TaxTMI 
TaxTMI 
1981 (1) TMI 85
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....er ground which remains for our consideration is that the Commr. (Appeals) has erred in upholding the disallowance of Rs. 2,05,700, being development charges paid to Gujarat Industrial Development Corporation (hereinafter referred to as 'GIDC') as constituting expenditure of capital nature. The relevant facts giving rise to the dispute between the assessee and the Department on this point are stated hereunder. 3. The company purchased 82,280 sq. Yds. of land in Vatva in 1961 for the purposes of setting up a new engineering unit. This unit, called 'X Engineering Works,' was set up in 1965. On 4th Aug., 1967, the Chief Executive Officer of the GIDC wrote a letter to the assessee company stating as under: "It appears from our development p....
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....ment was to be made in two parts, firstly, an amount at the rate of Rs. 1.50 per sq. yd. In three annual equal instalments within 3 years from the execution of the exchange deed. The deed of exchange was executed on 24th Dec., 1974. For the purpose of stamp duty and registration the total value of the land exchanged by the two parties was taken at Rs. 1,16,000. The deed, however, shows that the area of the land which came to be exchanged by each party was 29,000 sq. yds. and not 31,460 sq. yds. as mentioned in the agreement. Cl. 4 of the deed provided that the land given by the GIDC to the company shall be held by it subject to certain terms and conditions set out in that clause. One of the terms set out in sub-cl. (b) reads as under— ....
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.... of the consideration for the exchange of land. According to him, this is also established by the fact that for the purpose of stamp duty and registration, the value of the land exchanged by the two parties was taken at Rs. 11,60,000 only. 8. Secondly, he contended that no advantage accrued to the assessee in the capital field as a result of this payment. He stated that certain Infrastructural facilities, including access to the main road nearby, no doubt, became available to the company. However, he urged that as these benefits, even if considered to be of an enduring nature, did not affect the capital structure of the company, the payment could not be regarded as being of a capital nature. In support of the contention, he placed relianc....
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....f this contention, he placed reliance on the decision of the Gujarat High Court in the assessee's own case reported as Addl. CIT vs. Rohit Mills Ltd. (1976) 104 ITR 132 (Guj). 11. On a consideration of the rival submissions and the facts and circumstances of the case, we are of the opinion that the question under consideration has to be decided in favour of the assessee and against the Revenue. On a reading of the agreement and the deed of exchange executed by the two parties, we are of the view that, although the payment of the development charges is, no doubt, one of the terms and conditions of the deed of exchange, the payment has not been made by the company in consideration of the exchange of land as contended by the ld. Departmental....
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..... has started any work at Vatva area. (b) We have made approach road to our factory as this area was completely undeveloped. (c) We had spent a substantial good amount to arrange for electricity line. (d) We also spent for rood fencing and telephone lines. Also we had made arrangement for water supply well, overhead tank as there was none upto the water supply was given by G.I.D.C. very recently. We have therefore to request you to consider the above factors while fixing the charges for development without taking into consideration the charges of Rs. 4 fixed by you with agreement with other concerns. We shall, therefore, be pleased if you will agree to our proposal of paying Rs. 2.50 per sq. yd as development charges." By its le....
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.... the Town Planning Scheme. Further on an analysis of the scheme as a whole the Hon'ble High Court came to the conclusion that the wide sweep of development contemplated thereunder "bears out the greatest potential advantages" to the lands covered thereunder. We are, therefore, of the view that as the relevant facts in the two cases are distinguishable, the decision in the case of Rohit Mills Ltd. relied upon by the ld. Departmental representative would not apply to the facts in the appeal before us. 15. It is also relevant to note that there is no material on record to indicate the extent of the additional infra-structural facilities provided by the GIDC on the land belonging to the assessee and whether any capital asset created as a resu....