COMMISSIONER OF INCOME TAX Vs. FAIR DEAL TRADERS

JUDGEMENT

(1.) FOLLOWING question of law has been referred for opinion of this Court under Section 256(1) of the Income Tax Act, 1961 by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 20.5.1993 in I.T.A. Nos. 150 to 152/Chandi/91 for the assessment years 1980 -81 to 1982 -83:

(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 same vendee. The sale deed could not be finalised because of restrictions under the Urban Land (Ceiling and Regulations) Act, 1976. The assessee firm entered into further transactions with the prospective buyers. The Assessing Officer sought to treat the said money as revenue receipt of the assessee. The assessee disputed the liability by submitting that the receipt was advance, since sale had not actually taken place and title had not been passed on to the purchasers. It was, however, not disputed that later on, sale deeds were executed. The Assessing Officer rejected the plea of the assessee and assessed the income to tax. The same view was taken by the Appellate Authority. It was observed as under:

(3.) WE have heard learned Counsel for the parties and perused the record.