JUDGMENT
Arijit Pasayat, C.J.
1. At the instance of the Revenue, the following questions have been referred under Section 256(1) of the Income-tax Act, 1961 (in short “the Act”), by the Income-tax Appellate Tribunal (in short “the Tribunal”), D-Bench, New Delhi, for the opinion of this court :
“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the award of Rs. 30,000 to the assessed is not taxable as income ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Commissioner of Income-tax has no jurisdiction under Section 265 to cancel the assessment made by the Income-tax Officer as it has merged with the orders of the Appellate Assistant Commissioner ?”
2. The dispute relates to the assessment year 1981-82.
3. The factual position in a nutshell is as follows :
The assessed is an individual and derives income from his profession as a photographer. An all-India photography contest was organized, where the assessed was a participant, won the first prize and received cash award of Rs. 30,000. He claimed that the said receipt did not bear the character of income and was, therefore, not taxable. Reliance was placed on a decision of the Madras High Court in CIT v. G. R. Karthikeyan [1980] 124 ITR 85. The Income-tax Officer (in short “the 1TO”) accepted the contention and concluded the assessment by excluding the aforesaid sum. The Income-tax Officer had made certain additions to the income returned against which an appeal was preferred before the Appellate Assistant Commissioner (in short ‘the AAC”). The Commissioner of Income-tax (in short “the Commissioner”) issued notice under Section 263 of the Act being of the prima facie view that the amount was includible in the income of the assessed. After considering a reply furnished by the assessed, the Commissioner concluded that the amount in question was casual income and, therefore, exemption available under Section 10(3) would be to the extent of Rs. 1,000. It is to be noted that before the Commissioner the assessed had raised primarily two stands : firstly, the Income-tax Officer’s order having merged in the order of the Appellate Assistant Commissioner, there was no scope for exercise of power under Section 263 of the Act. The second plea was relating to the nature of the receipt. The Commissioner did not accept the stand that though the question as to whether the amount was taxable did not form a part of the order of assessment, there was merger with the order of the Appellate Assistant Commissioner. He did not also accept the stand about non-taxability. The assessed filed appeal before the Tribunal. Placing reliance on the decision of the Madras High Court in G. R. Karthikeyan’s case [1980] 124 ITR 85, the Tribunal held that the amount was not taxable. On being moved for reference the questions as set out above have been referred for the opinion of this court.
4. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessed in spite of notice. Learned counsel for the Revenue submitted that the amount in question would be covered under Section 2(24)(ix) read with Section 28. It was submitted that winning the prize was in the contest of skill and is directly related to the ability of the professional and, therefore, chargeable to income-tax.
5. We notice that G. R. Karthikeyan’s case [1980] 124 ITR 85 as decided by the Madras High Court was in challenge before the apex court in CIT v. G. R. Karthikayan [1993] 201 ITR 866. It was observed, inter alia, that the word “income” is of the widest amplitude and it must be given its natural and grammatical meaning. The principles culled out from the decision are as follows :
(i) since the definition of income in Section 2(24) was an inclusive one, its ambit should be the same as that of the word “income” in entry 86 of List I of Schedule VII to the Constitution of India ;
(ii) the words “other games of any sort”, in Section 2(24)(ix) were or wide amplitude and their meaning was not confined to games of a gambling nature alone, and. therefore, Section 2(24)(ix) was not confined to mere gambling or betting activities ;
(iii) assuming that the expression “winnings” had acquired a particular meaning, viz., receipts from activities of a gambling or betting nature only, it did not follow that monies received from non-gambling or non-betting activities were not included within the ambit of “income” ;
(iv) the definition of “income” in Section 2(24) was inclusive, the purpose of the definition was not to limit the meaning of “income” but to widen its net, and the several clauses therein were not exhaustive of the meaning of income ; even if a receipt did not fall within the ambit of any of those clauses, it might still be income if it partook of the nature of income ;
(v) the rally was a contest, if not a race and the respondent entered the contest to win it. What he got was a return for his skill and endurance. It was “income” construed in its widest sense. Though it was casual in nature, it was nevertheless income. The receipt of Rs. 22,000 constituted “income” as defined in Section 2(24) and could be brought to tax.
6. In view of the above, the answer to the first question is in the negative, in favor of the Revenue and against the assessed. So far as the second question is concerned, it is squarely covered by the decision of the apex court in CIT v. Shri Arbuda Mills Ltd. [1998] 231 ITR 50 and of this court in CIT v. Eurasia Publishing House (P.) Ltd. [1998] 232 ITR 381. In Shri Arbuda Mills Ltd.’ case [1998] 231 ITR 50 (SC), it was held as follows (page 52) :
“The main contention of the assessed which was considered by the Tribunal was whether or not the order of the Income-tax Officer regarding the said three items in respect of which the assessed had no occasion to prefer an appeal had merged in that of the Commissioner (Appeals) so as to exclude the jurisdiction of the Commissioner of Income-tax under Section 263 of the Act.
We may refer to the amendment made in Section 263 of the Income-tax Act, by the Finance Act, 1989, with retrospective effect from June 1. 1988. The relevant part thereof for the present case is as under :
‘Explanation.–For the removal of doubts, it is hereby declared that for the purposes of this sub-section,– . . .
(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after June 1, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.’
The consequence of the said amendment made with retrospective effect is that the powers under Section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the Commissioner under Section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessed. This is sufficient to answer the question which has been referred.”
7. Therefore, our answer to the question is in the negative, in favor of the Revenue and against the assessed.
8. The reference is disposed of accordingly.