9911796707
TMI Blog1986 (7) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... other agricultural land. The ITO disallowed the claim in respect of development charges and the investment in another agricultural lands. 3. The CIT(A) 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 Corporation (hereinafter referred to as '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 amount, over and above that rate would be payable to Durga. The land was actually sold at the price of Rs. 46 and so the excess amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and emphasized the word "remuneration" and that in the original Gujarati the word "Mahautant" 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 vs. M.D. Manohar Rao (1985) 48 CTR (AP) 14 : (1985) 155 ITR 696 (AP). 6. The ld. D.R. replied that in order to claim the benefit under s. 48 the assessee had to prove that the expenditure was incurred wholly and exclusively in connection with the transfer. He also mentioned that the agreement with the purchaser showed that the assessee was entitled to Rs. 46 per sq. yd. In April, 1975 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a liberal interpretation, a general method of liberal interpretation of that clause cannot be derived in view of the clear language of that sub-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 has been paid brokerage. Nor can it be said to be expenditure in connection with the transfer under sub-cl. (i) which would cover such stamp duty, legal expenses etc. That is expenditure connected with procuring a certain price and not with the transfer. It was an incentive for Durga but nothing beyond that. 8. We now come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 vs. Sitaldas Tirathdas (1961) 41 ITR 367 (SC) may be referred, to: "Where by 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 follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1st April, 1980 but that does not mean that the land was not used for agricultural purpose for sometime thereafter. Therefore we hold that the assessee is entitled to the benefit of s. 54B in respect of the amount of Rs. 2,51,525 invested in the purchase of agricultural lands. 12. The last ground is that the ld. CIT(A) ought to have held that the cost of acquisition of land came to Rs. 5 per sq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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