TDR transfer proceeds were not taxable as long-term capital gains where no cost of acquisition could be determined.

Compensation received on transfer of development rights was held not chargeable as long-term capital gains because the rights had no ascertainable cost of acquisition. The capital gains computation machinery under section 48 cannot operate where the transferred asset, including additional FSI/TDR generated under the development control regime, lacks a determinable acquisition cost. On that basis, the amount received for the transfer of TDR was not taxable as long-term capital gains.

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Issues: Whether compensation received on transfer of development rights was chargeable to long-term capital gains when no cost of acquisition of such rights could be ascertained.

Analysis: The assessee had acquired development rights under the Development Control Rules, 1991, and transferred those rights to a developer. The computation provisions for capital gains require an ascertainable cost of acquisition. Binding jurisdictional precedent held that additional FSI/TDR generated by the development control regime does not have a determinable cost of acquisition, and therefore the machinery for computing capital gains under section 48 cannot operate.

Conclusion: The amount received on transfer of TDR was not taxable as long-term capital gains, as there was no cost of acquisition for the rights transferred.

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