9911796707
TMI Blog1996 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... from property or other sources. Although it appears that in I. T. R. No. 86 of 1982, there are four questions and in I. T. R. Nos. 63 and 64 of 1992, there are five questions, relating them together it would be seen that we have to answer the following five questions : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the sums made over to the applicant cannot be recorded as rents ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that sums are assessable as the income of the applicant ? 3. Whether, on the facts and in the circumstances of the case, the sums paid by the vendor are a commercial equivalent to the interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered to purchase the said property, known in common parlance as " Girija Gardens ". The terms and conditions, so far as they are relevant for the purpose of these proceedings, show that Rs. 25,00,000 out of the agreed consideration of Rs. 30,00,000 is received under the agreement by the vendor. An amount of Rs. 5 lakhs by virtue of clause 4 of the agreement is understood and agreed to be paid on the date of the execution of the sale deed. Conditions Nos. 6 and 7 specified the agreed conduct of the parties during the currency of the agreement. It would be necessary to reproduce the said conditions hereinafter : " 6. During the currency of this agreement, the first party agrees that the entire rents collected from out of the buildings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first party to the agreement, obviously as an owner of the property in question are also agreed to be paid to the second party as a condition of this agreement. The question before us is as to whether the said payment totalling Rs. 1,02,000 received by the assessee (second party to the agreement) could be understood as having any character as " income from house property " or would have to be understood as " income from other sources ". Once the terms and conditions of the agreement, as seen above, are understood and once the situation that the second party, the present assessee, does not become an owner of the property in question as no sale deed is executed, till then the payment would clearly be payments under clauses 6 and 7 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Rs. 25,00,000 may not be a loan it would be a debt owed by the latter to the former. In other words, the Tribunal considered this as a situation of a loan and a debt. The Tribunal considered the question with regard to the contention of the assessee that what is received by the assessee would have to be understood as rent. It was argued before the Tribunal that the reading of the agreement would show that the payment is described as rent and normally would come under the head " Income from house property ". In the process of reasoning, the Tribunal has observed that the agreement for sale does not create any title of ownership in favour of the prospective buyer and therefore such an agreement is only a legal right to demand conveyan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the parties agreed during the period of execution of the agreement in question. If this is the situation the sum in question with regard to the assessment year would have to be understood as " income from other sources ". The position is again crystal clear that the agreement in question does not confer any title of ownership on the second party---the present assessee before us, and, therefore, as a consequence any income received under the terms and conditions of the agreement cannot be understood as income from house property but only as income under the agreement in question. As we have stated, the factual matrix really presents no difficulty, on a fair and even charitable reading of clauses 6 and 7 of the agreement. Learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted and acted upon. The controversy before us is as to whether the payment could be income from house property or income from other sources. It cannot be understood as income from house property because the assessee is not the owner of the house property which is still the subject-matter of the agreement. In our judgment, the Income-tax Officer as well as the Tribunal determined the income under the head " Income from other sources ". For all these reasons, we answer the questions in the following manner : Question No. 1 is answered in the affirmative, in favour of the Revenue and against the assessee; Question No. 2 is also answered in the affirmative, in favour of the Revenue and against the assessee; Question No. 3 : is unnecessa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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