VISVESWARAIAH LUCKY CENTRE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) this is a reference under Section 256(1) of the income tax Act, 1961. The case stated by the income tax appellate tribunal, Bangalore bench, Bangalore, and the question referred are not wholly satisfactory in the facts and circumstances of the case. Before we further enlarge upon what we have stated above, it is useful to briefly state the facts leading to this reference.

(2.) the petitioner-assessce is an agent selling lottery tickets of lotteries conducted by the state of Karnataka (and perhaps others) for a commission. The rate of commission is 15 per cent on the face value of each ticket sold. In the return filed for the assessment year 1978-79, the assessee disclosed a total income of Rs. 88,240/- compriscd of the commission received by sale of lottery tickets as well as a sum of Rs. 1,00,000/- receivcd as bonus commission on account of the fact that one of the tickets sold by him in a particular draw of the lottery had won the first prize of Rs. 10,00,000/-. Before the income-tax officer, the assessee claimed the benefit of Section 80tt of the income tax act (hereinafter referred to as 'the act'). The assessment was concluded and the petitioner assessed to tax on a total income of Rs. 81,252/-. The assessee being a partnership firm, apportionment was made in the assessment order at l/8th of the total income as the income of each partner. On appeal preferred against the assessment, the assessce-firm for the first time claimed the benefit arising out of the Provisions made in Section 80tt of the act claiming that the sum of Rs. 1,00,0007- earned as bonus commission was in fact lottery winning within the meaning of the expression occurring in Section 80tt of the act. The appellate assistant commissioner granted that benefit and allowed the appeal. The revenue, being aggrieved by the order of appellate assistant commissioner, took up the matter in appeal before the income tax appellate tribunal, Bangalore bench, Bangalore, in income-tax appeal No. 145/bang. 1981. By order dated 18th march, 1983, the appellate tribunal allowed the appeal of the revenue and set aside the order of the appellate assistant commissioner and denied the benefit of Section 80tt of the act to the asscsscc-firm. However, on the request of the assessec under Section 256(1) of the Act, a statement of case was drawn up and the following question has been referred to us for answer:

(3.) 'income' is defined under clause (24) of Section 2 of the act. There is no dispute between the revenue and the asscssee-firm that the income disclosed from the sale of lottery tickets and the commission derived therefrom and the bonus commission given in that particular year both constitute taxable income irrespective of the source. The real question within which the dispute of controversy lies is a narrow one and that is whether the income derived as bonus commission in the sum of Rs. 1,00,000/- in the relevant assessment year constituted income falling fairly and squarely under sub-section (ix) of clause (24) of Section 2 of the act as it was then. Sub-section (ix) reads as follows: