THANIKKACHALAM, J.

At the instance of the Department, the Tribunal referred the following two questions for the opinion of this court under section 256(1)) of the Income-tax Act, 1961 :

"1. Whether, on the facts and in the circumstances of the case, the Appellant Tribunal was right in holding that the sum of Rs. 20, 000 being the deposits made by an intending buyer, forfeited and appropriated by the assessee, did not constitute business income of the assessee and as such was not liable to be taxed ?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sum of Rs. 20, 000 could not at all be considered as income to bring it within the term 'causal receipt' falling under section 10(3) of the Income-tax Act ?" *

The assessee is a private limited company. The assessment for 1974-75, was completed by the Income-tax Officer determining the total income at Rs. 44, 450. The company had earlier entered into an agreement with one Sri K. Periasamy to sell its land and superstructure situate at Trichy for a sum of Rs. 4, 20, 000. The purchaser was to pay the vendor a sum of Rs. 60, 000 as earnest money towards the sale pric