Taxation of Transferable Development Rights without cost of acquisition upheld by Bombay High Court

The High Court of Bombay upheld the decision of the Income Tax Appellate Tribunal regarding the taxation of receipts arising from the transfer of Transferable Development Rights, based on the lack of cost of acquisition of the TDR. The Court dismissed the appeal by the Revenue, stating that the questions raised did not present any substantial legal issues, in line with precedent.

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Issues involved:
Challenge to order of Income Tax Appellate Tribunal for Assessment Year 2007-08 regarding taxation of receipt arising on transfer of TDR under Capital Gains, justification of not subjecting sum to Capital Gain Tax due to lack of cost of acquisition, and correctness of Tribunal's decision on taxation of receipts.

Analysis:
The judgment by the High Court of Bombay pertains to an appeal under Section 260A of the Income Tax Act, 1961, challenging the order passed by the Income Tax Appellate Tribunal for the Assessment Year 2007-08. The Revenue raised questions regarding the taxation of receipts arising from the transfer of Transferable Development Rights (TDR) under the head of Capital Gains. The first question was whether the Tribunal was correct in holding that the receipt from the transfer of TDR was not taxable under Capital Gains. The second question raised was about the justification of not subjecting a sum to Capital Gain Tax due to the absence of a cost of acquisition of the TDR. The third question was related to the correctness of the Tribunal's decision in holding that there was no cost of acquisition, thereby concluding that the receipts could not be subjected to tax.

The Counsel for the Revenue acknowledged that the questions raised by the Revenue had already been decided against them and in favor of the Assessee by a previous decision of the Court. The Court noted that the questions as formulated by the Revenue did not raise any substantial question of law, as per the precedent set by the earlier decision in CIT v/s. Sambhaji Nagar Cooperative Housing Society Ltd. The Court, therefore, dismissed the appeal, stating that there was no order as to costs.

In conclusion, the High Court of Bombay upheld the decision of the Income Tax Appellate Tribunal regarding the taxation of receipts arising from the transfer of Transferable Development Rights, based on the lack of cost of acquisition of the TDR. The judgment emphasized the importance of precedent in tax matters and dismissed the appeal by the Revenue, as the questions raised did not present any substantial legal issues.

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