Law:

Section:

Section 2(24)(ix) of the income-tax act, 1961-Income-Assessable as-Assessee received Rs. 22,000 on winning a motor rally-Whether impugned receipt taxable as income-Held, no Facts The assessee participated in an All India Highway Motor Rally. According to the regulations of the rally, the emphasis was on endurance driving and it was designed as a reliability test for automobiles. The first prize of Rs. 20,000 was ascertainable by adopting a system of penalty points for various violations of any traffic rules or regulations. The competitor with the least penalty points would be adjudged the best. The assessee won the first prize of Rs. 20,000 and he got another sum of Rs. 2,000 for the same performance from another concern in the accounting year relevant for the assessment year 1973-74. The ITO opined that this sum of Rs. 22,000 was liable to tax under section 2( 24)(ix) because it represented winnings from race. On appeal, the AAC held that the contest was not a race because speed was not its essence but it was only a careful driving and, therefore, the sum was not taxable. On revenue's appeal, the Tribunal sustained the AAC's view, holding, inter alia, ( i) that the event was not even a game as it did not involve gambling or betting; and (ii) that the receipt was casual but not income and, therefore, immune from tax. On reference: Held 1. The competition was not of a gambling nature and, therefore, the prizes won could not be winnings income from gambling or betting of any form. 2. The Parliament introduced a statutory fiction so as to enlarge the concept of taxable income by including the winnings in races, etc., which are not ordinarily regarded as income. In the context of this legislative intent and the dictionary meaning of the word "winnings", it is clear that what is intended to be taxed is only a windfall that reached persons without any effort or without any skill. In this case, the winner had made efforts and exhibited a skill in getting the prize and, therefore, there was no scope for such receipt being considered as falling under the provisions of section2(24)(ix). The word "winnings" should be assigned the meaning chance winning and not winning a…

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