1987 (3) TMI 167 - AT - Income Tax

Slogan contest prize ruled non-taxable as it required skill, not luck.

The tribunal ruled in favor of the assessee, determining that the prize won in a slogan contest required skill and expertise, not just chance or luck. The ... Income, Winnings From Lotteries Issues:1. Whether the winnings from a slogan contest organized by a company fall under section 2(24)(ix) of the Income-tax ActRs.2. Whether the prize won in the contest requires skill and expertise, or is it based on chance or luckRs.3. Whether the prize received by the assessee should be considered as casual and non-recurring income for tax purposesRs.Analysis:1. The case involved a departmental appeal against the order of the Appellate Assistant Commissioner concerning the taxation of winnings from a slogan contest for the assessment year 1980-81. The assessee, an individual, participated in the contest and won a Premier Padmini car or Rs. 40,000 as the first prize. Initially, the assessee declared the income as winnings from a lottery in the return but later claimed it to be exempt from tax as casual and non-recurring income. The Income-tax Officer taxed the income at Rs. 39,000 under section 2(24)(ix) of the Income-tax Act.2. The Appellate Assistant Commissioner, after considering the Madras High Court ruling and the wording of section 2(24)(ix), concluded that the prize won in the contest required skill and expertise, not just chance or luck. Citing precedents like Jodhani Nina Pitamber v. ITO, the Appellate Assistant Commissioner held that the prize did not qualify as income under the said section. Consequently, the appeal was allowed, and Rs. 39,000 was deleted from the assessed income.3. The department challenged the Appellate Assistant Commissioner's order in a second appeal, arguing that the prize should be taxed as casual and non-recurring income under section 2(24)(ix) since it was akin to winning from a lottery. However, the tribunal, considering the dictionary meanings of 'winnings' and the precedents cited, upheld the Appellate Assistant Commissioner's decision. It was held that the prize received required skill, and coining slogans did not constitute a game of chance. Therefore, the prize did not fall under the definition of winnings from races or games as per the Income-tax Act.4. The tribunal's decision was based on the understanding that the prize was not solely won by chance or luck but involved the exhibition of skill by the assessee. Referring to previous judgments, including the Madras High Court ruling and Jodhani Nina Pitamber's case, the tribunal dismissed the departmental appeal, emphasizing that coining slogans did not qualify as a race or game of chance. Hence, the prize received by the assessee was not taxable under section 2(24)(ix) of the Income-tax Act.