TMI Blog1980 (8) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... acter? 2. Whether the Tribunal was right in holding that betterment charges of Rs. 60,390 paid by the assessee to the Ahmedabad Municipal Corporation could not be considered to cost of improvement within the meaning of section 48(ii) of the I.T. Act, 1961 ? 3. Whether the Tribunal erred is not allowing deduction of betterment charges of Rs. 60,390 as claimed by the assessee ? " At the commencement of the hearing of this reference, Mr. K C. Patel, the learned counsel for the assessee, stated that the assessee was not pressing questions Nos. 1 and 3 and the only question that now survives for our consideration is question No. 2. The facts leading to this reference are as follows: We are concerned with the assessment years 1967-68 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t liable to pay tax on the capital gains inasmuch as the aforesaid land sold by him was agricultural land. As regards the computation of capital gains the assessee contended that the value of the land as on January 1, 1954, was Rs. 15 per sq.yd. instead of Rs. 10 per sq.yd. as held by the ITO. He further claimed that the betterment levy paid by him to the Ahmedabad Municipal Corporation be added to the value of the land as on January 1, 1954, or the cost of the land for the purpose of computation of capital gains. This contention was based on the provisions of s. 48(ii) of the I.T. Act, 1961. The ITO rejected the assessee's contention regarding betterment levy paid by him to the Ahmedabad Municipal Corporation. The AAC, in appeal, held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of the capital asset the following amounts, namely, the cost of acquisition of the capital asset and the cost of any improvement thereto. Under s. 55(1 )(b) of the Act, special meaning of " cost of improvement" for the purpose of ss. 48, 49 and 50 has been laid down by the Legislature and it has been provided that the " cost of any improvement " in relation to capital asset in any other case, means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset by the assessee after it became his property, and, where the capital asset became the property of the assessee by any of the modes specified in sub-s. (1) of s. 49, by the previous owner, but does not include any expenditure which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to prevent distress sale and to protect the business set up, the expenditure was on capital account and not an expenditure for producing profits in the conduct of business. The instalment of contribution paid under the Town Planning Act was not deductible under s. 37. In view of this decision in Rohit Mills' case [1976] 104 ITR 132 (Guj), it is obvious that the betterment charges paid by the assessee were levied against the increased potential value of the lands covered by the scheme and the increment in value of land contemplated by the Town Planning Act was real. The assessee gained an enduring advantage by paying this amount of Rs. 60,390. Thus, what the assessee spent by way of betterment charges was certainly for the improvemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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