Business income from property sale turns on genuineness of transaction and accrual of income, requiring fresh factual examination.

Where immovable property was treated as stock-in-trade, the controversy concerned business income rather than capital gains, but accrual of income still depended on whether a genuine sale had occurred under the surrounding facts. The agreement, alleged cancellation, possession, conduct of the parties, related-party connection, accounting entries, and factual discrepancies were all relevant to test whether the transaction was real or whether cancellation was an afterthought. As the available material was insufficient to resolve those issues conclusively, the existing findings were set aside and the matter was remanded for fresh adjudication on a de novo factual examination.

---

---

Issues: Whether the addition of Rs. 1.70 crores arising from the agreed sale of immovable property could be sustained on the existing record, or whether the matter required fresh examination by the Assessing Officer.

Analysis: The property was treated as stock-in-trade, so the controversy was not one of capital gains but of business income. Even so, the question whether any real sale had taken place, and whether income had accrued, depended on the true nature of the transaction under the general law, including the effect of the agreement, alleged cancellation, possession, the conduct of the parties, the connection between the parties, the accounting treatment in the books, and the surrounding factual discrepancies. The available material was found insufficient to conclusively determine whether the transaction was genuine or whether the cancellation was an afterthought.

Conclusion: The existing findings of the income-tax authorities were set aside and the matter was remanded to the Assessing Officer for fresh adjudication in accordance with law.

Final Conclusion: The dispute was not finally decided on merits and was sent back for a de novo examination of the factual matrix before any tax liability could be affirmed.

---