Law: Income Tax Act, 1922

Section:

Income-tax----Assessment---Status---Several persons purchasing lottery tickets with object of earning income---Winnings to be shared in agreed ratio---Not to be assessed individually---Prize money to be assessed in status of body of individuals=--Individual assessment made on some of the members will not disentitle ITO to assess body of individuals---Indian Income Tax Act, 1961. As many as 101 lottery tickets were purchased by 14 individuals. In the draw held on August 7, 1981, one of the tickets purchased by them won the prize of Rs.10,00,000. For the assessment year 1982-83, the individual assessees separately filed returns claiming that according to an agreement the prize was to be shared in the prescribed ratio. It was also contended that two of the members of the body had been separately assessed, and so all of them could not be assessed as a 'body of individuals. The Income-tax Officer held that the assessees were to be assessed collectively as a body of individuals. This order was reversed by the Commissioner of Income-tax (Appeals). On appeal by the Revenue, the Tribunal upheld the view of the Commissioner of Income-tax (Appeals). On a reference: Held, (i) that by purchasing the tickets collectively, the assessees entered into a joint venture, the object being sharing of the prize money if one of the tickets happened to be the prize winning ticket. That joint venture was organised as the members wished to minimise their risk and the extent of their investment and maximise their chances of winning. The venture so initiated was not for rendering charity but with the intention of earning an income by winning a prize. The assessment made on them collectively as a body of persons by the income-tax Officer was an assessment made on the "right person". CIT v. A. U. Chandrasekharan (1998) 229 ITR 406 (Mad.) fol (ii) that the individual assessments made on some of the members of the group did not disentitle the Income-tax Officer from making an assessment on the body of individuals comprising all persons who had taken part in the joint venture. ITO v. Ch. Atchalah (1996) 218 ITR 239 (SC) fol. JUDGMENT R. JAYASIMHA BABU, J.---As to whether the purchase of lottery…

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