9911796707
TMI Blog2009 (7) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount received as advance money towards sale price of land was not be considered as assessee's income till the sale was complete and title passed to the buyers under registered sale deeds, though possession of land had been given? 2. The assessee is engaged in the business of purchase and sale of land. An agreement to purchase land was entered into between Smt. Davinder Kaur, on the one hand, and S/Sh. Hardev Singh, Balbir Singh, Shingara Singh, Jiwan Singh and Ujagar Singh, on the other, in the year 1974. Subsequently, the prospective buyers constituted a partnership firm and entered into a second agreement in the year 1979 with the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en and the major part of the payment received and the balance was only to be received at the time of execution of the registration document. The clause 7 of the agreement also is general in nature and registration would be the responsibility of the partners and that by itself does not change the nature of the receipt. As regards the assessee's plea that the profit has been wrongly worked out is not acceptable as the ITO has taken the advances received and the corresponding advance to the land lady and the balance is the profit of the appellant. The Hypothetical example given by the counsel is of no use as he has not shown that the payment to Smt. Davinder Kaur is more than the advances realised in any one transaction. Lastly, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income for assessment year 1987-88 to 1992-93. The assessing officer has also passed assessment orders for these years. A statement placed at page 44 of the paper book makes it clear that the assessee has been duly assessed. It has been contended by the ld. counsel that Davinder Kaur at the instance of the assessee firm and in the terms of agreement to sell dated 26.4.1979, executed sale deeds in favour of different purchasers of plots. These deeds true registered in financial year 1986-87 to 1988-89. After registration of sale deeds, the assessee proceeded to disclose income and has been duly assessed. It has been argued that in view of the assessments made for the years 1987-88 to 1992-93, assessments under challenge in these thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt. The relevant observations are as under:- "In CIT Bombay etc. v. M/s. Podar Cement Private Limited etc., AIR 1997 SC 2523, the assessee purchased flats and let out the same and received rental income. During the assessment, the assessee took the plea that the said income was not income from house property as the assessee was not "legal owner" of the flats in as much as ownership was not transferred in the name of the assessee. The plea of the assessee was upheld by the Tribunal and the High Court. It was argued that the assessee being in beneficial enjoyment of the flats, was owner for purposes of income tax. It was held that even though, under the common law, "owner" means a person who has got a valid title legally conveyed after compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction goes through, the earnest money received will be given credit to, towards the consideration fixed in the agreement. Either way, once earnest money or deposit is received, it is not a refundable amount. This is a great factor to be reckoned in determining whether the receipt of earnest money is a trading or revenue receipt or a capital receipt. It should also be noticed that the company, in carrying on its business, has entered into the deal for the sale of plots. As part of the bargain, it has stipulated payment of earnest money or deposit for the due performance of the contract. Prima facie, the earnest money received has got immediate nexus with the "business" carried on by the assessee-company. It is a part of the bargain in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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