs. 15,000 is not correct. On the other hand, learned counsel appearing for the respondent/assessee, while supporting the order passed by the Tribunal submitted that even if the tickets purchased are not yielding any income, the expenditure incurred for purchasing such tickets should be allowed as deduction. Learned counsel for the respondent further submitted that the assessee was going to races both at Madras and at Bangalore and he incurred the expenditure under various heads. The assessee was maintaining regular account books and the account books were accepted by the Tribunal. It was only on the basis of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed as deduction, from his share in the jackpot. The Department contended that the expenditure incurred for the purchase of that ticket, which won the jackpot alone should be deducted under the head " Other sources " and the rest of the expenditure should not be allowed. Winnings from races are assessable under the head " Other sources ". Section 56(2)(i)(b) of the Act provides that all winnings covered by section 2(24)(ix) of the Act shall be assessed as " income from other sources ". The assessee now claims deduction of the expenses which were incurred not only for purchasing the jackpot ticket, but also the loss incurred in purchasing the other tickets, which did not yield any income. According to learned counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt and the resulting income or loss would be determined. It would make no difference to this process whether the expenditure is X or Y or nil ; whatever is the proper expenditure allowed by the statute would be debited. Equally, it would make no difference whether there is any income and if so, what, since whatever it be, X or Y or nil, would be credited. And the ultimate income or loss would be found. We fail to appreciate how expenditure which is otherwise a proper expenditure can cease to be such merely because there is no receipt of income. Whatever is a proper outgoing by way of expenditure must be debited irrespective of whether there is receipt of income or not. That is the plain requirement of proper accounting and interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fee, etc., but also towards the loss in the purchase of tickets for betting on horses and food charges. It remains to be seen that personal expenditure is not allowable as deduction. So also, the amount invested for purchasing the ticket cannot be allowed as deduction since it amounts to investment. Barring these two items of expenditure, the assessee can claim deduction of other expenditure incurred for purchasing the tickets even though the tickets did not yield any income. Considering all these aspects, the Tribunal estimated the expenditure incurred by the assessee in winning the jackpot. Inasmuch as the Tribunal did not doubt the genuineness of the account books, and on the basis of the account books, estimated the probable expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
