THE TRAVENCORE RUBBER & TEA CO.LTD. vs C.I.T., TRIVANDRUM

The Supreme Court addressed the taxation of amounts forfeited by a plantation company from abortive sale transactions of rubber trees, determining that the earnest money of Rs. 75,000 is assessable as revenue income under Section 2(24) of the Income Tax Act, while the advance of Rs. 3,56,300 is not. The Court upheld the Income Tax Appellate Tribunal's decision that the forfeiture of earnest money constitutes revenue receipt, clarifying the distinction between earnest money and advance payments. The appeal by the Revenue was allowed, affirming the Tribunal's findings on the nature of the receipts.