Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (2) TMI 177 - AT - Income TaxCapital gains income - Transfer of Development Rights (TDR) - liability to be taxed as capital gains of the appellant society - charging interest u/s 234B - Held that:- The concept of TDRs originates from the regulation of "Development Control Regulation of Greater Mumbai" i.e., "DCR, 1991", wherein it was provided that the owner or a lessee of a plot, which was reserved for public purpose under the development plan of DCR, would be eligible for award of compensation by way of development right certificate of equivalent Floor Space Index (FSI). Such a right is definitely a "Capital Asset" held by the assessee and assignment of such a right in favour of the developer amounts to transfer of capital asset. Thus transfer of TDRs amounts to transfer of a "Capital Asset". 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 as decided in the case of Shri B.C. Srinivasa Setty [1981 (2) TMI 1 - SUPREME COURT] & Jethalal D. Mehta v. Dy. CIT [2005 (1) TMI 595 - ITAT MUMBAI] The perusal of section 55(2)(a) reveals that cost of acquisition is to be taken at nil in those cases where the capital asset transferred is either goodwill of business or the trademark or a brand name associated with business or a right to manufacture, produce or process any article or thing or right to carry on any business, tenancy rights, stage carrier permits or loom hours. In the present case, the assessee is not carrying on any business and the right to construct additional floors is not covered by any of the assets mentioned in the aforesaid sub-section (2) of section 55. Therefore, the amended provisions of section 55(2) do not apply to the present case and the lower authorities were not justified in taking the cost of acquisition of the capital asset being right to construct the additional floors as nil. Therefore the transfer of TDR amounts to transfer of a capital asset, however, the same cannot be subjected to tax under the head "Capital Gain" for the reason that there is no cost of acquisition in acquiring the right which has been transferred and computational mode given in section 48, therefore, taxing under the head capital gain by the AO cannot be sustained - in favour of assessee.
|