TaxTMI 
TaxTMI 
2008 (6) TMI 381
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....t offered to tax by the assessee. The assessee is the member of that housing society. 4. There is an agreement dated 13-3-1995 between the developer M/s. Hetali Estate and Properties (P.) Ltd., and the members of Jai Temple View Co-op. Hsg. Society. From the agreement, the Assessing Officer noted that the society had given permission to the developer to raise the superstructure on the existing building known as 'Popular Apartments' consisting of not more than 8 flats. The society had also formed a 'compensation committee' which was to ensure compliance of the various terms and conditions of the agreement. On the basis of the terms and conditions of the agreement dated 13-3-1995, the Assessing Officer observed that the assessee was entitled to receive a sum of Rs. 5,80,000 from the said developer. The Assessing Officer did not convince with the contention of the assessee that the amount was not taxable. He was of the view that the amount receivable from the developer was liable to be taxed as capital gain. According to the Assessing Officer the society Jai Temple Co-op. Hsg. Society was the owner of the land and buildings and it permitted the developer to construct the additional....
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.... 6. While examining the cost of acquisition, the CIT(A) noted that the Assessing Officer has adopted a reasonable methodology in arriving at the cost of the capital asset. The Assessing Officer noted that the flat was purchased in 1972 for a sum of Rs. 38,000 and considering the appreciation estimated the value as on 1-4-1981 at Rs. 1,20,000. The Assessing Officer further observed that in the old building there existed 21 flats and as 8 new flats were to be added as a result of the present agreement. The Assessing Officer considered 1/3rd of the value of flat as the 'right of development' inherent in the value of the flat and thus adopted the sum at Rs. 40,000. The Assessing Officer has rightly adopted the indexed cost of the same at Rs. 1,03,600. The CIT(A) accordingly confirmed the action of the Assessing Officer. 7. The Ld. AR submitted that the assessee had not transferred any rights in or with respect to the flat owned by the assessee in the society and accordingly there was no transfer of any capital asset. The assessee did not possess any other rights in or with respect to the building owned by the society and/or the transferable development rights and/or the voluntary....
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.... cited. The admitted facts of the case under consideration are that the owner of the property i.e., land and buildings/flats is Jay Temple Co-op. Hsg. Soc. There is an agreement between the society and developer, M/s. Hetali Estate and Properties (P.) Ltd. The developer was in possession of T.D.R. and was looking out for properties where on the developer can utilize the T.D.R. The society agrees to grant permission to the developer on certain terms and conditions. The members of society including the assessee received some amount. The case of the revenue is that the society through its members had transferred the development rights and such rights are subject to capital gain under section 45 of the Income-tax Act. To examine the issue we would see the requirements of section 45 of the Act. On reading of section 45(1) we noticed that following conditions are necessary to attract the said provision :- (i)there should be a "Capital asset"; (ii)that "Capital asset" should have been held or owned by the assessee; (iii)a "transfer" of that capital asset should have been "effected"; (iv)such "transfer" should have been "effected" in the "previous year" relevant to particular a....
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....of the society or otherwise or in law the members did not have any say in the matter once the society decided to give its consent. The members of the society had paid for the purchase of the flat, which confers very limited rights in terms of the regulations of the society and 'right to grant permission for additional construction', as such does not form part of any rights; but it arises on account of the volition or voluntary desire of a person. Such permission cannot be obtained by enforcing any rights or obligation arising from the agreement to purchase the flat and/or the regulations of the society. Accordingly, the voluntary consent given cannot constitute or form part of the bundle of rights which are owned or possessed by the member in or with respect to the tenure of the flat granted to the member by the society. The area occupied by the members was only a "measure" in quantitative terms inasmuch as the extent of hardship which may be faced cannot be quantified. When an additional construction is made, the location of the flat, as such, is of no significance or importance, since everyone suffers the hardship and the extent cannot be determine through any "measure". The memb....