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TMI Blog2022 (11) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The NFAC did not give proper opportunity for hearing and submissions to the appellant and violated the principles of natural justice. The CPC ignored the judicial precedents. NFAC did not call for any details and expected the appellant to file further details without seeking them. 4. The impugned addition is made in "IFOS", but corresponding deduction is not made in "Business income" resulting into double counting of income in rectification order." 3. The only grievance of the assessee in the present appeal is against treating the income earned from unsold lottery tickets as "income from other sources" instead of "income from business". 4. The brief facts of the case pertaining to the issue, as emanating from the record, are: The assessee is a lottery dealer. For the year under consideration, the assessee filed its return of income on 12/10/2017, declaring total income of Rs.8,62,28,150. The return of income was processed under section 143(1) of the Act, determining the taxable income at Rs.11,42,28,150, after making adjustment of Rs.2,80,00,000, on account of income by way of winning from lottery tickets, etc., under section 115BB of the Act. Thereafter, the assessee file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord. Hence, all these grounds are dismissed." Being aggrieved, the assessee is in appeal before us. 6. During the course of hearing, the learned Authorised Representative ("learned A.R.") by referring to the decision of the Co-ordinate Bench of the Tribunal in M/s. Pooja Marketing v/s PCIT, ITA no.2596/Mum./2019, A.Y. 2014-15, order dated 24/05/2021, submitted that in case of similar lottery trader, income from prize received from unsold lottery tickets has been held to be taxable under the head "Income From Business". The learned A.R. further submitted that facts in assessee"s case are similar to the facts in the aforesaid decision and filed a comparative chart in this regard. 7. On the other hand, the learned Departmental Representative ("learned D.R.") vehemently relied upon the impugned order passed by the learned CIT(A). 8. We have considered the rival submissions and perused the material available on record. As per the assessee, all the transactions relating to its business has resulted in income from business. The purchases, losses, unsold stock of lottery tickets, expenditure and all the activities are pertaining to business only. Further, the assessee being a seller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales returns'. We find that the assessee is engaged only in one activity of distribution of lottery tickets. It is not engaged in participation in the draw of lottery tickets. The participation in the draw of lottery tickets in respect of unsold stock lying with it (pursuant to sales returns from stockists) is an automatic fall out of business and becomes indivisible business activity with that of distribution of lottery tickets. Hence prize winnings from unsold lottery tickets would also constitute part of income arising from distribution of lottery tickets and to be construed as part realization of cost of unsold lottery tickets. Therefore, it would be incorrect to construe the unsold lottery tickets as a separate activity. Obviously, the assessee firm had indeed paid monies for purchasing the tickets and it had indeed made sales to its stockists. If the stockists are not able to ultimately sell the tickets to retailers consumers, as the case may be, and return those unsold tickets to assessee firm and in the event of Government or National Distributor refusing to get back the unsold tickets from the assessee firm, then any prudent assessee would try to mitigate its loss by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee would have to pay tax on the entire sale value and not only on the difference between the sale value and the purchase value. Indeed, in the contingency of these skins finding a sale, it is revenue that would stand to gain. The observation of the Tribunal that this method of permitting him to value the goods "would open the door for showing these very goods as obsolescent and then sell them off later without bringing the profits into the books" is wholly uncalled for. It seems to suggest that the Tribunal found the assessee's intention to be to make a concealed profit by the sale of the goods in subsequent years. It is unfortunate that the Tribunal should have indulged in such uncalled for aspersions on the assessee's integrity. .................... There seems to the be no quarrelling with the question of fact that there was no market for these skins either locally or abroad. Locally it is certain there was at no time any market, and the observation of the Tribunal that the assessee should have tried to sell them locally is certainly un-under-standable in the context of the evidence. It is for the trader to ascertain what avenues for the sale of the goods are open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a profit motive and not for sport or pleasure. It predicates a profit making motive pervading a whole series of transactions. In common parlance, it connotes activities in which a person is engaged with a set purpose and frequency or the repetition of the activity. From the financials of the assessee firm for the Asst Years 2014-15 to 2016-17, it could be seen that the assessee had time and again carried out the same set of activity by trying to realize the prize winnings from unsold lottery tickets to mitigate its loss incurred on purchase cost of lottery tickets. This is a purely a prudent business decision taken by the assessee firm with a set purpose to make profit as an ultimate motive under any eventuality. We find that the term 'business' u/s 2(13) of the Act is having widest amplitude and import to cover all incidental activities is also endorsed by the decision of Hon'ble Supreme Court in the case of Mazagaon Dock Ltd vs CIT reported in 34 ITR 358 (SC). Hence even as per the inclusive definition of the word 'business' u/s 2(13) of the Act, the prize winnings from unsold lottery tickets could only have to be treated as income from business of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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