1. THE two questions that arise for decision are :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 1 lakh received by the assessee as damages from New Central Jute Mills Ltd. for non-performance of the agreement is neither a revenue receipt nor a short-term capital gains ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in holding that a sum of Rs. 1 lakh received by the assessee as damages for non- performance of the agreement was a capital receipt not liable to capital gains tax ?"

It is the contention of the Revenue that the sum of Rs. 1 lakh which was received out of a contract by way of liquidated damages was in the nature of a business transaction and it was thus a revenue receipt. It was agreed in the agreement itself that if the transaction could not be completed because of any fault on the part of the vendor, a specified amount of liquidated damages to the tune of Rs. 1 lakh is to be paid to the intending purchaser.

2. IT may be recalled that on the failure on the part of the vendor to complete the agreement, because of the title not bei