(1.)THE Income -tax Appellate Tribunal ('Tribunal' for short), has referred to us for our opinion the following questions under section 256(1) of the Income -tax Act, 1961 :
' (1) Whether, on the facts and in the circumstances of the case, the amount of Rs. 66,066 received by the assessee -firm during the S. Y. 2027 (previous year relevant to assessment year 1972 -73) is includible in the assessment for the assessment year 1973 -74 ? (2) Whether, on the facts and in the circumstances of the case, the conclusion of the Income -tax Appellate Tribunal that the receipt of Rs. 66,066 became taxable as business income of the assessee -firm for the assessment year 1972 -73 and that the said amount was not again includible in the assessee's total income for the assessment year 1973 -74, in question is correct in law and sustainable from the material on record ?'
(2.)THE assessment year under reference is 1973 -74, the previous year being S. Y. 2028 which commenced on October 20, 1971, and ended on November 6, 1972. The assessee is a registered partnership firm consisting of 10 partners. It is a dealer in land and it was constituted under a deed of partnership dated May 25, 1971. Clause 5 of the partnership deed enumerates the businesses for which the partnership was formed. One of such businesses stated in sub -clause (a) thereof is 'purchase of land or building or rights therein by agreement or outright purchase and sale of the rights acquired or the property. ' On May 28, 1971, the assessee entered into an agreement with one Sharda Raje for purchase of land admeasuring approximately 1,20,120 sq. ft. at the rate of Rs. 2 per sq. ft. and paid earnest money of Rs. 48,000 to her. It was agreed that the assessee would pay a further sum of Rs. 1,00,000 to Raje by July 15, 1971. and the balance of sale price on completion of sale on or before August 31, 1971. The sale was to be completed on or before August 31, 1971. The vendor agreed to sell the land either to the assessee itself or to its nominee or assignee. On May 31, 1971, viz., three days after Raje executed the agreement in favour of the assessee as aforesaid, the assessee entered into an agreement with Shri Krushnakunj Co -operative Housing Society Limited (proposed) ('society' for short), to sell the said land to the society at the rate of Rs. 3.10 per sq. ft. Under this agreement. the society paid to the assessee earnest money of Rs. 20,000 on the date of the agreement, viz., May 31, 1971. The society further agreed to pay to the assessee Rs. 1,00,000, on or before July 15, 1971, and the balance of the sale price on or before August 31, 1971, on completion of the sale. Under this agreement also, the sale was to be completed on or before August 31, 1971. It would, therefore, appear that the terms regarding payment of consideration and completion of sale were identical in both the aforesaid agreements.
Raje executed in favour of the society 8 deeds of sale on 25th, 26th, 27th, 28th and 30th October and 1st, 2nd and 3rd November, 1971. The assessee was a party to these sale deeds as confirming party. The sale deeds were registered on November 4, 1971.
(3.)THE assessee, in addition to the earnest money of Rs. 20,000 received from the society on May 31, 1971, the date of the agreement as aforesaid, received from the society four further amounts on 14th, 15th, 16th and 19th October, 1971, totaling to Rs. 46,066. Thus the assessee in all received Rs. 66,066 before the end of S. Y. 2027, which is the previous year relevant to the assessment year 1972 -73. This receipt of Rs. 66,066 was disclosed as its income by the assessee in its return for the assessment year 1972 -73. The assessment for the assessment year 1972 -73. was completed by the Income -tax Officer on September 25, 1973, assessing the assessee's total income at Rs. 61,366 after allowing,, deduction of business expenses incurred during S. Y. 2027.