High Court Of Delhi
CIT vs. Bikram Singh Sood
Sections 4, 10(3), 28(i)
Asst. Year 1972-73
Arijit Pasayat, C.J. & D.K. Jain, J.
IT Ref. No. 211 of 1981
9th January, 2001
R.C. Pandey with Ajay Jha, for the Petitioner : None, for the Respondent
ARIJIT PASAYAT, C.J. :
At the instance of the Revenue, following question, pursuant to the directions given by this Court under s. 256(2) of the IT Act 1961 (in short âActâ), has been referred for opinion of this Court : “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 1,18,928 received by the assessee as his share of the percentage of the 1st prize money was not taxable?” Dispute relates to asst. yr. 1972-73.
2. Factual position, in a nutshell, is as follows : Assessee was an agent of the Haryana Government for selling lottery tickets in respect of lottery known as “Haryana State Lottery”. As an authorised agent, assessee was to get certain percentage of the prize money. Conditions laid down in this regard are as follows : “7 per cent and 2 per cent of all prizes above and including Rs. 500 will be deducted and paid to the authorised agents and sellers respectively. The sellers prize will be paid on production of counterfoils of the prize winning tickets. 1 per cent of the prize money of the aforesaid prizes will be deducted for lucky draw for agents.” Undisputedly assessee got a sum of Rs. 1,18,928 being his share for the percentage of the 1st prize money, which was obtained by a person, who bought a ticket from the assessee. The ITO was of the view that the said receipt was a part of the business activities and, therefore, was to be taxed. Assessee, on the other hand, stated that the amount was in nature of a casual and nonrecurring receipt and was, therefore, not taxable. The ITO did not accept the plea and levied tax on the amount in question. Matter was carried in appeal before the Appellate Assistant Commissioner (in short âAACâ), who agreed with the ITOâs conclusion. Matter was further carried in appeal before the Income-tax Appellate Tribunal, Delhi Bench âDâ, Delhi (in short âTribunalâ) Referring to the conditions as quoted above. Tribunal was of the view that the assesseeâs stand warranted acceptance. According to it, there was an element of chance involved and merely because the amount in question was received as a part of the business activities, that would not make any difference. Revenue moved an application for reference under s. 256(1) of the Act, which was turned down. Thereafter as stated above, this Court was moved and question as set out above was directed to be referred along with the statement of the case.
3. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessee in spite of notice. Learned counsel for the Revenue submitted that receipt is inextricably connected with the business activities of the assessee and therefore, the Tribunalâs conclusions are not in order.
4. We find that Tribunal has not disputed the position that receipt was inextricably connected with the business activities of the assessee. What seems to have weighed with it is that winning of the 1st prize had an element of chance and, as a consequence, receipt of the percentage of the prize money by the assessee was also carrying on an element of chance. Such conclusion is clearly erroneous because the amount was received as a part of the business activities and that itself did not carry any element of chance. On the contrary the condition laid down, as extricated above, clearly indicated as to the percentage which an authorised agent, like an assessee, would receive. Above being the position, the AO and the AAC were justified in their conclusions, but that is not so in the case of the Tribunal. Accordingly, we answer the question referred, in the negative, in favour of the Revenue and against the assessee.
Reference accordingly stands disposed of.
[Citation : 249 ITR 454]