COMMISSIONER OF INCOME TAX Vs. SATYA SETIA KUM

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act at the instance of the Revenue.

(2.) THE assessee had purchased a plot of land at Than a (Maharashtra) in 1955 for a sum of Rs. 6,000, on November 10, 1961. She entered into an agreement for its sale with M/s. Bharat Stores Ltd. Agra, for a sum of Rs. 1,39,500. THE sale was to be completed by 3'lst December, 1962. On default it was agreed that the assessee was entitled to charge interest at 6% per annum for a period of two years and thereafter she was at liberty to rescind the agreement and forfeit the earnest money which was fixed at Rs. 40,000. THE purchasers neither paid the earnest money nor ' the purchase price within the stipulated period. However, on October 8, 1965, they assigned certain decrees passed in their favour by the Allahabad High Court to the assessee. THE purchasers under the said decrees were entitled to recover a sum of Rs. 89,000 with future interest and this right was assigned to the assessee for a consideration of Rs. 60,000. Rs. 15,000 were paid in cash by the purchasers and the balance of Rs. 45,000 was described as earnest money in respect of the sale agreement dated November 10, 1961, THE assessee, being the assignee of the decrees, recovered a sum of Rs. 87,071 on May 13, 1967, out of which she transferred a sum Rs. 50,000 to the credit of the purchasers (M/s. Bharat Stores Ltd., Agra). For the assessment year 1968-69, the ITO held that this amount of Rs. 50,000 was assessable as the income of the assessee. On appeal, the AAC not only confirmed the order of the ITO but he added further a sum of Rs. 31,000 also. On the same ground a sum of Rs. 49,820 received by the assessee in execution of the decrees was taxed as income from other sources for the assessment year 1973-74.

(3.) IT was admitted before us that question No. 1 was consequential to question No. 2 inasmuch as if question No. 2 was decided against the Revenue then the direction of remand by the Appellate Tribunal for deciding the nature of the receipt would be justified.