Law: Income Tax Act, 1961

Section: 56,57

Income-tax-----Other sources---Deductions---Winnings from races---Assessable as income from other sources---Expenditure on earning such income based on estimate of Tribunal---Deductible---Indian Income Tax Act, 1961, Ss.56 & 57. The assessee was an individual whose only activity was going to horse races both at Madras and Bangalore. He joined a syndicate consisting of 13 members. The syndicate won a jackpot,- which gave it a sum of Rs.3,11,486. The assessee's share came to Rs.48,669.69. The Income Tax Officer treated this receipt as income of the assessee from undisclosed sources and brought to tax the entire receipt of Rs.48,670 in the assessment year 1973-74. The Appellate Assistant Commissioner found that the assessee earned the share income from the jackpot and that alone was the subject-¬matter of the assessment and held that the expenditure that would have been incurred for such restricted activity alone could be allowed. On that basis, he allowed a sum of Rs.1,000 by way of expenditure. The Tribunal, on going through the accounts produced by the assessee did not doubt the genuineness of the same, and on a perusal of the account books filed by the assessee estimated the expenditure incurred in purchasing the lottery tickets to the extent of Rs.15,000 and allowed the same as deduction, On a reference: Held, that winnings from races were assessable as income from other sources. Inasmuch as the Tribunal did not doubt the genuineness of the account books, and on the basis of the account books, estimated the probable expenditure for winning the jackpot, its conclusion could not be interfered with by the High Court. The amount of Rs.15,000 was, therefore, deductible. CIT v. Rajendra Prasad Moody (1978) 115 ITR 519 (SC) ref. JUDGMENT THANIKKACHALAM, J.---At the instance of the Department, the Tribunal referred the following question for the opinion of this Court under section 256(1) of the Income Tax Act, 1961 (in short, "the Act"): "Whether, on the facts and in the circumstances of the case and having regard to the provisions of section 57(iii) of the Income Tax Act, 1961, the Appellate Tribunal was justified in holding that a further sum of Rs.14,000…

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