Revenue's Appeal on Society's Development Rights Tax Dismissed; Tribunal's Decision Upheld for Assessment Year 1997-98.

The HC of Bombay dismissed the Revenue's appeal concerning the taxability of the amount received by a society for granting developer rights for the Assessment Year 1997-98. The Tribunal had determined that the amount received from the transfer of Transferable Development Rights (TDR) was actually received by the society's members, who had declared it in their individual tax returns. The Revenue did not challenge this factual finding, leading the HC to dismiss the appeal without costs, upholding the Tribunal's decision that the society itself was not taxable for the amount received.

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Issues involved: Interpretation of tax law u/s 2(24), 2(47), and 2(14) of the Income Tax Act regarding taxation of amount received by a society for granting the right to develop property.

Summary:

Issue 1: Taxability of amount received by society for granting developer rights

The High Court of Bombay heard an appeal by the Revenue for the Assessment Year 1997-98. The main question raised was whether the Tribunal was correct in holding that the amount received by the society cannot be taxed in the hands of the assessee society. The Revenue sought to tax the society for the amount received on transfer of Transferable Development Rights (TDR). The Tribunal found that the amount received on the transfer of TDR was actually received by the members of the Respondent Society. These members had offered the amounts received by them to tax in their individual returns. The Tribunal also noted that the individual members who received amounts from the developers and offered them for tax had their orders placed before the Tribunal. Since the decision was based on a factual finding that was not challenged by the Revenue as being perverse, the High Court saw no reason to entertain the proposed question of law.

Therefore, the appeal was dismissed with no order as to costs.

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