Law:

Section:

Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessment year 1973-74 - Previous year of assessee-firm, a dealer in land, for assessment year 1973-74 commenced on 20-10-1971 and ended on 6-11-1972 - Assessee entered into an agreement on 31-5-1971 with a housing society to sell certain land and received a sum of Rs. 66,066 from society up to 19-10-1971 which was taxed in assessment year 1972-73 - Transaction of sale of land was, however, completed during assessment year 1973-74 - Whether amount of Rs. 66,066, which was received by assessee in previous year relevant to assessment year 1972-73, was advance towards price of land and that would not become or represent assessee's profit unless and until sale transaction in favour of society was completed which was stated to be completed in previous year relevant to assessment year 1973-74 and thus entire profit or income which included aforesaid advance was assessable in assessment year 1973-74 - Held, on facts, yes Facts The previous year of the assessee-firm, which was carrying on the business of sale and purchase of land or buildings, commenced on 20-10-1971 and ended on 6-11-1972 corresponding to the assessment year 1973-74. On 28-5-1971, the assessee entered into an agreement with one R 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 further sum of Rs. 1 lakh to R by 15-7-1971 and the balance of the sale price on the completion of sale on or before 31-8-1971. On 31-5-1971, the assessee entered into an agreement with a housing society to sell the aforesaid land to the society at the rate of Rs. 3.10 per sq. ft., up to 19-10-1971, the assessee had received a sum of Rs. 66,066 from the society and it was agreed that the society would pay to the assessee a sum of Rs. 1 lakh on or before 15-7-1971 and the balance of the sale price was agreed to be paid on or before 31-8-1971 on the completion of the sale. The aforesaid receipt of Rs. 66,066, was assessed in the assessment year 1972-73. The sale deeds in favour of society were registered on 4-11-1971. The ITO, while…

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