JUDGMENT : Bansi Lal Bhat, J. 1. This appeal has been preferred by the Revenue against order dated 30.05.2003 passed by the ITAT, Amritsar Bench in Appeal No. 500(ASR) of 1996 for the assessment year 1992-93 in terms whereof appeal filed by the Revenue against the order of CIT(A) Jammu dated 19.03.1996 was dismissed on the ground that the earnest money amounting to Rs. 20.00 lacs was forfeited by the respondent-assessee for failure of purchaser to fulfill contractual obligation to purchase 1.00 lac equity shares and such shares being held by respondent-assessee as an investment, forfeiture of earnest money could not be connected with trading activity of assessee and such amount did not fall in the category of revenue receipts as held by the Assessing Officer. The impugned order has been assailed on the ground that the amount of Rs. 20.00 lacs deposited as earnest money by M/s. Pioneer Distributors Pvt. Ltd. which had been forfeited by respondent-assessee for failure to fulfill the terms of the agreement relating to purchase of 1.00 lac equity shares had to be treated as income in the hands of respondent-assessee and not as capital reserve account in the balance sheet which the respondent-assessee claimed as receipt not liable to tax. 2. Heard. 3. It is not in controversy that the respondent-assessee Company was trading in securities. It had made a total sale of the value of Rs. 14,36,500/- during the relevant period and earned dividend income and interest income at Rs. 11,80,392/- and Rs. 2,86,521/- respectively. The Assessing Officer found that the respondent-assessee had entered into an agreement with M/s. Pioneer Distributors Pvt. Ltd. for sale of 1.00 lac equity shares of DCM Limited which M/s. Pioneer Distributors Pvt. Ltd. had agreed to purchase on spot delivery basis against full payment at a price of Rs. 270A per share. The transaction was to be completed on 29.06.1991. Earnest money of Rs. 20.00 lacs was deposited by M/s. Pioneer Distributors Pvt. Ltd. with the respondent-assessee on 04.06.1991. In terms of agreement, failure on the part of M/s. Pioneer Distributors Pvt. Ltd. to carry out the terms of agreement within the stipulated period would entail consequences of forfeiture of earnest money. Admittedly M/s. Pioneer Distributors Pvt. Ltd. failed to adhere to the contractual terms and the earnest money of Rs. 20.00 lacs stood forfeited. In terms of agreement, failure on the part of M/s. Pioneer Distributors Pvt. Ltd. to carry out the terms of agreement within the stipulated period would entail consequences of forfeiture of earnest money. Admittedly M/s. Pioneer Distributors Pvt. Ltd. failed to adhere to the contractual terms and the earnest money of Rs. 20.00 lacs stood forfeited. The respondent-assessee reflected the same to the capital reserve account in the balance sheet claiming the same as receipt not liable to pay tax. On being asked by the Assessing Officer to explain as to why the forfeited amount be not treated as Revenue receipt in the hands of respondent-assessee and taxed accordingly, the respondent-assessee maintained that the shares of DCM Limited were held as investment as such sale of 1.00 lac shares of DCM Limited to M/s. Pioneer Distributors Pvt. Ltd. was on capital account and, therefore, the forfeited deposit of Rs. 20.00 lacs was capital receipt not chargeable to tax. However, the assessing Officer made an addition of Rs. 20.00 lacs treating the forfeited earnest money of Rs. 20.00 lacs as Revenue Receipt in the hands of respondent-assessee. The respondent-assessee assailed the order of assessment dated 23.03.1995 in appeal before CIT (Appeals) who deleted the addition holding that the transaction in question was of a capital nature. It was further held that the respondent-assessee's intention behind purchase of shares of DCM Limited was for controlling the Company and not for trading and as such, such shares could not be treated as stock in trade for purposes of trading. Revenue filed appeal before ITAT, Amritsar assailing the order of deletion of addition passed by CIT(A). The appeal was dismissed in terms of the impugned order assailed in the instant appeal. 4. The issue raised for consideration is whether the amount of forfeited earnest money is a Revenue receipt liable to be charged to tax. According to Assessing Officer, once earnest money is received, it is not a refundable amount. The earnest money is of revenue in nature as the other party can claim loss of earnest money. The loss of security deposit has to be considered in relation to the business of the assessee as the deposit is made for purpose of earning profits and if such deposit in forfeited, it is a business loss. The earnest money is of revenue in nature as the other party can claim loss of earnest money. The loss of security deposit has to be considered in relation to the business of the assessee as the deposit is made for purpose of earning profits and if such deposit in forfeited, it is a business loss. CIT (Appeals), relying upon the view taken by him in Appeal in "Lotus Finance and Investments Private Limited" held that the forfeited earnest money of Rs. 20.00 lacs could not be treated as a trading receipt and the same being a capital was not taxable. The order passed by CIT(A) was assailed in appeal before ITAT which, while placing reliance upon the judgment of Hon'ble Apex Court in Travancore Rubber and Tea Company Limited v. CIT reported in (2000) 243 ITR 158 held that the forfeited earnest money has to be treated as capital receipt and not as revenue receipt as such earnest money was not connected with the trading activity of the respondent-assessee. 