Income-tax---

‑‑‑‑Association of persons‑‑‑Conditions precedent‑‑‑Several persons jointly purchasing lottery tickets‑‑‑Joint venture with object of earning income‑‑ Prize money assessable in status of AOP‑‑‑Indian Income Tax Act, 1961, S.2(24).

A group of 12 persons jointly purchased lottery tickets and one of them won the second prize. The Income‑tax Officer held that the persons should be assessed in the status of body of individuals. The Tribunal held that they were liable to be assessed as co‑owners individually. On a reference to the High Court:

Held, that the prize money was assessable in the status of association of persons under section 2(24) of the Income Tax Act, 1961, since the two conditions for assessing the income under the status of association of persons that there must be a joint venture and the object of the joint venture must be to, earn income, had been satisfied.

CIT v. A.U. Chandrasekharan (1998) 229 ITR 406 (Mad.) fol.

C.V. Rajan for the Commissioner.

Nemo of the Assessee.

JUDGMENT

MRS. A. SUBBULAKSHMY, J.‑‑‑At the instance of the Revenue, the following question has been referred to us:

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that P. George and eleven others who won the lottery of Rs.11 lakhs were not assessable to income‑tax in respect of the said lottery winning, in the status of body of individuals?"

A group of 12 persons jointly purchased lottery tickets and one of the tickets won the second prize. The Assessing Officer held that there was a common aim involved in the joint venture and had common interest in all the tickets to earn income. On appeal, the Commissioner held that the persons who won the ticket should be considered as co‑owners of the tickets and hence they should be assessed as co‑owners individually and not jointly in the status of body of individuals. The Tribunal confirmed the view of the Commissioner.

This Court in the case of CIT v. A.U. Chandrasekharan (1998) 229 ITR 406 has held that in the case of several persons entering into a written agreement for purchase of lottery tickets from contributions, the winnings have to be equally distributed and the prize money is assessable in the status of association of persons under section 2(24) of the Income Tax Act, 1961, since the two conditions for assessing the income under the status of an association of persons (a) that there must be joint venture, and (b) that the object of the joint venture must be to earn income, had been satisfied and, therefore, the assessees were assessable in the status of association of persons.

In the instant case, the two conditions are satisfied and, therefore, following the above decision and for the reasons stated therein, we, answer the question in favour of the Revenue and against the assessee, holding that the assessee are assessable as an association of person. No costs.

M. B.A/622/FC Reference answered.