TMI Blog1988 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is 1973-74, the previous year being S.Y. 2028 which commenced on October 20, 1971, and ended on November 6, 1972. The assessee is a registered partnership firm consisting of 10 partners. It is a dealer in land and it was constituted under deed of partnership dated May 25, 1971. Clause 5 of the partnership deed enumerates the businesses for which the partnership was formed. One of such businesses stated in sub-clause (a) thereof is " purchase of land or building or rights therein by agreement or outright purchase and sale of the rights acquired or the property. " On May 28, 1971, the assessee entered into an agreement with one Sharda Raje for purchase of land admeasuring approximately 1,20,120 sq.ft. at the rate of Rs. 2 per sq.ft. and paid earnest money of Rs. 48,000 to her. It was agreed that the assessee would pay a further sum of Rs. 1,00,000 to Raje by July 15, 1971, and the balance of sale price on completion of sale on or before August 31, 1971. The sale was to be completed on or before August 31,1971. The vendor agreed to sell the land either to the assessee itself or to its nominee or assignee. On May 31, 1971, viz., three days after Raje executed the agreement in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's income in S.Y. 2027. The Incometax Officer was of the view that Rs. 66,066 which the assessee had received in S.Y. 2027 and the four amounts totalling Rs. 66,066 received in S.Y. 2028, represented the assessee's income earned in S.Y. 2028. The Income-tax Officer, therefore, brought to tax the entire amount of Rs. 1,32,132 for the assessment year under reference. The assessee carried the matter in appeal before the Appellate Assistant Commissioner. One of the contentions which was raised before the Appellate Assistant Commissioner was that the amount of Rs. 66,066 having already been taxed in the assessment year 1972-73, could not again be subjected to tax in the assessment year under reference. In other words, according to the assessee, the said amount of Rs. 66,066 could not be doubly taxed. The Appellate Assistant Commissioner, however, took the view that whether or not the said amount of Rs. 66,066 was taxed in the earlier year, that is, 1972-73, was not relevant and that it was open to the assessee to take appropriate remedy in case the said amount was held to be includible in the assessee's total income for the assessment year under reference. The Appellate Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have to consider is whether the amount of Rs. 66,066 which the assessee received in S.Y. 2027 represented the assessee's income earned in that year, in other words, whether the said amount is includible in the assessee's total income for the year under reference. The Tribunal has hardly given any reason for holding that the said income was the assessee's business income taxable in the income-tax assessment for the assessment year 1972-73, which is relevant for S.Y. 2027 in which, as stated above, the said amount was received. The only reason given by the Tribunal is that " the said amount could not be said to be unrelated to the said business activity of the assessee firm ". The question was not whether the amount was related or unrelated to the business activity of the assessee ; the question was whether it was income of the assessee earned in S.Y. 2027. Even if the amount is not unrelated to the business of the assessee, it would not necessarily become the income of the assessee in S.Y. 2027. In our opinion, the reason which the Tribunal has given for including the said amount in the assessee's total income for the assessment year 1972-73, is no reason and even if is consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in S.Y. 2027 was to receive full consideration for sale of the land on completion of the sale as provided in the agreement with the society. The assessee had acquired the right to purchase land from Raje under the agreement with her and it, in turn, had agreed to sell the land to the society under the agreement with it. Unless and until the sale transaction was completed, the only right which the assessee had qua Raje was to obtain the sale deed from her either in its favour or in favour of its nominee or assignee on payment of full consideration and qua the society it had a right to receive full consideration on the execution of the sale deed either by itself or by Raje. What the assessee received from the society in S.Y. 2027 was earnest money and the amount towards the price. The money which the assessee received in S.Y. 2027 would become profit in its hands only on completion of the sale in favour of the society ; and till such time as the sale was completed, this amount remained only as an advance towards the price or consideration. It is true that the amounts which the assessee had received in S.Y. 2027 were not unrelated to the assessee's business which was to deal in land, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit which the assessee earned on completion of the sale transaction with the society. The Income-tax Officer and the Appellate Assistant Commissioner were, therefore right in including the amount of Rs. 66,066 in the assessee's total income for the assessment year under reference. The Tribunal, after correctly appreciating and stating the law on the subject, erred in holding that the said amount represented the assessee's income earned in S.Y. 2027. S. N. Soparkar, learned counsel appearing for the Revenue, reiterated the assurance which was given by the Income-tax Department before the Tribunal by stating that if the amount of Rs. 66,066 received by the assessee in S.Y. 2027 was held to be includible in the assessee's total income for the year under reference, the assessee's assessment for the assessment year 1972-73, would be suitably amended. In view of this statement made by Soparkar, the grievance which the assessee had made regarding double taxation before the Appellate Assistant Commissioner and the Tribunal does not survive. It may, however, be clarified that the assessee had not sought any reference on the view taken by the Tribunal to the effect that the inclusion o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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