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2008 (12) TMI 442 - AT - Income TaxNo cost not capital gain concept - applicability or not - Computation of capital gain - Cost of acquisition '' Nil " - taxability of receipt of sale of additional FSI received - CIT(A) confirmed the view of the ld AO that no cost no capital gains theory is not applicable to the applicant’s case - Assessee’s contention that the right to transfer by the assessee did not have any post of acquisition and hence the provisions of Chapter IV-E fail, did not find favour with the AO. HELD THAT:- We find that the assessee became entitled to the additional FSI of around 11,000 sq. ft. due to its land holding. The assessee transferred this entitlement for a consideration to M/s. D.K. Builders. The items of capital assets specified in section 55(2) are those for which the cost of acquisition shall be taken at Rs. nil for computing capital gains. However if the assessee had not incurred any cost of acquisition on a capital asset and such capital asset does not fall in the category of the capital assets specified in section 55(2) then the judgment of the Hon’ble Supreme Court in B.C. Srinivasa Setty [1981 (2) TMI 1 - SUPREME COURT] shall apply and no capital gains would be charged. It is abundantly clear that the assessee had not incurred any cost of acquisition in respect of the right which emanated from the 1991 Rules making the assessee eligible to additional FSI. The land and building earlier in the possession of the assessee continued to remain with it as such even after the transfer of the right to additional FSI. The ld DR could not point out any particular asset as specified in sub-section (2) of section 55, which would include the right to additional FSI. No capital gains can be charged on the transfer of the additional FSI by the assessee for sale consideration for the reason that it has no cost of acquisition. Our view is fortified by the order of the Mumbai Bench of the Tribunal in Jethalal D. Mehta [2005 (1) TMI 595 - ITAT MUMBAI]) which was also cited before the ld CIT(A). No material has been brought to our notice to show that the said order has been modified or reversed by the Hon’ble High Court. Further the ld DR could not point out any contrary decision. Respectfully following the precedent, we accept this ground of appeal. The ld AR did not press other grounds of appeal, which are hereby dismissed. Hence, the appeal is partly allowed.
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