9911796707
TMI Blog1986 (7) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... been invested in National Rural Development Bonds and Rs. 2,51,525 exemption under section 54B of the Income-tax Act, 1961 ('the Act') for acquiring another agricultural land. The ITO disallowed the claim in respect of development charges and the investment in another agricultural lands. 3. The Commissioner (Appeals) has confirmed the disallowance and that is why the assessee is in appeal. 4. The assessee sold the land at a price of Rs. 46 per sq.yd. and the aforesaid sum of Rs. 1,05,780 claimed as development charges was actually paid to one Durga Land Development Corpn. ('Durga') with which the assessee had entered into an agreement to the effect that if Durga procured a buyer for a price higher than Rs. 40 per sq.yd., the excess amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctible. He pointed out that in the agreement with Durga it was mentioned that the amount of Rs. 6 per sq.yd. was to be paid by way of commission/wages/remuneration and emphasized the word 'remuneration' and that in the original Gujarati the word ** was used. He also mentioned that the development charges may consist of various items listed in the draft assessment order. On the alternative claim based on the diversion at source he relied upon the decision of the Andhra Pradesh High Court in the case of CIT v. M.D. Manohar Rao [1985] 155 ITR 696. 6. The learned departmental representative replied that in order to claim the benefit under section 48 the assessee had to prove that the expenditure was incurred wholly and exclusively in connecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation should be made, it must be said that for every interpretation beyond the clear words of this clause there should be a clear authority. From one decision which can be considered as a liberal interpretation, a general method of liberal interpretation of that clause cannot be derived in view of the clear language of that clause. Regarding the submission that Durga was paid for the labour or work put in, there is nothing in the agreement of 1975 to support it. That agreement merely mentioned that Durga had managed to procure a buyer at the rate of Rs. 46 per sq.yd. For this work Durga had been paid brokerage. Nor can it be said to be expenditure in connection with the transfer under clause (i) which would cover such expenditure as stamp d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess amount over Rs. 40 per sq. yd. to Durga. Therefore, these two sources are different. Hence, this payment of Rs. 1,05,780 cannot be a diversion at source. In this regard the analogy drawn by the assessee's counsel between this case and the case before the Andhra Pradesh High Court on the basis of payment of excess amount is superficial and unjustified. In this connection the Supreme Court's observations in the case of CIT v. Sitaldas Tirathdas [1961] 41 ITR 367 may be referred to: "... Whereby the obligation income is diverted before it reaches the assessee, it is deductible ; but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s counsel pointed out extracts from Form No. 12 to show that the land was used for agricultural purposes. 10. On the other hand, the learned departmental representative pointed out from those extracts that for the years 1976-77, 1977-78, 1978-79 and 1980-81 the land was fallow. 11. We find that for the years 1976-77, 1977-78 and 1978-79 only a small part of the land was fallow and for the year 1979-80 which is relevant for the assessment year before us no part of it was fallow. Further, even after the sale it was used for agricultural purpose. It is true that permission to use it for non-agricultural purpose was taken on 1-4-1980 but that does not mean that the land was not used for agricultural purpose for sometime thereafter. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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