- (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.)THE assessee preferred a second appeal. Before the Appellate Tribunal the assessee explained the transactions between her and the purchasers. Before the Appellate Tribunal it was pleaded that actually the sum of Rs. 50,000 was credited to the account of the purchasers and the receipt, annex 4-A, was produced for the purpose. It was further explained that the earlier contract had been modified by another agreement dated November 15, 1967 (annex. 1-A ). In accordance with the subsequent agreement the consideration for the land was raised from Rs. 1,39,500 to Rs. 2,40,000. There were certain other conditions also. The Appellate Tribunal allowed the assessee to produce the modified agreement dated November 15, 1967. The Tribunal thereafter set aside the orders of the AAC and the ITO and directed that fresh assessment should be made for the assessment years in question in the light of the new agreement dated November 15, 1967, which was later adjusted between the parties by an arbitration award dated April 20, 1978.