JUDGMENT
Arijit Pasayat, C.J.
1. On being moved by the assessed under Section 256(1) of the Income-tax Act, 1961 (in short “the Act”), the following question has been referred for the opinion of this court, by the Income-tax Appellate Tribunal. Delhi Bench “A” (in short “the Tribunal”) :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessed was not entitled to deduction under Section 80TT in respect of winnings from jackpot ?”
2. The factual position, in a nutshell, is as follows :
3. The assessed, an individual, filed his return of income for the assessment year 1974-75 corresponding to the accounting year ending on March 31, 1974. On February 3, 1974, the assessed had won a sum of Rs. 1,26,700 as jackpot and the said amount was paid to the assessed by the Delhi Race Club (1940) Ltd. The assessed treated this amount as income and claimed deduction under Section 80TT of the Act. Such deduction was claimed on the ground that winning of jackpot was in the nature of winnings from a lottery. The Income-tax Officer, however, did not allow the deduction under Section 80TT of the Act, being of the view that such deduction was available only in respect of winnings from any lottery. As the amount was won from horse racing, it was held that Section 80TT of the Act had no application. The assessed filed an appeal before the Appellate Assistant Commissioner of Income-tax (in short the “AAC”) and submitted that winning in a jackpot was in the nature of winning from a lottery and, therefore, deduction under Section 80TT of the Act is to be granted. The Appellate Assistant Commissioner upheld the conclusion of the Income-tax Officer. The matter was carried in appeal before the Tribunal by the asses-see. The Tribunal observed that in view of the definition of “income” under Section 2(24)(ix), the claim as made by the assessed was not acceptable. On being moved for reference, the question as set out above has been referred.
4. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessed in spite of notice. It was submitted by learned counsel for the Revenue that the language used in Section 2(24)(ix) made the position clear that winning’s from lotteries stand on a different footing from winnings from races including horse races. The undisputed factual position being that the jackpot winning is nothing but winning from horse races, the conclusions of the authorities and the Tribunal are irreversible. In order to adjudicate the question that has been referred, reference to a few provisions as existed at the relevant point of time would be necessary. Section 2(24)(ix), Section 10(3), Section 74A and Section 80TT of the Act read as follows :
“2. (24) ‘income’ includes- . .
(ix) any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.
10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-. . .
(3) any receipts which are of a casual and non-recurring nature, to the extent such receipts do not exceed five thousand rupees in the aggregate :
Provided that where such receipts relate to winnings from races including horse races, the provisions of this clause shall have effect as if for the words ‘five thousand rupees’, the words ‘two thousand five hundred rupees’ had been substituted :
Provided further that this clause shall not apply to-
(i) capital gains chargeable under the provisions of Section 45 ; or
(ii) receipts arising from business or the exercise of a profession or occupation ; or
(iii) receipts by way of addition to the remuneration of an employee ;
74A. (3) In the case of an assessed, being the owner of horses maintained by him for running in horse races (such horses being hereafter in this sub-section referred to as race horses), the amount of loss incurred by the assessed in the activity of owning and maintaining race horses in any assessment year shall not be set off against income, if any, from any source other than the activity of owning and maintaining race horses in that year and shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year and–
(a) it shall be set off against the income, if any, from the activity of owning and maintaining race horses assessable for that assessment year :
Provided that the activity of owning and maintaining race horses is carried on by him in the previous year relevant for that assessment year ; and
(b) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on ; so, however, that no portion of the loss shall be carried forward for more than four assessment years immediately succeeding the assessment year for which the loss was first computed.
80TT. Deduction in respect of winnings from lottery–Where the gross
total income of an assessed, not being a company, includes any income by
way of winnings from any lottery (such income being hereafter in this Section referred to as winnings), there shall be allowed, in computing the
total income of the assessed, a deduction from the winnings of an amount
equal to-
(a) in a case where the winnings do not exceed five thousand rupees, the whole of such winnings ;
(b) in any other case, five thousand rupees as increased by a sum equal to fifty per cent, of the amount by which the winning’s exceed five thousand rupees.”
5. Section 74A was introduced with effect from April 1, 1972. Sub-section (2) thereof, which was omitted by the Finance Act, 1986, reads as follows :
“(2) The sources referred to in Sub-section (1) are-
(a) lotteries ;
(b) crossword puzzles ;
(c) races including horse races ;
(d) card games ;
(e) other games of any sort ; and
(f) gambling or betting of any form or nature whatsoever not falling under any of the foregoing clauses.”
6. A bare reading of the provisions shows that distinction was made in the provisions between (a) lotteries, and (c) races including horse races. Section 2(24)(ix), which was amended also with effect from April 1, 1972, makes a difference between winnings from lotteries and races including horse races. It is also to be noted that Section 194B and Section 194BB deal with winnings, from (a) lotteries or crossword puzzles, and (b) winnings from horse races, respectively. Though Section 194BB was introduced later, i.e., with effect from April 1, 1978, it is relevant to note that a clear distinction has been made between winnings from lotteries and winnings from horse races. It is also to be noted that in Section 10(3), there is a specific reference to winnings from races including horse races.
7. In CIT v. G.R. Karthikeyan [1980] 124 ITR 85, it was held by the Madras High Court that prize money in a motor car rally depends entirely on the skill in performance of driving of the car and does not come within the sweep of the expression “winnings from races”. Reversing the decision, the apex court held that the car rally was a contest, if not a race, and the assessed entered the contest to win. What he got was a return for skill and endurance. It was “income” construed in its widest sense, though it was “casual” in nature (see CIT v. G.R. Karthikeyan ).
8. In Corpus Jurisdiction Secundum the expression “lottery” has been defined as “pooling the proceeds derived from chances or tickets taken or purchased and then allotting such proceeds or a part of them or their equivalent by chance to one or more such takers or purchasers are indicia of a ‘lottery’. It is necessary that winner must not only be a contributor to the prize money, but also be a participant.” In Webster’s Dictionary, a lottery is defined to be “a distribution of prizes by lot or chance”–and a similar definition is given in Johnson. The word “lottery” embraces the elements of procuring through lot or chance, by the investment of a sum of money or something of value, some greater amount of money or value.
9. The expessions “winnings from lotteries” and “winnings from horse races” have been used in different contexts at different places in the statute. Section 80TT permits deduction in respect of winnings from lotteries. As the winnings from races including horse races have been treated differently under different statutory provisions, the claim of the assessed for deduction under Section 80TT has been rightly refused. Our answer to the question, therefore, is in the affirmative, in favor of the Revenue and against the assessed.
