1993 (4) TMI 9 - SC - Income Tax

Prize money from corporations and motor rallies held taxable income u/ss 2(24) and 10(3)

SC held that the prize amount received by the assessee from a corporate entity and a motor rally is 'income' within the wide, inclusive scope of s. 2(24) ... Taxability of amount received as Prize - Scope and ambit of the term 'income' u/s 2(24) - income from various sources including salary and, business income - Whether Tribunal was right in holding that the total sum received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally should not be brought to tax - HELD THAT:- The contention of the assessee was that he was not deriving any monetary benefit by residing in his own house and, therefore, no tax can be levied on him on the ground that he is deriving income from that house. It was contended that the word ' income ' means realisation of monetary benefit and that in the absence of any such realisation by the assessee, the inclusion of any amount by way of notional income under section 23(2) of the Act in the chargeable income was impermissible and outside the scope of entry 82 of List I of the Seventh Schedule to the Constitution. The idea behind providing an inclusive definition in section 2(24) is not to limit its meaning but to widen its net. This court has repeatedly said that the word ' income is of the widest amplitude, and that it must be given its natural and grammatical meaning judging from the above standpoint, the receipt concerned herein is also income. May be it is casual in nature but it is income nevertheless. That even casual income is ' income ' is evident from section 10(3). Section 10 seeks to exempt certain ' incomes ' from being included in the 'total income'. A casual receipt which should mean, in the context, casual income is liable to be included in the total income, if it is in excess of Rs. 1,000, by virtue of sub-section (3) of section 10. Even though it is a clause exempting a particular receipt/income to a limited extent, it is yet relevant on the meaning of the expression ' income '. In our respectful opinion, the High Court, having found that the receipt in question does not fall within sub-clause (ix) of section 2(24), erred in concluding that it does not constitute income. The High Court has read the several sub-clauses in section 2(24) as exhaustive of the definition of income when in fact it is not so. In this connection, it is relevant to notice the finding of the Tribunal. It found that the receipt in question was casual in nature but-it opined-it was nevertheless not an income receipt and fell outside the provision of section 10(3) of the Act. We have found it difficult to follow the logic behind the argument. We hold that the receipt in question herein does constitute ' income ' as defined in clause (24) of section 2 of the Act. The appeal is accordingly allowed and the question referred by the Tribunal under section 256(1) of the Act is answered in the negative. Issues Involved:1. Whether the sum of Rs. 22,000 received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally constitutes taxable income.2. Interpretation of the term 'income' under section 2(24) of the Income-tax Act, 1961.3. Applicability of section 10(3) regarding casual and non-recurring receipts.Issue-Wise Detailed Analysis:1. Taxability of the Sum Received:The primary issue was whether the total sum of Rs. 22,000 received by the assessee from participating in the All India Highway Motor Rally should be taxed. The Income-tax Officer included this amount in the respondent-assessee's income, relying on the definition of 'income' in clause (24) of section 2. The Appellate Assistant Commissioner and the Tribunal, however, held that the rally was not a race and that the amount received did not constitute income under section 2(24)(ix).2. Interpretation of 'Income' under Section 2(24):The court examined the inclusive definition of 'income' in section 2(24) of the Income-tax Act, 1961. The definition has been expanded over time to include various forms of receipts. The court noted that the term 'income' should be given its widest connotation, as emphasized in previous judgments such as Raja Bahadur Kamakshya Narain Singh of Ramgarh v. CIT and Navinchandra Mafatlal v. CIT. The court reiterated that the definition is not exhaustive and that even casual receipts could be considered income if they partake of the nature of income.3. Applicability of Section 10(3):Section 10(3) of the Act, which deals with casual and non-recurring receipts, was also considered. The court pointed out that even casual income is included in the total income if it exceeds Rs. 1,000. The Tribunal had found the receipt to be casual but opined that it was not an income receipt under section 10(3). The court disagreed with this interpretation, stating that the receipt in question does constitute income.Conclusion:The Supreme Court concluded that the sum of Rs. 22,000 received by the assessee from the rally does constitute 'income' under section 2(24) of the Act. The court held that the High Court erred in concluding that the receipt did not constitute income merely because it did not fall within sub-clause (ix) of section 2(24). The appeal was allowed, and the question referred by the Tribunal was answered in the negative, i.e., in favor of the Revenue and against the assessee. There was no order as to costs.