C.I.T.PATIALA vs. M/S S.I.BRICKS & BUILDERS PVT.LTD.LUD.
What did the High Court hold?
The High Court answered the referred question of law in favour of the Revenue and against the assessee. The Court's reasoning, based on its earlier judgment concerning M/S Dhir & Co. Colonisers (P) Ltd., which relied on the Supreme Court's decision in CIT Vs. M/S Podar Cement Private Limited etc., stated that once possession of plots was transferred and transferees even made constructions, the dominion over the property passed to the transferees. Consequently, the amounts received by the assessee could not be treated as mere deposits, and the property transferred could not be considered stock-in-trade. Therefore, the amounts received had to be treated as revenue receipts in the assessee's hands. The operative direction is to answer the question in favour of the Revenue.
What were the facts?
The assessee, M/S S.I.Bricks & Builders Pvt. Ltd., is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 1980-81. The Assessing Officer had made an addition on account of amounts received by the assessee as earnest money from agreements to sell plots, where sale deeds had not yet been executed. The Commissioner of Income Tax (Appeals) set aside this addition, and the ITAT upheld the CIT(A)'s decision, relying on its own prior ruling in M/S Dhir & Co. Colonisers (P) Ltd. The Revenue has referred a question of law to the High Court.
What were the issues?
1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal erred in law in holding that the amount received by the assessee by way of advances or earnest money as a result of agreements to sell plots did not constitute revenue receipts in its hands as no sale deed had yet been executed? (Question of law) Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The Revenue relies on this Court's earlier judgment in ITR No.102 to 104 of 1990- The Commissioner of Income Tax, Patiala Vs. M/S Dhir & Co.Colonisers (P) Limited, Ludhiana, decided on 29.9.2006. This judgment, in turn, referred to the Supreme Court's decision in CIT Bombay etc. Vs. M/S Podar Cement Private Limited etc. and the Kerala High Court's decision in CIT Vs. Travancore Rubber & Tea Co.Limited. The Revenue argues that once possession of plots was transferred and construction was made by transferees, dominion passed to them, and amounts received should be revenue receipts.
Which sections of the Income-tax Act were involved?
Not explicitly mentioned in the provided text, but the context implies discussions related to revenue recognition and capital vs. revenue receipts.
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh arising out of its order dated 18.7.1990 passed in I.T.A.No.331 of 1986, in respect of the assessment year 1980-81. “i) Whether on the facts and in the circumstance of the case, the Appellate Tribunal erred in law in holding that the amount received by the assessee by way of advances or earnest money as a result of agreements to sell plots did not constitute revenue receipts in its hands as no sale deed had yet been executed?
-2- *** The Assessing Officer in the course of assessment made addition on account of amount received by the assessee as earnest money as a result of agreements to sell plots, which were not followed by execution of any sale deed. This addition was set aside by the C.I.T.(A), which was upheld by the Tribunal following its earlier judgment in M/S Dhir & Co.Colonisers (P) Ltd. by holding that facts were facts were identical. Counsel for the Revenue points out that reference arising out of the order of the Tribunal in M/S Dhir and Co. Colonisers has been decided by this Court on 29.9.2006 being ITR No.102 to 104 of 1990- The Commissioner of Income Tax, Patiala Vs. M/S Dhir & Co.Colonisers (P) Limited, Ludhiana
and after referring to the judgment of Hon'ble Supreme Court in CIT Bombay etc. Vs. M/S Podar Cement Private Limited etc.,
A IR 1997 SC 2523 and judgment of the Hon'ble Kerala High Court in CIT Vs. Travancore Rubber & Tea Co.Limited (1991) 190 ITR 508, this Court observed:- “In the present case, the Tribunal held that unless the title of the assessee was extinguished, land was to be treated to continue as stock in trade of the assessee and the amounts received on account of sale of plots were not trading receipts. In view of law laid down by the Hon'ble Supreme court, this view cannot be approved. Once the possession of plots was transferred and -3- *** transferees even made constructions, the dominion over the property passed on to the transferees and the amounts received by the assessee could not be held to be mere deposits and property transferred could not be held to be stock in trade of the assessee. The amount received by the assessee had, thus, to be revenue receipt in its hands.” None appears for the assessee. In view of the earlier judgment of this Court, the question referred is answered in favour of the Revenue and against the assessee. (Adarsh Kumar Goel) Judge November 1 ,2006 (Rajesh Bindal) Pka Judge
Recent GST High Court judgments
Search GST case law →- Sh Umang Uniyal vs. Commissioner Department Of Central Goods And Services TaxUttarakhand · 16 Oct 2026
- Paresh Textiles Prop Paresh Gudhka vs. Superintendent Range Iv Div VBombay · 15 Oct 2026
- M/S Palladium Constructions PVT LTD. vs. Principal Commissioner Of Central TaxKarnataka · 15 Oct 2026
- M/S. Vk Construction vs. The Deputy State Tax Officer - IiMadras · 15 Oct 2026
- Tvl. Sri Bhuvaneshwari And Co vs. The Deputy Commissioner (St)Madras · 15 Oct 2026
