TMI Blog2020 (12) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... erm capital gain has been computed by the AO is on account of transfer of Development Rights in the land of the assessee. The land itself has not been transferred by the assessee. Thus, in our opinion provisions of section 50C have been wrongly applied upon the impugned transaction. Thus, we reverse the action of lower authorities in applying the provisions of section 50C and in substituting any value other than the amount of actual sales consideration received by the assessee. It is also noted by us that for the assessment year under consideration there is no other provisions on the statute which permit the AO to substitute any other value with the full amount of consideration actually received by the assessee, while computing income under the head of capital gains - Ground of the assessee is allowed. - I.T.A. No.1224/Bang/2019 - - - Dated:- 2-11-2020 - Shri N. V. Vasudevan, Vice President And Shri Chandra Poojari, Accountant Member For the Assessee : Shri V. Srinivasan, Adv. For the Revenue : Shri Sumer Singh, Addl. CIT(DR) ORDER PER CHANDRA POOJARI, AM This appeal filed by the assessee is directed against the order of the CIT(A), Mysuru dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Hon ble CCIT/DG, the appellant denies herself liable to be charged to interest u/s. 234-A and 234-B of the Act, which under the facts and in the circumstances of the appellant s case and the levy deserves to be cancelled. 7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 3. The facts of the case are that the assessee is an individual. During the financial year relevant to the assessment year under consideration the assessee made an investment of ₹ 1.32 crores as purchase of Transferable Development Rights (TDR). During the said financial year the Government of Karnataka (BBMP) acquired land belonging to Sri David Raj C. alias David C. measuring 35.41 guntas or 3583.36 sq. meter property bearing Sy. No. 59/2, Nagavara Village, Kasaba hobli, Bengaluru North Taluk, Bengaluru (Schedule A) under the provision of section 14B of lands without payment of any compensation as per the Notification No. UDO/154/BEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of section 56(2)(vii)(b) as income from other sources in the hands of the buyer-assessee. 4. On appeal, the CIT(A) observed that the Transferable Development Rights (TDR) is a method for controlling land use to complement land-use conservation. According to the CIT(A) the TDR process can be considered as a tool for controlling urban spread by considering development. The CIT(A) observed that TDR is a legal mechanism offered in some local government jurisdictions as a form of development control. It was observed that TDR is also a way to avail institutional taking issues caused by rezoning areas which would otherwise eliminate a significant amount of value from the party. The procedure offers landowners financial incentives or bonuses for the conservation and maintenance of the environment, heritage or agricultural values of their land. According to the CIT(A), TDR is based on the concept that with land ownership comes the right of use of land or land development and these land-based development rights can in some jurisdictions be used, unused, sold or otherwise transferred by the owner of a parcel. According to the CIT(A), the question which arises is whether the TDRs are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, there is no scope to import any other meaning from any other enactment, or any where else and this would amount to an exercise of jurisdiction which is not provided in Law and hence, invoking of the section being improper needs to be set right by allowance of the appeal. 5.1 The Ld. AR drew our attention to section 50C of the I.T. Act which is applicable only to land or building or to both but not to any other thing like TDRs. Accordingly, he submitted that invoking of the provisions of section 50C also is not permissible in law and this would make the cancellation of the same. 5.2 The Ld. AR submitted that section 50C of the I.T. Act provides a legal (deeming provision) and any legal provision for a particular purpose operates only for the purpose for which it is created and will not operate beyond the purpose for which it is created. The Ld. AR submitted that this deeming provision extends only to a capital asset which is land or building or both and there is well recognized and a clear distinction between the land or building or both and the right to the same or any other right. The Ld. AR submitted that this deeming provision does not extend beyond the capital a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made. (iii) in a case where the consideration for the transfer consists of a thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made, and such sum, and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer determined by adopting such rate of interest as may be prescribed in this behalf; (d) immovable property means i) any land or any building or part of a building, and includes, where any land or any building or part of a building is to be transferred together with any machinery, plant furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also. Explanation For the purposes of this sub-clause, land, building, part of a buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee was 'Development Rights in the land' and not the 'Land' itself. If we go through similar provisions of the Act, we find that the legislature has used this expression consciously and carefully and keeping in view its need and objective of legislating section 50C. For example, in section 269A, the expression 'immovable property' has been defined as under: Immovable property means- (i) any land or any building or part of a building, and includes, where any land or any building or part of a building is transferred together with any machinery, plant, furniture, fittings or other thing which machinery, plant furniture, fittings or other things also. Explanation- for the purposes of this [sub-clause], land building part of a building, machinery, plant, furniture, fittings and other things include any rights therein; (ii) any rights of the nature referred to in clause (b) of sub-section (1) of section 269AB..... 7.2 Similarly, in section 269UA also identical definition has been given. In these cases, 'rights' in 'land building' have been specifically included as per requirement of these sections. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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