TMI Blog2005 (1) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... owned by the assessee, and not with the right to receive the TDR from the Government. The person getting TDRs from the Government has to surrender the reserved plot but the person on whose plot such TDRs can be used, as is the case we are in seisin of, does not do anything more than owning the receiving plot . The costs incurred by a third party for acquiring the TDR has nothing to do with the right to availing the said TDR on assessee s plot. Similarly, the costs of plot and costs of construction are also not the cost of acquisition of these rights. What the assessee has transferred is not the plot or the building, but a right parting with which does not result in parting with land or building. The costs of obtaining BMC approval for the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e virtue of transferable development rights (TDRs, in short) under the Development Control Regulations for Greater Mumbai 1991 . 2. The scheme of the Development Control Regulations for Greater Mumbai 1991 (DCR, in short), so far as it pertains to the issue in appeal before us, is like this Regulation 34(1) of the DCR provides that the owner or lessee of a plot, which is reserved for public purposes under the development plan of the DCR, will be eligible for award of compensation by way of development right certificates (DRCs) of equivalent floor space index (FSI). In other words, in consideration of plot being reserved for public purposes under the development plan, the person who so loses his plot gets certain development rights for avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into an arrangement with a developer who has used TDRs on assessee s plot to avail additional floor space index. Additional storeys of the building were thus constructed, which, under the arrangements that the assessee had with developer, belonged to the developer. In consideration of allowing the said developer to construct on the said additional floor space, the assessee has received a consideration of Rs. 33,62,500. The right to construct this additional floor space have been thus assigned to the developer and in consideration of this assignment, the said sum of Rs. 33,62,500 is received. The dispute which has travelled in appeal before us is whether or not this amount is taxable in the hands of the assessee. The assessee s contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. (P.) Ltd. ( supra ), as also the stand that the cost of acquisition of the rights assigned is the cost of acquisition of the plot in question. The CIT(A) also held that the assessee got his designs approved from the Corporation and constructed the building on that plot , and that only after so much of expenditure he got the tenancy rights to transfer the open portion of the property to some person as per the law . The CIT(A) went on to observe that "As per the provisions of section 55, the provisions of section 55 the transfer of tenancy right is fully covered in the definition as per Finance Act, 1994, w.e.f. 1-4-1995". As regards the applicability of Hon ble Supreme Court s judgment in the case of CIT v. B.C. Srinivasa Setty [1981] 128 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. In this context, however, what is necessary to appreciate is that the rights assigned to the developer are the rights to receive and apply the transferable development rights, and that these rights arose to the assessee by the virtue of introduction of Development Control Regulations for Greater Mumbai 1991 . Until the point of time these development regulation came into existence, the assessee did not have right to receive and apply the transferable development rights. It is these rights on the assignment of which the assessee has received the impugned amount. Therefore, the expenditure incurred on purchase of plot and construction thereon cannot be said to be the costs for acquisition of these rights. The rights are acquired by the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of construction are also not the cost of acquisition of these rights. What the assessee has transferred is not the plot or the building, but a right parting with which does not result in parting with land or building. The costs of obtaining BMC approval for the building plan can also not be said to be the costs of acquisition of these rights as these rights do not arise by the virtue of getting these approvals but by the virtue of a legal right independent thereof. The law is trite, and there is no dispute on the said position, that when an asset has no cost of acquisition, the gains on sale or transfer of same cannot be brought to tax. The law laid down by the Hon ble Supreme Court in the case of CIT v. B.C. Srinivasa Setty [1981] 128 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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