N. Krishnamurty, Judicial Member - (1.) THESE appeals by the Revenue are directed against the orders dated 1-10-1987 of the Commissioner of Income-tax (Appeals), Madras, relating to the assessment year 1984-85. Since these appeals involve identical questions, they are considered together and disposed of by this common order for the sake of convenience.
(2.) One Shri V. Sundaramurty along with 22 other individuals had purchased 23 lottery tickets of Royal Bhuttan Lucky Weekly (Coronation Bumper) Lottery. After some time, they came to an understanding that if any one or more tickets is declared as won, the proceeds of such a winning ticket or tickets should be shared by all the 23 persons as if all the 23 tickets have won the lottery. In the draw held on 16-6-1983, one of the tickets purchased by this group of persons won the first prize. The gross prize amount was Rs. 83 lakhs and after deducting 15 per cent in terms of the conditions laid down for the lottery, the balance prize amount due was Rs. 70,47,810. This amount was shared equally by all the persons and thus each person got Rs. 3,06,426. On 5-4-1984, a notice under Section 139(2) read with Section 175 was issued on Shri Sundaramurty and others treating them as a "Body of Individuals". Subsequently, the representative of the assessees submitted before the Assessing Officer that the 23 lottery tickets were bought by 23 individuals separately and, therefore, it would not be open to the Assessing Officer to treat the winnings of this lottery as an income of "Body of Individuals". However, since no returns were filed, the Income-tax Officer completed the assessment under Section 144, rejecting this claim of the assessees and treating them as "Body of Individuals" following the decision of the Madras High Court in the case of N.P. Saraswathi Ammal v. CIT [1982] 138 ITR 19. Aggrieved by this, the assessees preferred appeals to the Commissioner of Income-tax (Appeals). Before the Commissioner (Appeals) it was contended on behalf of the assessees that all the 23 persons purchased tickets as Individuals and at the time of such buying, there was no intention whatsoever to join with any one or more persons but after some time only the 23 persons came 10 a clear understanding that each individual is distinct and separate owner of each such tickets and if any one or more of such tickets happened to be declared as won, then all the 23 individuals are entitled for respective l/23rd distinctive and separative share in the said winning ticket or tickets. Therefore, on the basis of this factual data, it was submitted that the Assessing Officer was not justified in treating the recipients of the lottery winnings as a "Body of individuals". The Commissioner (Appeals) after distinguishing the decision of the Madras High Court in the case of N.P. Saraswathi Ammal (supra) and following the ratio of the decision of the Andhra Pradesh High Court in the case of Deccan Wine & General Stores v. CIT [1977] 106 ITR 111 had reached the conclusion that there is no justification for assessing the 23 persons referred to above in the status of "Body of Individuals" and he accordingly cancelled the assessments made in the status of "Body of Individuals". In the present appeals, the learned Departmental Representative submitted that the Commissioner (Appeals) has erred in holding that the prize money of Rs. 70 lakhs won by the assessce and 22 others should not be assessed in the status of "Body of Individuals". It is further submitted that the Commissioner (Appeals) has failed to appreciate that the assessee and 22 others purchased various tickets at various centres, then joined together with the above object of winning and sharing the prize money. It is further submitted that the Commissioner (Appeals) has failed to appreciate that the persons under reference joined together after the purchase of the ticket and jointly acted in pursuance of a common object and common intention and with the common purpose of making profits and sharing the same. Therefore, in the light of the ratio of the decision of the Madras High Court in the case of N.P. Saraswathi Ammal (supra), the Commissioner (Appeals) should have held that the assessees constituted a "Body of Individuals". Against this, the assessees supported the orders of the Commissioner (Appeals) and maintained that the same do not call for any interference.
(3.) WE have considered the rival submissions. In this case, 23 persons had purchased a lottery ticket each. Then they came to an understanding that if any one or more of such ticket or tickets is declared as won, the proceeds of such a winning ticket or tickets should be treated as if all such 23 tickets are deemed to have won and claimed as per their respective rights. One of the tickets purchased by one of the members of this conglomeration won the first prize of Rs. 70,47,810 (net). This amount of Rs. 70,47,810 was shared by all the 23 ticket holders equally. In this context, the question that arises for consideration is whether the status of the assessees is to be taken as a "Body of Individuals" or all the 23 members of this group are to be assessed separately in their capacity as "Individuals".;