Karnataka High Court
Commissioner Of Income-Tax, Karnataka vs Lachmandas Veerbhandas on 30 March, 1980
Equivalent citations: [1981]128ITR606(KAR), [1981]128ITR606(KARN), [1981]5TAXMAN149(KAR)
JUDGMENT Srinivasa Iyengar, J.
1. Both these references relate to the same assessment year, viz., 1973-74. The Income-tax Appellate Tribunal, Bangalore Bench, has referred the following question for the opinion of this court :
"(i) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the previous year in respect of the jackpot winnings was the year ended 30th June, 1972 ?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the jackpot winnings by the assessee from September 1, 1971, to January 23, 1972, pertaining to the accounting year ending June 31, 1972, were assessable in the assessment year 1973-74, under section 10(3) as it stood amended with an exemption of Rs. 1,000 only ?"
2. The assessee had received monies on jackpot races. The receipts were as follows :
Rs.
1. 1-9-1971 82,273
2. 22-12-1972 6,673
3. 21-1-1972 7,741
4. 15-2-1972 5,670
5. 23-1-1972 23,172
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1,25,529
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3. Aggregating to Rs. 1,25,529. After deducting expenses the net gain was shown at Rs. 1,22,569 in Part III of the return and exemption was claimed in respect of that amount as being casual and non-recurring receipt. The ITO did not accept the claim of the assessee that these receipts were not taxable. He held that theses receipts were income from undisclosed sources and accordingly included them in the computation of the total income. He had treated similar receipts in relation to the assessment year 1972-73 also as income liable to be taxed. The assessee preferred appeals in respect of both the assessments to the AAC. The AAC following a decision of the Tribunal in the case of L. Shamsunder along with whom the assessee was a partner as book-maker, held that the jackpot winnings were casual income and not arising out of business or vocation and was, therefore, exempt under s. 10(3). But he held that s. 10(3) had been amended with effect from April 1, 1972, and, therefore, the restriction imposed therein was applicable and accordingly allowed relief only to the extent of Rs. 1,000 in relation to both the assessment years. Against this decision both the assessee as well as the department preferred appeals to the Tribunal. The contention on behalf of the department was that the relief given to the extent of Rs. 1,000 was untenable and the receipts should have been held to be income from undisclosed sources. The Tribunal, however, dismissed the appeals preferred by the department as without substance. The contention on behalf of the assessee was that so far as the assessment year 1972-73 was concerned, he was entitled to the relief under s. 10(3) in respect of the entire winnings by the virtue of provisions of s. 59 of the Finance Act of 1972. The Tribunal accepted this contention and granted relief in regard to the entire receipts so far as the assessment year 1972-73 was concerned. The contention of the assessee in regard to the receipts abovementioned was that these amounts had been received by him prior to March 31, 1972, and, therefore, cannot be considered in the assessment for the assessment year 1973-74. But the Tribunal observed that the jackpot winnings were being credited in the same account in which business receipts were being credited and the assessee was adopting the previous year ended on 30th June for purpose of business and, therefore, the previous year in relation to these receipts also must be taken as the year ending on June 30, 1972. Accordingly, it held that these receipts were to be considered in the assessment for 1973-74, and in view of the amendment to s. 10(3) the assessee was entitled to a relief only to the extent of Rs. 1,000. It is in these circumstances that the two questions mentioned above have been referred for the opinion of this court. It appears that because there was an appeal by the department also, the Tribunal had made two references, though the questions would arise even on the appeal filed by the assessee.
4. Before proceedings further we must mention one error in the second question referred to us. The jackpot winnings have been referred to as having been received between September 1, 1971, to January 23, 1972. There is a receipt on February 15, 1972, also. Apparently, because in the statement of the case, in an earlier paragraphs, the receipt dated February 15, 1972, was mentioned earlier to the receipt dated January 23, 1972, the mistake has occurred, therefore, the question is treated as referring to the receipt dated February 15, 1972, as well. In our opinion the answer to the first question would automatically answer the second question. The Tribunal gave a finding that the previous year must be the one ending on June 30, 1972, merely on the ground that these receipts were being credited in the business account and the previous year for business was the one ended on 30th June, 1972. The Tribunal has overlooked the provisions in s. 56(2)(ib) which provides that the income referred in sub-clause (ix) of clause (24) of s. 2 shall be chargeable to income-tax and held to be income from other sources. Jackpot winning would come within the ambit of the income referred to in s. 2(24)(ix). There can be different previous years for different source of income as is clear from the provisions of s. 3 of the Act. So far as the income from other sources is concerned, the previous year would be the financial year, i.e., the year ending on March 31, 1972. This is clear from the decision of the Supreme Court in Baladin Ram v. CIT . Therefore, so far as these receipts are concerned the corresponding year of assessment would be 1972-73. Merely because the assessee credited the amount in his business account, the previous year for the purpose of taxation would not change, so far as the income from other sources is concerned. The ITO had treated these receipts s income from undisclosed sources. If the receipts shown were the income from undisclosed sources, then the provisions of s. 68 would have applied. But, in the instant case, the Tribunal has specifically held that these receipts could not be considered as income from undisclosed sources especially as the receipts were all in the form of cheques issued by the race club. In these circumstances the provisions in s. 68 of the I.T. Act, would not be attracted and the receipts could not be taxed in the assessment year 1973-74. Accordingly, we answer question No. 1 in the negative, i.e., the Tribunal was in error in holding that the previous year in respect of jackpot winning was the year ending on 30th June, 1972. It ought to have held that the previous year was the financial year ending on March 31, 1972.
5. In view of the above conclusion, the receipts between September 1, 1971, and February 15, 1972, pertain to the accounting year ending on March 31, 1972, and were assessable in the assessment year 1972-73. By virtue of s. 10(3) read with s. 59 of the Finance Act, 1972, the said income could not be included in the assessment for 1972-73, and it was not liable to be taxed. Accordingly, question No. 2 is answered in the negative, i.e., the receipts could not be brought to tax in the cement for the assessment year 1973-74, and the restriction in s. 10(3) limiting the exemption to Rs. 1,000 only was not attracted.