COMMISSIONER OF INCOME TAX Vs. VISHNUDAYAL DWARKADAS

JUDGEMENT

(1.) AT the instance of the Revenue, the following two questions are referred to us for our determination :

(2.) ASSESSEE , Vishnudayal Dwarkadas, an HUF, was partner in the firm carrying on business and on dissolution of the said firm, the assessee received certain movable and immovable properties, being agricultural properties. On January 25, 1959, the assessee executed a sale deed for sale of certain agricultural properties to one Rajendrakumar for the price of Rs. 2,28,442. Under the sale deed, the assessee received the full prices he also received interest at the rate of 6 3/4per cent from May 1, 1958, on the sale price till the date of payment. Certain movables were sold under the agreement and for the said movables a sum of Rs. 53,105.66 was received. It is further provided in the sale deed that right from May 1, 1958, the assessee, who was the vendor, had given possession to the vendee and thereafter, as the agent of the vendee, he carried on agricultural operations on behalf of the vendee until the date of the execution of the sale deed and khas or actual possession of the land was given to the vendee on the execution of the sale deed. Thus, between May 1, 1958, and January 25, 1959, being the date of execution of the sale deed, as the agent of the vendee the assessee had incurred expenses amounting to Rs. 53,870,08, and received income of Rs. 26,309.09 in respect of agricultural operations. The difference in the amount of Rs. 27,561, in respect of these agricultural operations, was also paid to the assessee by the vendee. By way of interest, an aggregate amount of Rs. 15,083 was received by the assessee from the purchaser Rajendrakumar.

(3.) IN an appeal, by the assessee, before the AAC, it was contended that the amount of interest of Rs. 15,083 was part of the sale consideration and since the property sold was an agricultural piece of property the price thereof could not be subjected to income tax. That contention was rejected by the AAC. He held that the consideration amount for sale of land was to be paid on May 1, 1958, but as the purchaser was not able to pay consideration immediately, the execution of the sale deed was postponed to such time when the purchaser would be able to pay the same. Accordingly, the assessee became entitled to interest by reason of deferment of payment of price and this interest could not be considered as part of the purchase consideration. It was further contended on behalf of the assessee, before the AAC, that the interest was received on the following dates :