Business Income

Lottery/Gambling Activity--Whether Constitute Business

T.N. Pandey

In this write-up the learned author examines that whether engagement in lottery/gambling activity can constitute business. He also examines whether purchasing and selling of lottery tickets by a person can constitute business. He concludes that purchasing and selling of lottery tickets by a person can constitute business on his part and gains and loss arising therefrom assessed as such. He also concludes that the gains arising from lottery/gambling activities would constitute 'income' for the purposes of taxation under the Act, but such income would be assessable under the head 'Income from other sources' not as income from business.

1. Introduction

section 14 of the Income Tax Act, 1961 (Act, for short in later discussion) prescribes 5 heads under which incomes can be taxed under the Act. These are :--

(i) Salaries;

(ii) Income from house property;

(iii) Profits and gains of business or profession;

(iv) Capital gains; and

(vi) Income from other sources

In later paragraphs, some aspects concerning income from 'business' are being considered.

2. Business

The term 'business' has been defined in Section 2(13) in the Act in an inclusive manner, to include every facet of an occupation/activity, which a person carries on with a view to earn profit. It includes (a) trade; (b) commerce; (c) manufacture or any adventure or concern in the nature of the activities stated earlier with intention to earn profits. In the Act, the word 'business' has been used in very broad/comprehensive manner and can be described in different connotations to earn profits.

 Section 28 of the Act describes activities, which can constitute 'business' for income-tax levy. These are :-