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2014 (12) TMI 1069 - HC - Income TaxTransfer of Development Rights (TDR) - Chargeability to capital gain - Invocation of section 50C - Addition under the head LTCG – computation of the sale of TDR – Held that:- The Tribunal was rightly of the view that while it is true that the AO invoked section 50C and computed these gains, in the decision of New Shailaja Co-operative Housing Society Ltd. Versus Income-tax Officer [2008 (12) TMI 442 - ITAT MUMBAI] it has been held that the sale of TDR does not give rise to any capital gains chargeable to tax - Following the decision in Union of India vs. Cadell Weaving Mill Co. P. Ltd. and Anr. [2005 (1) TMI 13 - SUPREME Court] wherein it has been held that an asset which is capable of acquisition at a cost would be included within the provisions pertaining to the head "Capital gains" as opposed to assets in the acquisition of which no cost at all can be conceived - the situation was that the FSI/TDR was generated by the plot itself - There was no cost of acquisition, which has been determined and on the basis of which the AO could have proceeded to levy and assess the gains derived as capital gains - It may be that subsection (2) of section 55 clause (a) having been amended, there is a stipulation with regard to the tenancy rights. It was also argued that the tenancy rights now can be brought within the tax net and in the present case the asset or the benefit is attached to the property - It is capable of being transferred. - all this may be true but as the Hon'ble Supreme Court holds it must be capable of being acquired at a cost or that has to be ascertainable - additional FSI/TDR is generated by change in the D. C. Rules - a specific insertion would therefore be necessary so as to ascertain its cost for computing the capital gains - Therefore, the Tribunal was in no error in concluding that the TDR which was generated by the plot/property/land and came to be transferred under a document in favour of the purchaser would not result in the gains being assessed to capital gains - what the Assessee sold was TDR received as additional FSI as per the D. C. Regulations - It was not a case of sale of development rights already embedded in the land acquired and owned by the Assessee - the Assessee had not incurred any cost of acquisition in respect of the right which emanated from 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 - even after the transfer of the right or the additional FSI, the position did not undergo any change - Revenue could not point out any particular asset as specified in subsection (2) of section 55 – the order of the Tribunal is upheld – Decided against revenue.
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