5. In "CIT v. Meera Goel" reported in (2014) 360 ITR 346 (Delhi), a Division Bench of Delhi High Court, while dealing with the issue of forfeiture of earnest money observed that the Commissioner of Income Tax Appeals had recorded a finding that no incriminating material having any adverse implication in relation to the genuineness of the transaction was found, thus concluded that the addition was made on the basis of presumption. It was also found that the earnest money was received through banking channels and genuineness of the receipt was not in dispute. It was held that no addition could be made on the basis of surmises and conjectures. 6. The Hon'ble Apex Court, while deliberating upon the considerations determining the nature of "receipts" in Commissioner of Income Tax, West Bengal-II v. Shri Kamal Bihari Lal Singha reported in AIR 1971 SC 2375 held as under; "It is now well settled that in order to find out whether a receipt is a capital receipt or a Revenue receipt one has to see what it is in the hands of the receiver and not its nature in the hands of the payer. In other words, the nature of receipt is determined entirely by its character in the hands of the receiver and the source from which the payment is made has no bearing on the question. In other words, the nature of receipt is determined entirely by its character in the hands of the receiver and the source from which the payment is made has no bearing on the question. Where an amount is paid which, so far as the payer is concerned, is paid wholly or partly out of the capital and the receiver receives it as income on his part, the entire receipt is taxable in the hands of the receiver. Therefore the fact that the amount sought to be taxed in these appeals was capital gains in the hands of the company is not a relevant circumstance. What we have to see is what it was in the hands of the assesses. The question whether a particular receipt is a capital receipt or a revenue receipt is a somewhat difficult question to decide though the principles bearing on the question are well settled. The application of those principles to a given set of facts often creates difficulties. The decision by and large depends upon the facts of each case." Dwelling upon the distinction between a capital receipt and a revenue receipt, Hon'ble Apex Court referred to the observations of Finlay Justice in Trustees of the Will of H.K. Brodie (deceased) v. Commissioner of Inland Revenue 17 TC 432; "But, I think, the governing consideration is this: the question being, was the sum received as income, one has to consider what was the source from which it was received and what were the circumstances in which it was received. If the capital belonged to a person receiving the sums-if he or she was beneficially entitled not only to the income but to the capital then I should think that, when the payments were made, they ought to be regarded and would be regarded, as payments out of capital, but where there is a right to the income, but the capital belongs to somebody else, then, if payments out of capital are made and made in such a form that they come into the hands of the beneficiaries as income, it seems to me that they are income and not the less income, not of the person receiving them, but in the hands of somebody else-capital." In the Travancore Rubber and Tea Company Limited v. CIT, Trivandrum reported in AIR 2000 SC 1980 , the Hon'ble Apex Court, while dealing with the nature of receipt in the form of earnest money deposit subjected to forfeiture for failure of purchaser in guarantying due performance of contract held that the phrase 'other money' incorporated in Section 51 of the Income Tax Act, 1961 would cover deposits made by the purchaser for guarantying due performance of the contracts and not forming part of the consideration. The monies received on the previous occasions and retained by the vendor/assesses cannot, therefore, be treated as a Revenue receipt. The forfeiture clause is in the nature of a provision for compensation for breach of contract within the meaning of Section 74 of the Contract Act. The compensation is to be treated for income tax purposes in the same manner as the amount due under the contract would have been treated if the contractual obligations had been carried out and the money due was received by the assessee. Had the agreed balance amount under the agreement been received by the respondent-assessee, same would have been credited in its account as a capital receipt. Thus viewed, the forfeited amount of earnest money must also be treated as a capital receipt. A capital receipt in the hands of the payee may necessarily not be capital expenditure qua the payer. Payment may be a revenue payment from the point of view of the payer and a capital payment from the point of view of the receiver and vice versa. A capital receipt in the hands of the payee may necessarily not be capital expenditure qua the payer. Payment may be a revenue payment from the point of view of the payer and a capital payment from the point of view of the receiver and vice versa. Deposit of earnest money was in the nature of capital receipt in the hands of assessee and not a sum received as income. Thus, forfeiture of earnest money did not amount to a profit in trading activity. The amount deposited as earnest money with the respondent-assessee being in the nature of a capital receipt and its subsequent forfeiture for breach of contractual obligations on the part of M/s. Pioneer Distributors Pvt. Ltd. does not change the nature of receipt. The finding of fact recorded by CIT (Appeals) in this regard has been confirmed by ITAT which has applied the correct test laid down by law. We find no scope for interference with the concurrent findings of CIT (Appeals) and ITAT. The appeal is accordingly dismissed.