B. P. Jeevan Reddy, J. - (1.) This appeal is preferred against the Judgment of the Madras High Court answering the question referred to it in the affirmative i.e., in favour of the assessee and against the Revenue. The question referred under section 256(l) of the Income-tax Act reads as follows:"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the total sum of Rs. 22,000/ - received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally should not be brought to tax."
(2.) The assessment year concerned is 1974-75. The assessee, G. R. Karthikeyan, assessed as an individual, was having income from various sources including salary and business income. During the accounting year relevant to the said assessment year, he participated in the All India Highway Motor Rally. He was awarded the first prize of Rs. 20,000/ - by the Indian Oil Corporation and another sum of Rs. 2,000/- by the All India Highway Motor Rally. The Rally was organised jointly by the Automobile Association of Eastern India and the Indian Oil Corporation and was supported by several Regional Automobile Associations as well as Federation of Indian Motor Sports Clubs and the Federation of Indian Automobile Associations. The rally was restricted to private motor cars. The length of the rally route was approximately 6,959 kms. One could start either from Delhi, Calcutta, Madras or Bombay, proceed anticlockwise and arrive at the starting point. The rally was designed to test endurance driving and the reliability of the automobiles. One had to drive his vehicle observing the traffice regulations at different places as also the regulations prescribed by the Rally Committee. Prizes were awarded on the basis of overall classification. The method of ascertaining the first prize was based on a system of penalty points for various violations. The competitor with the least penalty points was adjudged the first-prize winner. On the above basis, the assessee won the first prize and received a total sum of Rs. 22,000/-. The Income-tax Officer included the same in the income of the respondent-assessee relying upon the definition of 'income' in clause (24) of section 2. On appeal, the Appellate Assistant Commissioner held that inasmuch as the rally was not a race, the amount received cannot be treated as income within the meaning of section 2(24) (ix). An appeal preferred by the Revenue was dismissed by the Tribunal. The Tribunal recorded the following findings: (a) That the said rally was not a case. It was predominantly a test of skill and endurance as well as of reliability of the vehicle. (b) That the rally was also not a 'game' within the meaning of Section 2(24)(ix).(c) That the receipt in question was casual in nature. It was nevertheless not an income receipt and hence fell outside the provisions of Section 10(3) of the Act.
(3.) At the instance of the Revenue, the question aforementioned was stated for the opinion of the Madras High Court. The High Court held in favour of the assessee on the following reasoning: (a) The expression 'winnings' occurring at the inception of sub-clause (ix) in Section 2(24) is distinct and different from the expression 'winning'. The expression 'winnings' has acquired a connotation of its own. It means money won by gambling or betting. The expression 'winnings' controls the meaning of several expressions occurring in the sub-clause. In this view of the matter, the sub-clause cannot take in the receipt concerned herein which was received by the assessee by participating in a race which involved skill in driving the vehicle. The rally was not a race. In other words the said receipt does not represent 'winnings'. (b) A perusal of the memorandum explaining the provisions of the Finance Bill, 1972, which inserted the said sub-clause in Section 2(24), also shows that the idea behind the sub-clause was to rope in windfalls from lotteries, races and card games etc. (c) Section 74(A) which too was introduced by the Finance Act, 1972 supports the said view. Section 74(A) provides that any loss resulting from any of the sources mentioned. therein can be set off against the income received from that source alone. The sources referred to in the said section are the very same sources mentioned in sub-clause (ix) of Section 2(24) namely lotteries, crossword puzzles, races including horse races, card games etc. ;