Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred to this court: "Whether, on the facts and in the circumstances of the case, and on a proper interpretation of the terms of agreement dated the 15th October, 1959 and 2nd June, 1971, the Tribunal was right in holding that the sum of Rs. 1,00,000 received by the assessee arose not out of the normal business as a broker but out of the distribution of capital assets of the firm or other association of persons within the meaning of Section 47(ii) of the Income-tax Act, 1961?"
(2.) The assessment year involved in this case is 1972-73. In that assessment the ITO noted that the assessee's system of accounting was mercantile. The assessee is an individual and he derived his income from the business as a broker of land and building. The assessee had shown a sum of Rs. 1,00,000 in Part II of the return and had claimed that it was a capital receipt not liable to income-tax. The assessee contended that there was an agreement dated the 15th October, 1959, to which we shall refer later, between the assessee and three others, viz., Sri Banwarilal Pasari, Sri Purushottamdas Pasari and Sri Sankarlal Pasari in respect of the purchase and sale for profit of permises No. 12-A and 12-B, Russel Street, Calcutta. It would be relevant in view of the contentions that have been raised before us to refer to some of the clauses of the agreement. The agreement, after setting out the names of the parties, inter alia, provided as follows: "That the first, second; third, and fourth parties will purchase the properties known as 12-A and 12-B, Russel Street, Calcutta, at or for a sum of Rs. 8,00,000."
(3.) It may be mentioned that Dhanraj Dugar who is named as the party of the fourth part is the assessee before us. Other relevant clauses of the agreement are as follows: "That money required for the purchase of the properties, registration and other expenses and for the developments, etc., will be provided by the parties as and when required interest whereon will be allowed at the rate of 6 per cent. per annum. Provided, however, that the fourth party shall not be required to make any contribution for the money as aforesaid. That this agreement is not to be regarded as a partnership agreement; the parties merely agreeing to do jointly in the manner laid down herein one particular transaction, i. e., to purchase the properties known as 12-A and 12-B, Russel Street, Calcutta, and to resell the same in one or several lots observing the terms and conditions mentioned herein. That if the parties hereto cannot agree upon the question of development, letting out, resale or the management of the properties, such of them will be, entitled to get the properties partitioned in equal one-fourth share and that in case such partition takes place, each of the parties will pay for his share of the total money expended if not already paid.";