Revenue receipts from plot sales can arise before registered conveyance where possession and effective dominion have passed.

Amounts received by a coloniser as advances or earnest money under agreements to sell plots were treated as revenue receipts when they arose in the course of business and possession had already been transferred. The absence of a registered sale deed did not preserve their character as refundable deposits, because income-tax treatment depends on the commercial substance of the transaction rather than technical conveyancing formalities. Once the transferees acted on the arrangements and effective dominion over the plots had passed, the receipts became taxable business income. The doctrine of part performance under Section 53A of the Transfer of Property Act did not change that character.

---

---

Issues: Whether advances or earnest money received by a coloniser under agreements to sell plots, where no registered sale deed had yet been executed and possession had been transferred, constituted revenue receipts or retained the character of non-taxable deposits.

Analysis: The amounts were received in the course of the assessee's colonisation business against proposed sale of plots. The earlier view that the land continued as stock-in-trade until execution of a registered sale deed was rejected in light of the principle that for income-tax purposes ownership and receipt character are not controlled exclusively by the technical requirements of conveyancing law. Once possession had been transferred and the transferees had acted upon the arrangements, the assessee's dominion over the plots stood effectively passed, and the sums received could not be treated as mere refundable deposits. The principle of part performance under Section 53A of the Transfer of Property Act did not alter this conclusion.

Conclusion: The advances and earnest money were revenue receipts chargeable in the hands of the assessee, not capital deposits.

Final Conclusion: The reference was answered by holding that receipts obtained in the course of plot sales before execution of registered sale deeds were taxable as revenue income.

Ratio Decidendi: For income-tax purposes, amounts received in the course of business against transfer of possession and effective dominion over property may constitute revenue receipts even if legal title has not yet passed by registered conveyance.

---