COMMISSIONER OF INCOME-TAX Vs. SARDARI LAL MEHRA

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Chandigarh Bench, has referred the following question of law for our opinion :

(2.) THE facts set out in the statement of the case are as follows: The assessee became a member of two lucky schemes launched by M/s. New Suraj Financiers and Chit Fund Co. Pvt. Ltd. , Amritsar, in August, 1967, and in December, 1967. According to the rules pertaining to the two schemes, each member was required to pay a sum of Rs. 100 towards each scheme per month to the company for a period of sixty months. At the end of each month, from the starting of the lucky schemes, a draw was made and the person whose luck favoured as a result of the draw was to be paid Rs. 6,000, and was further entitled to stop contributing his one hundred rupees in future. But, all the members, excepting those in whose favour the draws had gone; were to get back Rs. 6,000 each at the end of sixty months with Rs. 500 in addition as interest. The assessee had contributed only Rs. 400 in the first lot when the draw was declared in his favour in August, 1967, and the received Rs. 6,000. In the second scheme he had contributed only Rs. 700, when the draw was drawn in his favour in December 1967. The Income-tax Officer included the sum of Rs. 10,900 in his income. The assessee contended that the sum of Rs. 10,900 was not his income as it was received on account of lotteries drawn in his favour and was of a casual and non-recurring nature. It was maintained that this amount was merely a fortuitous gain and was not a venture in the nature of trade. The Income-tax Officer came to the conclusion that the monthly contribution made by the applicant was pure and simple investment for definite and expected gains. The Income-tax Officer treated the sum of Rs. 10,900 as income of the assessee and included it in his assessment. On appeal, the Appellate Assistant Commissioner agreed with the Income-tax Officer. The assessee then preferred an appeal to the Appellate Tribunal. The Tribunal allowed the appeal with the following observations :

(3.) THE department, being dissatisfied, applied under Section 256 (1) of the Income-tax Act, 1961, asking the Income-tax Appellate Tribunal to refer the question of law, set out already, for the opinion of this court.