TMI Blog2015 (12) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... sue to be decided is whether capital gain can be computed in respect of capital asset which has no cost of acquisition.In the absence of cost of acquisition of TDR rights, amount received on sale of such TDR rights cannot be subjected to long term capital gain as the computation provisions contained under section 48 of the Act, cannot be worked out. Compensation received on account of sale of TDR rights is not taxable, the other issues raised by the assessee relating to claim of exemption under section 54 of the Act and enhancement of compensation have become redundant and not required to be adjudicated upon. - Decided partly in favour of assessee. - ITA No. 7582/Mum/2014 - - - Dated:- 9-10-2015 - Rajendra, AM And Saktijit Dey, JM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice, the assessee made his submissions on 4th November 2011, offering an amount of Rs. ,2,32,56,607, as long term capital gain after claiming exemption under section 54EC of the Act. The Assessing Officer completed the assessment by computing long term capital gain on sale of TDR at ₹ 2,32,56,607. 5. Being aggrieved of such computation of long term capital gain, the assessee preferred appeal before the first appellate authority. The assessee, before the learned Commissioner (Appeals), again claimed exemption from capital gain on the amount received on sale of TDR. It was the submissions of the assessee that as there is no cost of acquisition of the TDR, capital gain cannot be computed. The learned Commissioner (Appeals), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has retained for himself FSI admeasuring 5,580 sq.ft. which was to be utilised in construction of 3 residential flat in the new building which the developer constructed and handed over to the assessee for construction cost of ₹ 80 lakhs adjusted against the compensation. It was submitted, as the assessee has not transferred any property to the developer, there cannot be any capital gain. He submitted transfer of TDR rights cannot be subjected to long term capital gain as there is no cost of acquisition for such rights. In this context, he relied upon the decision of the Hon'ble Court in CIT v/s Sambhaji Nagar Co-operative Housing Society Ltd., ITA no.1356/2012, judgment dated 11th December 2014. He also relied upon a numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompelled by the Assessing Officer, as an alternative argument, the assessee has submitted computation of long term capital gain showing cost of acquisition on the lease hold rights but that cannot be considered as cost of acquisition of TDR. 9. We have considered the submissions of the parties, perused the orders of the Revenue authorities and the material available on record. As could be seen from the impugned order of the learned Commissioner (Appeals), he has decided the issue merely adopting the finding of his predecessor in the earlier order. It is the reasoning of the learned Commissioner (Appeals) that since the assessee himself has shown cost of acquisition in the computation of long term capital gain submitted before the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court is 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. In the present case as well, 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 Assessing Officer 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. However, even in the case of tenancy right, the view taken by the Hon'ble Supreme Court, afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perative Housing Society Ltd., is based on the Hon'ble Supreme Court's decision in the case of B. C. Srinivasa Shetty (supra). The Tribunal concluded that 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. The Revenue could not point out any particular asset as specified in subsection (2) of section 55. The conclusion of the Tribunal is imminently possible and in the given facts. That is also possible in the light of the legal position a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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