S P KOCHHAR Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE two petitions can be conveniently taken up together. The facts giving rise to these writ petitions are as under: The petitioner, S. P. Kochhar, an individual, is proprietor of a business carried on in the name and style of Dehra Dun Land and Housing Corporation. The business is that of coloniser and a dealer in real estate. On May 19, 1967, the petitioner had entered into an agreement with Amitabh Textile Mills Ltd., Dehra Dun (hereinafter referred to as " the company"). This company was the absolute owner of a bungalow and land surrounding, bearing No. 52, Rajpur Road, Dehradun, having a total area of 8 bighas 17 biswas and 10 biswansis (71,876 sq. ft.). The company agreed to sell and the petitioner agreed to purchase this property for a sum of Rs. 1,40,000. The petitioner paid a sum of Rs. 10,000 as earnest money and promised to pay the balance before or at the time of the execution of the sale deed. The petitioner could buy the property in his own name or in the name of his nominee or nominees partly in his name and partly in the names of his nominees and in one lot or in pieces and at one time or at different times. The possession of the bungalow except for the portion occupied by the Kapoor was delivered to the petitioner who was entitled to make additions or alterations therein without diminishing the value of the property. It was further agreed that the petitioner could prepare layout plan for the development of the said property and get the necessary sanction therefor. The transaction was agreed to be completed within two years, that is by May 18, 1969, provided Sri Kapoor vacated the portion occupied by then, and in case he did not do so the price would stand reduced by Rs. 5,000. It was further provided in the agreement that during the said period of two years if the petitioner wanted that any portion of the said property may be conveyed to any other person, the company would sell the same to the said person as the petitioner's nominee and the price was to be paid at the rate of Rs. 15,000 per bigha. The price of the entire constructed portion along with 1 bigha 17 biswas 12 biswansis of appurtenant land was to be at Rs. 50,000 and if portions thereof were sold to the petitioner's nominee, sales were to be made for a proportionate price.

(2.) PARTIES proceeded to act upon this agreement and a sale deed was executed in favour of the petitioner by the company on June 26, 1969, The preamble of the sale deed proceeded to state that after the completion of the agreement to sell, the petitioner started repair and improvement of the property by levelling uneven ground, laying the main sewage line, constructing roads, etc. During this period the company effected the following sales : <FRM>JUDGEMENT_255_ITR145_1984Html1.htm</FRM>

(3.) THE petitioner appealed to the AAC. THE AAC deleted these latter two additions. In his opinion there could have been no profit in respect of the sale made by the petitioner in favour of his wife and as regards the sale made in favour of Smt. Bawa, he held it to be a distress sale. Coming to the addition of Rs. 85,625 he was of the opinion that this transaction had been entered into by the petitioner with a view to acquire a residence for himself and there was no element of profit involved therein. In the result, all these additions were deleted. Aggrieved, the Revenue filed an appeal before the Appellate Tribunal.