COMMISSIONER OF INCOME TAX Vs. THIAGARAJAN S S

JUDGEMENT

(1.) THE following two questions have been referred under Section 256(1) of the I.T. Act, 1961.

(2.) THE assessee was assessed as an individual and his source of income over the years included salary, income from property, etc. He owns a bangalow at Vepery, Madras, and resides therein. He also owns race horses which are entered for various races and sent to stud on occasions. THEre were two disputes relating to the assessment for the assessment years 1963-64 to 1966-67. One of them related to losses incurred by the assessee in each of the years in connection with the maintenance of race horses and the activity connected with racing.

(3.) THE Tribunal in coming to the conclusion that the income referable to the racing activity of the assessee would be income from " other sources " relied on the decision of this court in Syed Jalal Sahib v. CIT [I960] 39 ITR 660 and that of the Allahabad High Court in Lola Indra Sen, In re [1940] 8 ITR 187 [FB]. But the view taken by the Tribunal is contrary to the ratio of those decisions. In Syed Jalal Sahib v. CIT [1960] 39 ITR 660 (Mad) the assessee, who was carrying on business of manufacture and sale of beedis, attended horse races regularly every year and indulged in betting and also entering the race horses, some of which were his own and some of which he owned in partnership with others. In respect of the assessment years 1947-48 and 1948-49 the excess of receipts over expenditure in the racing activities was assessed as income of the assessee from his business. This was confirmed by the AAC to whom the assessee appealed. THE contention of the assessee was that both his activity of betting and racing constituted his hobby or pastime and the receipts were casual and nonrecurring in nature and exempt from tax under Section 4(3)(vii) of the Indian I.T. Act, 1922. This court held, following the decision in Lala Indra Sen, In re [1940] 8 ITR 187 (All) [FB] and after a review of some other cases, that the receipts of the assessee from his racing and betting activities in the two years in question constituted his income, that it was not income from any business, profession or vocation of his, but it was " income from other sources " within the scope of Section 6 of the Indian I.T. Act, 1922, and that it was not taxable income as it was income of a casual and nonrecurring nature within the scope of the exemption granted by Section 4(3)(vii) of the Act. This decision squarely applied to the facts of the present case and the decision of the Tribunal is against the view taken therein.