1980 PLP (Trib (PTD)

ABRAR HUSSAIN NAQVI (MEMBER).‑‑This is the appeal of an individual and relates to assessment year 1974‑

75. The appellant is a partner in a registered Firm Messrs Q Picture .... He besides his income from the firm also disclosed income from horse race betting as a professional punter at Rs. 35,000 but claimed it to be exempt under sec tion 4(3) (vii) on the ground that it was an income of casual and non recurring nature. Both the officers below did not accept this plea and hence this second appeal.

2. The learned A. R. contended before us that the income from horse betting was in the casual and non‑recurring nature and came within the ambit of section 4 (3) (vii). Reliance was placed on the case of Janab A Sayed Jalal Sahib v. C. I. T., Madras ((1960)2 Taxation 569). Before dealing with the case further it would be pertinent to note that the appellant also declared income from horse betting in the subsequent years. In the years 1975‑76 and 1976‑77 he declared net income from this source at Rs. 16,000 and Rs. 44,000, respectively. In the above cited case the facts were that the assessee's main business was manufacture and sale of Bidis but for pastime and pleasure he also owned horses and derived income from winning prizes as well as betting the horses. The Tribunal upheld the departmental view that such an income was not of casual and recurring nature and therefore taxable. On reference to High Court it was held that receipts of the assessee from his racing and betting activities constituted an income but it was not an income from any business, profession or vocation. It was‑ further held that it was not a taxable income being of casual and non‑recurring nature within the meaning of section 4(3) (vii) of the Income‑tax Act. The learned Judges of the High Court mainly based their judg ment on an earlier case of Lala Indra Sen ((1940) 8 I T R 187). The learned Judges while deciding the point as to whether such an income was of casual and non‑recurring nature or not relied upon the observations in case from the judgment of Braund J., which is quoted below :‑- "I think that the word `casual' in this section must be read as meaning the antithesis of that which is governed by something more than mere chance‑something out of which, according to the probabilities of business to the known course of practical experience, a rational expectation of profit arises. And that does not in my opinion apply to a mere bet." The learned Judges also relied upon another observation of Braund, J. in the same judgment which is also reproduced below :‑ " .the true view is that be made a bet whenever he felt inclined to do so. He was not compelled to and as far as we know there was no method in his betting. I think, therefore, that the right way to look at this is that the assessee whenever he felt inclined, from time to time, made a bet and not that he made a series of bets on a prescribed plan. He was free to stop whenever he liked. And if each bet is, as I think an individual transaction, I can myself see nothing of a recurring nature about it. It was not its nature to recur. If it did in fact recur with great frequency it might on that account become a `business'. It may be true that in fact these bets did recur. But that was not the result of the `nature' of the transaction but of the mere spasmodic volition of the assessee. They were trot, to my mind of a recurring `nature' . . . . . . . . " With utmost respect to the views expressed in the aforesaid cases we cannot contribute to these views. Even applying the standard laid down by Braund, J. in the afore‑mentioned observations the conclusion drawn by him cannot be the one drawn by him. A distinction must be drawn between the mere betting in games of chance and the horsebetting. The leas‑nevi Judges in the afore mentioned cases have equated the horsebetting with winning of lottery prizes. Winning of lottery prizes is on the basis of just chance and no human intelligence, experience I method can bring about winning of prizes whereas the horse-betting of late has attained the position of scientific game not depending on mere chance. In many cases experience can prevail for the winning of a horse in a particular race. Mere fact that despite reasonable expectation of winning of a particular horse it does not win, does not make the game a game of chance alone. It is pertinent to note that winning of a horse depends on a number of factors which are generally known to the experts of the game or the habitual or professional punters. The factors which play an important part in the winning of a horse are breeding of the horse, age of the horse, the Jackey riding ii, the trainer who has trained it and the distance for which race is placed. As a matter of fact the race clubs do maintain authentic record of the aforesaid factors and it is on the basis of this record drat the book makers fix their betting rates on the probability of winning and the punter also places his betting. As a matter of fact the business of book makers is dependent on their experience of probability of winning horses for which they provide different rates. Since the judgment in the cited case is based on initially wrong premises the conclusion drawn on such incorrect premises has resulted in a wrong finding. From the above it is abundantly clear that the horsebetting could not be equated with winning of prizes in lottery or winning of prizes in a prize bond draw. In the horse betting there is always a plan and a method based on the aforesaid factors. The fact that a punter regularly wins a bet one after the other of course wit some losing as well, makes it a recurring income. The word `recur' presuppose frequency of the events which is patently clear from the receipts shown by the assessee. In the present case it is not the case of the assessee that he won this amount only in one bet. Had it been so the assessee may have the case that it was a casual and income of non‑recurring nature. However the vase of the assessee is that he is a regular punter and obviously the receipts of Rs. 35,00 are a result of series of betting with winning and losing in the whole year. It is also pertinent to note that the assessee not only in this assessment year but also in the subsequent two years had earned Rs. 16,001 and Its. 44,000 respectively from this source which further proves that even if it is not a business it is certainly an adventure in trade out of which the assessee has been deriving regular income. Such an income therefore cannot be visualised to be covered under section 4(3) (vii) of the income‑tax Act as it is neither casual nor non‑recurring in nature. It is also to be noted that the assessee is not keeping any accounts. From the very nature of the receipts from horsebetting the assessee could not clearly show as to what are his bet receipts without keeping the accounts of each betting. Many races take place in one day and in each race a number of horses take part. A punter when makes a bet, he either loses or wins. Unless he keeps the record of his betting and its results it is not possible to find out the correct result as to what was the income car less. We specifically asked the A. R. as to whether any accounts were maintained by the assessee but his answer was in the negative. We are surprised to note as to how the assessee has been able to disclose specific amount of receipts without keeping the accounts. The obvious inference is that either the assessee has kept the accounts but has withheld it from the department or the income from undisclosed sources has been shown as income from horse betting with the hope of getting exemption under section 4 (3) (vii) Be that as it may for the reasons we have recorded above we see no force in this appeal which is hereby dismissed. M. KARIM (MEMBER).‑I agree with the conclusion that the income was taxable in the instant case. Appeal dismissed.