Capital gains computation failed for development rights lacking an ascertainable or deemed acquisition cost in the relevant assessment year.

Transfer of Transferable Development Rights or a Development Right Certificate for Assessment Year 2016-17 was outside the capital gains charge because sections 45 and 48 require an ascertainable cost of acquisition or a statutory deeming mechanism. The statutory entitlement was not acquired for monetary consideration, and the pre-amendment cost provision did not cover development rights or prescribe their cost. The later inclusion of other intangible assets or rights applied prospectively from Assessment Year 2024-25. Consequently, failure of the computation mechanism meant that the capital gains charge did not arise; alternative exemption and valuation issues remained academic.

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Issues: Whether consideration received on transfer of Transferable Development Rights/Development Right Certificate was chargeable to tax under the head Capital Gains for Assessment Year 2016-17.

Analysis: Sections 45 and 48 of the Income-tax Act, 1961 operate as an integrated code, and capital gains taxation requires an ascertainable cost of acquisition or a statutory deeming provision. The Transferable Development Rights/Development Right Certificate was a statutory entitlement that was not acquired for monetary consideration, and the pre-amendment Section 55(2)(a) did not include such development rights or provide a mechanism to ascertain or deem their cost. The subsequent amendment introducing "any other intangible asset or any other right" was prospective from Assessment Year 2024-25 and could not be applied to Assessment Year 2016-17. As the computation mechanism failed, the capital gains charge failed. The alternative exemption and cost-quantification pleas were left open as academic.

Conclusion: Consideration received on transfer of the Transferable Development Rights/Development Right Certificate was not chargeable to tax under the head Capital Gains for Assessment Year 2016-17.

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