TaxTMI 
TaxTMI 
1986 (7) TMI 136
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....Development Bonds and Rs. 2,51,525 exemption under s. 54B of 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 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 ....
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.... the amount of Rs. 6 per seq. yd. was to be paid by way of commission/wages remuneration 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....
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....sub-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 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 t....
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....Rs. 1,05,780 cannot be to be 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 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 mere....