ITAT ‘C’ Bench, Mumbai
Before D. Manmohan (VP) and
R. K. Panda (AM)
ITA No. 2550/Mum./2008
A.Y. : 1999-2000. Decided on : 28-8-2009
Counsel for assessee/revenue : Subhash Shetty/
Virendra Ojha
S. 45 and S. 48 — Amount received by the society from the
builder for permitting him to construct additional floors on existing building
of the society by utilising TDR FSI belonging to him is not chargeable to tax
since there is no cost of acquisition.
Per D. Manmohan :
Facts :
The assessee, a co-operative society, on request of the
developer granted him permission to construct 2 floors having 8 flats, on the
existing building of the assessee by utilising TDR FSI available to the
developer. As consideration, the developer paid Rs.26 lakhs to the assessee
and Rs.5.50 lakhs to each of the 12 members of the assessee.
According to the assessee, the members owned a piece of
land on which 12 flats were constructed by utilising maximum FSI available to
them. These persons formed a society. Since the assessee had no right to
construct further structure, there was no question of exploiting any of its
available right so as to earn income out of it. The assessee had regarded the
amounts received by it as not being chargeable to tax.
The Assessing Officer held that the permission granted by
the assessee-society resulted into transfer by way of relinquishment of the
right i.e., ‘to load TDR and construct additional floors’ and since
there was no cost of acquisition, in absence of details, he taxed the entire
consideration of Rs.26 lakhs as long-term capital gains.
Aggrieved, the assessee preferred an appeal to the CIT(A)
who enhanced the assessment and charged even Rs.66 lakhs, being the amount
paid by the developer to individual members of the society, as long-term
capital gains in the hands of the assessee.
Aggrieved, the assessee preferred an appeal to the
Tribunal.
Held :
The assessee and its members had exhausted the right
available while constructing the flats and therefore the assessee and its
members had no right to construct additional floors on the existing building.
The Tribunal noted that TDR was not obtained by the assessee and sold to the
developer. The Tribunal held that the assessee had not transferred any
existing right to the developer, nor any cost was incurred/suffered prior
to permitting the developer to construct the additional floors. Since there
was no cost of acquisition, following the ratio of the decision of the Apex
Court in B. C. Srinivasa Shetty 128 ITR 294 (SC), the consideration was held
to be not assessable as capital gains.
The Tribunal dismissed the appeal filed by the Revenue.
Cases referred to :
1. CIT v. B. C. Srinivasa Setty, (1981) 128 ITR
294 (SC)
2. Deepak S. Shah v. ITO, (2009) 29 SOT 26 (Mum.)
3. M/s. New Shailaja CHS Ltd. v. ITO, ITA
512/M/2007 dated 2-12-2008
4. Maheshwar Prakash-2 Co-op Hsg. Soc. Ltd v. ITO,
(2009) 118 ITD 223 (Mum.)
