SECOND INCOME TAX OFFICER v. M. NAGARAJ
[Citation -1984-LL-0809-7]

Citation 1984-LL-0809-7
Appellant Name SECOND INCOME TAX OFFICER
Respondent Name M. NAGARAJ
Court ITAT
Relevant Act Income-tax
Date of Order 09/08/1984
Assessment Year 1983-84
Judgment View Judgment
Keyword Tags prize amount
Bot Summary: 1983-84, the assessee, along with another person, purchased a lottery ticket and won the prize of Rs. one lakh. The ITO completed the assessment in the status of AOP. While doing so, he rejected the contention of the assessee that the persons concerned should be assessed individually in respect of their respective winnings. On appeal, the AAC accepted the claim of the assessee and held that the ITO was not justified in completing the assessment in the status of an AOP. While doing so, he observed as under: There is no dispute that the two persons have purchases a lottery ticket jointly. The question is whether mere purchase of a lottery ticket jointly would constitute a concorded activity by these two persons for earning income. CIT vs. Indira Balkrishna 39 ITR 546 and Deccan Wine General Stores vs. CIT 106 ITR 111, the scope of the expression 'AOP would be only that the persons of the Association must join together for purposes of producing an income. Various Tribunals particularly the Madras Tribunal also have held, especially, in the case of persons, joining together for purchase of lottery tickets and winning the lottery prize, that they cannot be treated as Association of Persons. The mere fact that by a stroke of fortune that one of the tickets secured the prize would not mean that the two persons associated together by carrying on a commercial activity to produce income.


During accounting period relevant to asst. yr. 1983-84, assessee, along with another person, purchased lottery ticket and won prize of Rs. one lakh. ITO completed assessment in status of "AOP". While doing so, he rejected contention of assessee that persons concerned should be assessed individually in respect of their respective winnings. However, on appeal, AAC accepted claim of assessee and held that ITO was not justified in completing assessment in status of "AOP". While doing so, he observed as under: "There is no dispute that two persons have purchases lottery ticket jointly. But question is whether mere purchase of lottery ticket jointly would constitute concorded activity by these two persons for earning income. Various High Courts particularly Supreme Court have defined what constitutes "AOP". According to decisions, viz., CIT vs. Indira Balkrishna (1960) 39 ITR 546 (SC) and Deccan Wine & General Stores vs. CIT (1977) 106 ITR 111 (AP), scope of expression 'AOP would be only that persons of Association must join together for purposes of producing income. Various Tribunals particularly Madras Tribunal also have held, especially, in case of persons, joining together for purchase of lottery tickets and winning lottery prize, that they cannot be treated as "Association of Persons". reason according to Hon'ble Tribunal is that absolutely no activity of any kind is also involved in getting prize amount which depends wholly on stroke of luck. There is no need for any common management except by sheer luck. mere fact that by stroke of fortune that one of tickets secured prize would not mean that two persons associated together by carrying on commercial activity to produce income. Relying on these decisions, I hold that ITO is not correct in holding status of appellants as "Association of Persons". He is directed to compute income in hands of individuals separately." Aggrieved by order of AAC, Department has filed present appeal. On date of hearing no one appeared on behalf of assessee. appeal was, therefore, heard ex parte. After going through record and hearing ld. representative of Department, we do not find any substance in this appeal. very point at issue came up for consideration before ITAT in case of Fifth ITO, Circle-II, Salem vs. M/s A.U. Chandrasekaran & Ors., India Cement Ltd., Sankari ITA No. 1008/Mds/1978-79 and same was decided against Department. According to this decision of Tribunal, mere fact that two or more persons purchased lottery ticket, which, by stock of luck, won prize could not lead to conclusion that persons concerned associated together for carrying on commercial activity to produce income. So, in such situation, assessment could not be made in status of 'Association of Persons'. Since facts of present case are identical to facts in case of ITO vs. M/s A.U. Chandrasekaran & Ors. (supra), we will follow aforesaid decision of Tribunal and confirm impugned order of AAC. In result, appeal is dismissed. *** SECOND INCOME TAX OFFICER v. M. NAGARAJ
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