JUDGMENT

Ruma Pal, J.-The assessment year in question is 1977-78. The issue is whether the amounts received by the assessee/appellant in respect of an abortive sale transaction of rubber trees are capital or revenue receipts?

2. The assessee is a plantation company engaged in the business of growing rubber and tea. In 1975, it entered into three agreements with three purchasers for sale of old rubber trees. Each of the purchasers paid a certain amount by way of earnest money and another amount by way of advance under their respective agreements. The total amount of earnest money received by the assessee under the three agreements was Rs. 75,000/- and the total amount by way of advance was Rs. 3,56,300/-. All the three purchasers defaulted in payment of the balance amounts. The agreements were accordingly terminated and the amounts of earnest money and advance were forfeited by the assessee. The assessee filed three suits before in Subordinate Judge, Kottayam in this connection. The assessee s right to retain the amounts of earnest money and advance was cofirmed by the Court. In 1979, the assessee was eventually successful in selling the old rubber trees to a third party but at a loss