TMI Blog2021 (5) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of law, and which had not costed the assessee any money. We find that the entire issue in dispute is squarely covered by the decision of the Hon ble Jurisdictional High Court in the case of Kailash Jyoti No.2 CHS Ltd [ 2015 (11) TMI 400 - BOMBAY HIGH COURT ] Thus we hold that the sum received by the assessee on sale of additional FSI, is not exigible for long term capital gains and accordingly the same is hereby directed to be excluded under normal provisions of the Act. Taxability of same sum while computing book profit u/s.115JB - We find that assessee had admittedly offered the said receipt of ₹ 4,76,25,000/- had admittedly offered the said receipt to tax while computing book profits u/s.115JB. There is absolutely no dispute that such receipt is indeed a capital receipt and that the same does not form part of operational working results of the assessee company. Even according to the case of the Revenue, the said receipt is only inseparable from land, building and accordingly it only partakes the character of a capital receipt. We hold that merely because a particular receipt , which is in the capital field, had been offered to tax by the assessee voluntar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and in law, the Ld. Commissioner (Appeals) erred in confirming the addition made by the A.O. of ₹ 4,76,25,000/-, being the amount received on sale of FSI, as income in computing the income of the Assessee under normal provisions of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case and in law, Assessee company submits that the sum of ₹ 4,76,25,000/- received on sale of FSI, is a capital receipt and hence is not income exigible to tax in the hands of the Assessee company under the normal provisions of the Income Tax Act, 1961. 3. On the facts and in the circumstances of the case and in law, the Assessee Company submits that the sum of ₹ 4,76,25,000/- received on sale of FSI being a capital receipt and hence not income in the hands of the Assessee company, there is no tax payable by the Assessee company under the normal provisions of the Income Tax Act, 1961 and consequently, the charge under section 115JB of the Act on book profits fails and the Assessee company is hence not liable to tax under Section 115 JB of the Act. 4. The Assessee company may be permitted to add, alter, amend or delete the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee vide its letter dated 19/01/2021 reproduced supra goes to the root of the matter and does not involve verification of any facts as all the facts are already on record and that being a legal issue, we are inclined to admit the said additional ground and take up for the purpose of adjudication alongwith other regular grounds raised by the assessee. 5.1. We find that the assessee company is engaged in the business of manufacturing machine tools, textile machines, air conditioning and refrigeration work, casting and job work for air conditioning and humidification, air control equipment and trading in engineering. The original return of income was filed by the assessee on 26/09/2013 and revised return was filed on 14/05/2014 declaring loss of ₹ 4,65,01,710/- under the normal provisions of the Act and book profit of ₹ 61,77,000/- u/s.115JB of the Act. 5.2. The brief facts of the case are that the assessee company owned a constructed building on a plot of land in the city of Coimbatore. The said land along with the super structure was acquired by the company vide sale deed dated 15.04.1967. During the Financial Year 2012-13 relevant to Asst Year 2013-14, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted independently; that the availability of increase in FSI is merely a value addition to the land provided by the Government; that any buyer, while purchasing the land will also take over the FSI and that the purchase price is determined by the benefits attached to the land. He further observed that the assessee has neither maintained the land with it and transferred the FSI to a third party nor has transferred the land and FSI to different people. He also observed that FSI is fastened to the land and is not separable there from, except in circumstances where only the FSI is permitted to be sold out by maintaining the title of land with the owner. Accordingly, the AO brought the amount of ₹ 4,76,25,000/- shown under the head transfer of FSI to tax under the head long term capital gain. 5.3. The ld. AO while computing the book profits u/s.115JB of the Act included the sum of ₹ 4,76,25,000/- as part of working results of the assessee company u/s.115JB of the Act, since it was already offered to tax voluntarily by the assessee in the return of income. 5.4. Before the ld. CIT(A), the assessee apart from appraising the aforesaid facts, vehemently pleaded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T vs. Sambhaji Nagar Co-op Housing Society Ltd., reported in 370 ITR 325 (Bom) dated 11/12/2014. b) Decision of Hon ble Supreme Court in the case of Union of India vs. Cadell Weaving Mill Co. Pvt. Ltd., reported in 273 ITR 1 (SC) c) Decision of Hon ble Supreme Court in the case of CIT vs. Srinivasa Setty (B.C.) reported in 128 ITR 294 (SC). d) Decision of Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax vs. Kailash Jyoti No.2 CHS Ltd., in Income Tax Appeal No.1607 of 2013 ; Commissioner of Income Tax vs. Pushpendra J. Mehta Ors. in Income Tax Appeal No.768 of 2009 ; Commissioner of Income Tax vs. Shankar Mahal Premises CHS Ltd. in Income Tax Appeal No.2176 of 2009 ; Commissioner of Income Tax vs. Maheshwar Prakash 2 CHS Ltd., in Income Tax Appeal No.2346 of 2009 and Commissioner of Income Tax vs. Kailash Jyoti Premises No.1 CHS Ltd., in Income Tax Appeal No.2660 of 2011 dated 24/04/2015. 