Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home

2019 (8) TMI 615

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ng of appeal. Nature of assets sold - computation of Period of holding - Transferable Development Rights (TDR) issue in lieu of acquisition of immovable property by the Municipal Corporation of Pune - as per assessee right in TDRs is a capital asset as defined u/s 2(14) - assesse has sold right in TDR by virtue of a MOU dated 17/08/1996 which was cancelled by way of cancellation deed dated 14/06/2004, the same right in TDR sold to third party vide agreement dated 14/06/2006 - HELD THAT:- In this case, there is no doubt, with regard to the fact that the assessee has derived right in TDR by virtue of acquisition of immovable property by the municipal authorities in the year 1986 and such right is conferred on the assessee from the date of acquisition of the property. The subsequent cancellation and sale of TDR to third party cannot be considered as purchase of TDR from a third party. Therefore, we are of the considered view that, for the purpose of determination of period of holding, the period of holding of the asset from the date of acquisition of property by the municipal authorities has to be considered, but not from the date, when MOU was cancelled in the year 2004. If you take, .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... come Tax. e. The capital asset transferred did not have any cost of acquisition and accordingly the gain arising on transfer of TDR was not assessable U/S. 45 of the Act. WITHOUT PREJUDICE TO THE ABOVE 2. The learned Commissioner of income Tax (Appeals) erred in riot assessing the income arising on receipt of consideration under the 'Deed of Transfer' dated 14.6.2004 as income under the head 'Long Term Capital Gains' 3. The learned Commissioner of income Tax (Appeals) erred in not granting deduction u/s. 54EC of the Act for the consideration Invested by the appellant In NABARD Capital gains Bonds 4. The learned Commissioner of Income Tax (Appeals) erred In charging Interest u/s. 234A, 234B, 234C and 2340 of the Act and having regard to the facts and circumstances of the case and In law the appellant denies his liability for payment of interest under the aforesaid sections. 2. At the time of hearing, the Ld. AR for the assessee, submitted that there is a delay of 658 days in filing appeal before the Tribunal, for which necessary petition for condonation in delay appeal along with affidavit has been filed explaining reasons for delay in filing of appeal. As per which, .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ally held that the Hon ble High Court should have taken liberal view in the matter and held the cause shown by the appellant as sufficient cause within the meaning of section 5 of the Limitation Act, and accordingly should be condoned, the delay in filing of the appeal. Therefore, considering facts and circumstances of this case and also taken support from the decision of Hon ble Supreme Court in the case discussed hereinabove, we condoned delay in filing appeal and admit appeal for hearing. 5. The brief facts of the case are that the assessee is a individual, filed his return of income for AY 2005-06 on 20/07/2005 declaring total income at ₹ 1,04,510/-. The case was selected for scrutiny and during the course of assessment proceedings, the AO noticed that during the year under consideration, the assessee has computed Long Term Capital Gain from sale of TDR and accordingly, called upon the assessee to file necessary evidences including details of assets sold, cost of acquisition and proof for investment in NABARD Bonds to claim exemption u/s 54EC of the I.T.Act, 1961. In response, the assessee has filed a deed of transfer dated 14/06/2004 and as per said deed, the assessee ha .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... C of the I.T.Act,1961, for the said amount does not arise. The relevant findings of the Ld. CIT(A) are as under:- 2.3 I have considered the submissions of the Appellant and the asstt. order. It is an undisputed fact that the Transferable Development Rights (TDR) was not inexistence when the MOU dt 17.8*96 was made and also on the date when the subsequent transfer was made on 14.6.04. As such there was no capital asset on the date of the said MOU and the subsequent transfer made. The purported TDR which were transacted upon were never allotted by concerned Authorities. The Appellant had also not filed any materials to evidence that it had made a claim for allotment of TDR or that Its proposal is under active consideration of the concerned the paper book filed for the Appellant it could be seen that the Govt. has only allowed TDRs in respect of Slum Redevelopment Scheme in Pune and the case of the Appellant dogs not fall under the said scheme. Moreover, the TDR under Slum Redevelopment Scheme had been sanctioned only with effect from 5.08.04. In the case of the Appellant the property had been acquired by the Pune Municipal Commissioner on 12.06.1986 and so far there has been no sanct .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... er erred in not granting deduction u/s 54EC for the consideration invested by the Appellant in NABARD Bonds. 3.1 As I have held that the consideration received amounting to ₹ 25 lacs hits not falling under the head Capita! Gains, the question of granting deduction u/s 54EC for the said amount does not arise. Accordingly, this ground of appeal is rejected. 7. The Ld. AR for the assessee, at the time of hearing, submitted that the Ld. CIT(A) was erred in assessing surplus generated from sale of TDR as speculative profit without appreciating the fact that, when the asset was sold on 1996, the department has assessed surplus under the head capital gains. The Ld. AR, further submitted that right in TDR is a capital assets, because such right has been inextricable linked with the asset, which was acquired by the municipal corporation. Although, there is no TDR was allotted to the assessee, but the assessee had a right to acquire TDR in lieu of acquisition of land by the authorities. The said right has been transferred to the third party, for which necessary consideration has been paid. When, TDR is considered to be asset, then any right in such TDR is also a capital asset within th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... its by taking note of provisions of section 43(5), for the reasons that the assessee is involved in repetitive transactions of buying and selling of TDR. Except this, the lower authorities had never disputed the fact that the assessee has transferred right in TDR to third party. In this factual back ground, if you examine, whether right in TDR is a capital asset and surplus from sale of such capital assets is assessable under the head capital gain, there is no doubt of whatsoever, with regard to the fact that TDR is a capital asset, because it is inextricably linked with immovable property and also flows from transfer of immovable property. When, TDR is considered to be an immovable property/assets within the meaning of section 2(14) of the I.T.Act, then any right in such TDR is also needs to be considered as a asset within the meaning of section 2(14) of the I.T.Act, 1961. Therefore, we are of the considered view that the Ld. CIT(A) was erred in considering surplus from transfer of TDR under the head speculative business profits. 10. Coming to the observations of the AO. The Ld. AO has observed that the period of holding of the assessee is less than 36 months, consequently surplus .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... der, although surplus generated from transfer of right in TDR has been assessed under the head income from capital gains. Although, the Ld. CIT(A) has admitted fact that the assessee has claimed benefit of exemption u/s 54EC of the I.T.Act, 1961, but exemption claimed was denied, because income from transfer of TDR has been assessed under the head speculative business profit. The assessee has filed copies of capital gain bonds issued by NABARD for amounting to ₹ 25 Lacs. However, the facts with regard to purchase of NABARD capital gain bonds within prescribed limit provided u/s 54EC of the I.T.Act, 1961, has not been examined by the Ld.AO, as well as the Ld. CIT(A). Therefore, we are of the considered view that the issue needs to be re-examined by the AO, in light of the evidences filed by the assessee and hence, we set aside the issue to the file of the AO, for the limited purpose of verification on facts with regard to the investments in NABARD capital gain Bonds for the purpose of exemption claimed u/s 54EC of the I.T.Act, 1961. In case, AO found the investment is within stipulated time and it has fulfilled all other conditions, then AO is directed to allow benefit of exem .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Site Map - Recent || Site Map ||