TMI Blog2008 (6) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act. We find that the assessee was neither holding any capital asset nor the same has been sold, exchange or relinquish of the assets. In other words there is no transfer of capital asset in accordance with Income-tax Act. We therefore of the considered view that section 45 is not attracted. We hold that the assessee is not liable to capital gain u/s 45 of the Income-tax Act. In the result, the appeal of the assessee is allowed. - R.K. GUPTA AND A.L. GEHLOT, JJ. Arvind Sonde for the Appellant. Virendra Ojha for the Respondent. ORDER A.L. Gehlot, Accountant Member. - The appeal is filed by the assessee. The relevant assessment year is 1995-96. The appeal is directed against the order of the CIT(A)-X dated 23-1-2001. The appeal arises out of the assessment completed under section 143(3) of the Income-tax Act, 1961. 2. The ground raised by the assessee in this appeal is that the Ld. CIT(A) erred in upholding the action of the Assessing Officer in bringing to tax a sum of Rs. 4,76,400 as capital gains. 3. The brief facts of the case are that the assessee derived income from salaries, dividend etc. During the assessment proceedings, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the society or the members had not technically transferred the T.D.R., in the sense of a legal authorization, but it has to be borne in mind that the amount paid by the assessee and the other members of the society towards the purchase of the land/flat was also for acquiring a bundle of rights in the said land and building including the right to grant permission for additional construction. The CIT(A) noted this view is supported by the decision of Hon ble Supreme Court in the case of A.R. Krishnamurthy v. CIT [1989] 176 ITR 417 . The CIT(A) further noted that technically the land and building owned by the society but in a fact each member of the society had a corresponding right in the land and building in relation to the investment made by him in the plot/flat. The CIT(A) was of the view that the assessee and the other members had drafted an agreement with the developer to make believe that the compensation receivable was for the hardship caused to the members on account of construction activity, however in effect and in reality it was the benefit that each members was given corresponding to the valuable right that he possessed in the land and building of the society. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench I in the case of Milan M. Patel v. ITO [IT Appeal No. 2167 (Mum.) of 2002] assessment year 1998-99 vide order dated 27-12-2002 held that since there was no transfer of any asset by the assessee, the same should not be taxed as capital gain by invoking the provisions of section 45. 10. The Ld. Departmental Representative relied upon the order of the CIT(A) and submitted that the assessee has given the rights/permission for construction of extra flats and such right amounts to assets which has been transferred by the assessee. Therefore capital gain under section 45 is clearly applicable. The ld. DR in support of his above contention relied upon the decision of ITAT Gauhati Bench in the case of ITO v. Md. Nasser Ahmed [2004] 2 SOT 389 and submitted that on identical set of facts whether the assessee having transferred his capital asset or extinguished any rights therein in favour of three purchasers vide registered sale deeds on which the assessee had also paid stamp duty at the prevailing market rate, it was held that the assessee had sold his valuable rights in the immovable property which is liable to capital gain. He further submitted that the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 2(14) is for the purpose of the entire Act and not for the purpose of capital gains only. Although a particular thing, right or interest may be a capital asset within meaning of section 2(14), yet transaction in relation thereto may not give raise to taxable capital gains, this would because of the fact that no transfer as envisaged by the Act was involved. Similarly, certain capital asset which could not give rise to capital gain because of the fact that no cost of acquisition can be envisaged in the acquisition of that asset. With this back ground of discussion, now we consider the facts of the case under consideration. We find that neither the assessee nor the society was in a possession of any T.D.R. The builder was in possession of T.D.R. The CIT(A) clearly noted the fact that the society or the members had not technically transferred T.D.R. in the sense of legal authorization. Thus neither the society nor the members owned or possessed any transferable development rights. The transferable development rights were owned and possessed by the builder and in terms of the regulations framed by Municipal Corporation, it was permissible for the building to utilize the said tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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