5.7. Per contra, the ld. DR vehemently supported the orders of the lower authorities by stating that the additional FSI is inseparable with land and building and hence, would partake the character of amount received towards land and building o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for getting such benefit by way of additional FSI. Hence, it could be safely concluded that the additional benefit derived by the assessee by way of getting vested with additional FSI on the land and building owned by the assessee is only a wind fall gain by operation of law, and which had not costed the assessee any money. In this factual matrix of the case, what is to be seen is whether the sum received by the assessee on sale of additional FSI amounting to ₹ 4,76,25,000/- could be taxed as long term capital gain in the hands of the assessee. We find that the entire issue in dispute is squarely covered by the decision of the Hon ble Jurisdictional High Court in the case of Kailash Jyoti No.2 CHS Ltd and others dated 24/04/2015 cited supra , wherein the following substantial questions of law were raised by the Revenue before the Hon ble High Court:- 6.1 Whether on the facts and in the circumstance and in law the Hon'ble ITAT was justified in holding that the assessee had incurred no cost on acquisition of TDR of additional FSI ? 6.2 Whether on the facts and in the circumstance, and in law the Hon'ble ITAT was justified in holding that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein, the society received a sum of ₹ 2,23,25,157 which was added by the Assessing Officer to the total income of the assessee to be chargeable to tax as income under the head Long Term Capital Gains . 5. This Court observed that a similar attempt has been rejected in the case of Nalinikant Ambalal Mody v. S. A. L. Narayan Row, Commissioner of Income-tax ITR 428 SC 432 and the conclusion of the Apex Court in the said judgment was followed which provided that only that which was 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 there was no cost at all. In that case, as in the present case, the situation was that the FSI/TDR was generated by the plot itself. There was no cost of acquisition in any of the appeals before us. Accordingly, following the view taken in Sambhaji Nagar Co-operative Housing Society Ltd., we find that none of the questions proposed by the Appellant raise any substantial question of law. Accordingly, the appeals are dismissed. There will be no order as to costs. 5.10. The ld. AR also pointed out that the Hon ble Supreme Court d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be claimed for the first time before this Tribunal. Reliance in this regard is placed on the decision of Hon ble Supreme Court in the case of NTPC Ltd., reported in 229 ITR 383 and CIT vs. Sinhgad Technical Education Society reported in 397 ITR 344 and the decision of Hon ble Jurisdictional High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt Ltd., reported in 349 ITR 336 (Bom). We also find that the Hon ble Calcutta High Court in the case of PCIT vs. Ankit Metal and Power Ltd., reported in 109 Taxmann.com 93 dated 09/07/2019 had specifically held that where the receipt is not in nature of income, it cannot be included in book profits u/s.115JB of the Act. The relevant portion of the said judgment is reproduced hereinabove. 26. Now the second issue which requires adjudication is as to whether the aforesaid incentive subsidies received by the assessee from the Government of West Bengal under the schemes in question are to be included for the purpose of computation of book profit under Section 115 JB of the Income Tax Act, 1961 as contended by the revenue by relying on the decision in the case of Appollo Tyres Ltd. (supra). 27. In this case since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said issue. Accordingly he argued that the provisions of Section 115 JB of the Act per se cannot be made applicable to the assessee company herein as there was no tax payable by the assessee under normal provisions of the Act in view of loss thereon. He also argued that the provisions of Section 115J and 115JA of the Act use the word total income which would also include loss, whereas the provisions of Section 115JB of the Act uses the expression tax payable on total income . Hence, he vehemently argued that unless there is tax payable by assessee under normal provisions of the Act, the provisions of Section 115 JB of the Act would not come into operation at all. 7.2. Per contra, the ld. DR vehemently relied on the order passed by this Tribunal in assessee s own case referred to supra in respect of this issue. 7.3. We have heard rival submissions and perused the materials available on record. We find that the decision relied upon by the ld AR was rendered in the context of section 143(1A) of the Act. The provisions of Section 115JB of the Act start with a non-obstante clause and is a self contained code by itself. By giving due weightage to the intention behind introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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