Gangadhara Rao, J.
1. This petitioner, a businessman, was lucky enough to win a sum of Rs. 26,755 in horse races during the accounting year 1972-73, but he was not lucky with the income-tax department. The Income-tax Officer, Nellore, added that amount to his other income for the assessment year 1973-74. Questioning the validity of that order the petitioner has filed this writ petition.
2. Prior to 1st April, 1972, winnings in horse races were not eligible to income-tax. By the Finance Act, 1972, Clause (ix) was added to Section 2(24) of the Income-tax Act, 1961, which defines 'income'. Now, according to Section 2(24)(ix) of the Income-tax Act, income includes any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.
3. In this writ petition Sri S. Dasaratharama Reddi, the learned counsel for the petitioner, questions the vires of Clause (ix). According to him, Parliament has no legislative competence to enact that clause. He argues that it is only the State legislature that is competent to levy tax on income from winnings in horse races under entry 62 in List II of the Seventh Schedule of the Constitution of India.
4. So, the question for our consideration is whether Parliament has the legislative power to enact Clause (ix) of Section 2(24) of the Income-tax Act
5. Under article 246 of the Constitution, Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule, referred to as the Union List.
6. Article 366(29) defines 'tax on income' as including tax in the nature of an excess profits tax.
7. Entry 82 in List I of the Seventh Schedule reads as follows :
'Taxes on income other than agricultural income.'
8. Thus, Parliament, by virtue of the power conferred upon it under article 246, has exclusive power to levy tax on income other than agricultural income under entry 82 of that List. There is also the residuary entry 97 of the same List which empowers Parliament to make laws with regard to any other matters not enumerated in List II or List III including any tax not mentioned in either of those Lists.
9. Entry 62 in List II (State List) reads as follows :
'Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.'
10. In view of this entry, the States are given power to impose tax on betting and gambling. The contrast in the language of entry 82 in List I and entry 62 in List II is apparent. While Parliament has got the power to tax the income, the State legislatures have got the power to impose tax on betting and gambling. Tax on betting and gambling is different from tax on income from betting and gambling. If a person wants to enter the race course enclosure, he should purchase a ticket. If he wants to bet on a horse, he should purchase a ticket. The State legislature can impose a tax on those tickets, because that will be a tax on betting. But, if that person were to win a jackpot, then that will be income from betting and only Parliament could levy tax on that income. Thus, while the State legislature could impose a tax on betting and gambling in view of entry 62 in List II, it is only Parliament that is competent to levy tax on income from betting and gambling in view of entry 82 in List I.
11. It is argued by Sri Dasaratharama Reddy that the word 'income' is not denned as such in the Constitution and it could only mean that it should be a steady and recurring income and an income by way of winnings in horse races, which is more in the nature of a windfall, should not be treated as income and, therefore, Parliament has no power to tax that income. In this connection, he referred us to some observations made in State of Bombay v. R.M.D. Chamarbaugwala : 1SCR874 . We have carefully gone through that decision and we do not find any observations supporting his contention.
12. It is true that the expression 'income' is not defined in the Constitution of India. As stated by us already 'tax on income' is defined as including tax in the nature of an excess profits tax under Clause (29) of article 366. Precisely because it is not defined in the Constitution of India it must be understood in its widest sense and no restrictive meaning could be given to that expression while interpreting entry 82 in the Union List.
13. In fact, the decision of the Supreme Court in Navinchandra Mafatlal v. Commissioner of Income-tax : 26ITR758(SC) furnishes a complete answer to the question raised by the learned counsel for the petitioner. In that case, an amount representing capital gains was assessed to income-taxin the hands of the appellant under Section 12B of the Indian Income-tax Act. The Indian Income-tax and Excess Profits Tax (Amendment) Act, XXII of 1947, amended the Indian Income-tax Act by enlarging the definition of the word' income' in Section 2(6C) so as to include capital gains and adding a new head of income in Section 6 and inserting the new Section 12B relating to capital gains. Under Section 100 of the Government of India Act, 1935, the Central Legislature was empowered to make laws with respect to matters enumerated in List I in the Seventh Schedule to that Act. Entry 54 in List I reads as follows :
'Taxes on income other than agricultural income.'
14. It was argued on behalf of the appellant therein that entry 54 which deals with taxes on income, does not embrace within its scope tax on capital gains. It was contended that the word 'income' does not signify capital gains either according to its natural import or common usage or according to judicial interpretation of relevant legislation both in England and in India. It was further contended that the word 'income' in entry 54 in List I of the Government of India Act should be understood in that restrictive sense. The learned judges held that it would be wrong to interpret the word 'income' in entry 54 of the Government of India Act in the light of the interpretation of the word 'income' in the Income-tax Act. It was observed that the Government of India Act being a constitutional Act should not be construed in a narrow and pedantic sense and that the word 'income' in entry 54 should be given its widest connotation in view of the fact that it occurs in a legislative head conferring legislative power. Consequently, the learned judges held that Section 12B was intra vires the powers of the Central Legislature.
15. The wording of entry 54 in List I of the Government of India Act is in pari materia with the wording of entry 82 in List I of the Constitution of India.
16. While interpreting the entries in the List of the Seventh Schedule of the Constitution with regard to taxes, we cannot interpret them in the light of the definition of the word 'income' in the Income-tax Act. Even in the Income-tax Act, it is not as if every income is taxed. It is only certain incomes that are taxed. The heads of income that are liable to tax are specified by the legislature and they are not exhaustive. In fact, the sources of income under that Act have been expanded from time to time, as for instance, by the inclusion of 'capital gains' in Section 6 of the Income-tax Act, 1961, by the Amending Act No. XXII of 1967. Casual gains, like winnings from lotteries, were treated as income in the Income-tax Act, 1922, but were specifically exempt from levy of income-tax under Section 4(3)(vii) of the 1922 Act and Section 10(3) of the 1961 Act, They againbecame taxable when the exemption was withdrawn by the Finance Act, 1972.
17. In Bhola Nath Kesari v. Director of State Lotteries : 95ITR171(All) , the Allahabad High Court held that Clause (ix) added to Section 2(24) of the Income-tax Act is intra vires the powers of Parliament. In that case the petitioner won a prize of rupees one lakh in the U.P. State Lotteries held in December, 1972. It was contended on behalf of the petitioner that the levy of tax was ultra vires of the powers of Parliament. It was urged that the tax does not fall either under entry 82 or entry 97 of the Union List (List I) but that it would fall, if at all, under entry 62, List II (State List) of the Seventh Schedule of the Constitution. The learned judges held that the impugned tax was covered by entry 82 of the Union List and Parliament was competent to impose tax on such winnings. We agree with that decision.
18. Thus there is no substance in the contention raised by the learned counsel for the petitioner. We hold that Parliament is competent to enact Clause (ix) in Sub-section (24) of Section 2 of the Income-tax Act, 1961, under entry 82 of the Union List (List I) of the Seventh Schedule to the Constitution.
19. In the result, we dismiss this petition with costs. Advocate's fee Rs. 250.