WHETHER THE PRIZE MONEY RECEIVED BY AN ASSESSEE FOR COMING FIRST IN A MOTOR RALLY IS INCOME?

Section 2(24)(ix) of Income tax act, 1961 states that income includes 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 other form or nature whatsoever.

Casual nature receipt is something which cannot be anticipated but it comes by chance rather than intentionally. For example receipt from horseracing, racing, betting etc is casual receipt by nature.

A receipt is of non recurring nature if it is not bound to recur in future, but it may recur in nature.

Section 10(3) of the income tax act, 1961 states that, in certain circumstances the receipt of casual nature and of non recurring nature will be exempted from computation of total income.

For example, if sister receiving sum of amount from her brother from several years. There is no obligation on the brother to pay the said amount to the sister and he is giving such amount out of gratuity. The amount will not be calculated in total income of the sister.

Thus the gift of personal nature given out of generosity will never be chargeable under income tax act unless they are not brought under the exception.

When a receipt of casual nature and non recurring nature aroused out of the profession or occupation is not exempted from tax and counted under the total income and the tax will be imposed on the same.

For example, a match arranged for sportsperson and the net collection from the match collected handed to him is not exempted from tax.

Thus, when the service is rendered by profession and teacher is the immediate cause of the making gift by donor, the gift will not be exempted from tax. But where the gift made due to the personal admiration arisiong out of the character of professional, the gift will not be taxable income.

Case. CIT vs. GK Karthikeyan, 1993

In this case the issue before the court was whether the money prize received is income under section 2(24)(ix) of Income tax act?

The court held that its income because the expression in section 2(24)(ix) ‘other games of any sort’ are of wide connotation and not confined to the games of only gambling or betting nature.

The money earned by the assessee through his skill and endurance is income.

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