Law:

Section:

Section 10(3) of the Income-tax Act, 1961 - Casual and non-recurring receipts - Assessee became member of lucky schemes - According to rules of schemes-each member was required to pay a sum of Rs. 100 towards each scheme per month to company for a period of sixty months - At end of each month, from starting of lucky schemes, a draw was made and person whose luck favoured as a result of draw was to be paid Rs. 6,000, and was further entitled to stop contributing his one hundred rupees in future - But, all members, excepting those in whose favour draws and gone, were to get back Rs. 6,000 each at end of sixty months with Rs. 500 in addition as interest - Assessee had contributed only Rs. 400 when draw was declared in his favour - Whether sum received by assessee fell within ambit of section 10(3) - Held, yes FACTS The assessee became a member of two lucky schemes, 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 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. The ITO treated the sum of Rs. 10,900 as income of the assessee and included it in his assessment. On appeal, the AAC agreed with the ITO. The Tribunal allowed the assessee's appeal. On reference : HELD The activity of the assessee, making contribution in…

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