TMI Blog2005 (1) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 availing additional floor space index equivalent to the floor space index so lost for public purposes. The development rights are transferable in nature in the sense that either the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, 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 contention that there was no cost of acquisition of this right as receiving plot , and, therefore, the sale of this right cannot lead to a taxable capital gain in the hands of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so 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 ITR 294 1 , the CIT(A) observed that "the person having TDR right had to surrender his land to the Government to purchase these rights and also the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 virtue of being owner of the plot in the specified area but that does not mean that the cost incurred on the plot is the cost of acquirin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding, 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 ITR 294 1 clearly holds so. For all these reasons,we are of the considered view that the receipts on sale of assignment of rights ..... X X X X Extracts X X X X X X X X Extracts X X X X
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