COMMISSIONER OF INCOME-TAX Vs. G KRISHNAN

JUDGEMENT

(1.) At the instance of the Department, the Tribunal referred the following two questions, for the opinion of this Court, under s. 256(1) of the IT Act, 1961, hereinafter referred to as the 'Act' :

(2.) The assessee is an accredited agent for selling Tamilnadu raffle tickers for Sivakasi, governed by the agreement, dt. 12th October, 1976 under the Tamilnadu State Raffle Rules, 1976. The assessment year involved in this case is 1978-79. The relevant portion in the agreement for the purpose of this tax case is as under :

(3.) The agent shall be entitled to receive commission of 11.5 per cent on the face value of the tickets in the ticket books purchased by him, which commission shall be deducted from the total value of the ticket books purchased by him. The agent shall also be entitled to receive a bonus equivalent to 10 per cent of the prize amount, if any, won by the tickets sold by him, on production of the voucher issued to him by the sub-treasury at the time of purchase of tickets for every draw. During the accounting year, relevant to the asst. yr. 1978-79, apart from the commission receipt of 11.5 per cent on the face value of the tickets in the ticket books purchased by him the assessee also became entitled to the bonus equivalent to 10 per cent of the prize amount of winning Ticket No. 6852288. The said ticket won a bumper prize of Rs. 15 lakhs and the assessee was given a bonus of Rs. 1,50,000. The ITO assessed this sum as business income along with the commission of Rs. 5,052 earned by the assessee on the sale of tickets. The ITO rejected the assessee's contention that this income was a windfall being without personal exertion by the assessee. The ITO held that s. 2(24)(ix) brought winnings from the lottery within the definition of "Income", but what the assessee received was not winning from lottery but was an income from the carrying on of the business as agent of Tamilnadu Government in selling the raffle tickets. The ITO also held that the bonus being not a winning from lottery, the assessee was not entitled to relief under s. 80TT of the Act. In this view of the matter, the ITO assessed the entire sum of Rs. 1,50,000.